I move:
That a sum not exceeding £9,083,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1992, for salaries and expenses in connection with Forestry and for payment of certain grants.
The 1992 Estimates demonstrate this Government's continued determination to resolve the problems of the public finances. Hard decisions have again been taken in the context of framing the 1992 Estimates. The net Energy and Forestry Estimates for 1992, of £6.4 and £9.1 million respectively, represent only a fraction of 1 per cent of the total 1992 Estimates for Public Services. Net expenditure in my Department — Energy and Forestry — has been reduced by 41 per cent over the past four years. This is a very credible achievement when one considers that the reduction has been brought about not by curtailing essential activity but by getting better value for money, maximising opportunities for securing non-Exchequer financing and encouraging private sector development.
After the threat to the availability of oil supplies posed by the Gulf War in 1990 and 1991 had passed without any disruption materialising, energy markets reverted to comparative stability at moderate prices. Nevertheless the lessons derived from that episode were carefully studied at Government and international levels and policies adapted to enhance security and multinational co-operation.
In Ireland's case the measures taken to increase oil stocks and emergency preparedness are retained and increased efforts put in place to improve the efficiency of oil refining and diversify further our energy supplies through integration of gas and electricity networks with those of neighbouring countries. Other major developments affecting energy markets which I will discuss later are: (a) the completion of the European Single Market in the energy sector; and (b) the impact on energy supplies and utilisation of measures to mitigate potential environmental damage through harmful emissions and climate change.
I will turn first to questions relating to oil, which continues to be the mainstay of our and international energy systems. The issue of Whitegate refinery and my Department's continuing efforts to attract a suitable investor for modernisation of the facility is a major priority. The House is already aware that discussions on the feasibility of a specific project have taken place. The results of these discussions are under consideration by my Department, their advisers and the Irish National Petroleum Corporation. A successful outcome depends on prospective partners achieving their objectives as well as my and the Government's being satisfied that a proposal is in our interest. I have stressed also to the House that no hasty decisions will be made on the future of the refinery.
My Department have succeeded in obtaining EC grant aid under the PERIFRA programme for refurbishment work at the Whiddy oil terminal as part of the operation for the input and storage of strategic stocks of crude there. The total cost of the work is approximately £1.8 million and the EC have agreed to fund up to half of this amount. This work will contribute towards an overall improvement to the facilities at the terminal, enhance safety of operation and will also assist us in our efforts to obtain investment for its commercial reactivation.
The gas interconnector link to the UK is now being developed. Progress is well advanced and the project is on target for completion in October 1993. Final Government approval was given to the project in December last. The total cost is expected to be around £290 million in current prices and the European Commission have agreed to provide 35 per cent of that cost.
Another important element of BGE's capital programme this year is the westward extension of the gas grid from Skibbolmore, County Louth, to Mullagh in County Cavan to serve a number of specific industrial and commercial customers. The estimated cost of this project is approximately £11 million, almost 70 per cent of which will be provided by the European Commission in grant aid from its Special Border Areas Programme. Work is curently under way and should be completed by the autumn.
Completion of these projects will enable natural gas to provide a more important role in an energy supply system and provide a more secure and environmentally friendly source of fuel. In 1991 Bord Gáis surrendered £128 million out of its profits to the Exchequer by way of dividend payment. This brings the company's total dividend payments to date to over £288 million. This year the board is expected to contribute £25 million.
The most significant landmark to report in the area of nuclear safety/radiological protection in Ireland has been the establishment of the Radiological Protection Institute of Ireland on 1 April last, which has now replaced the Nuclear Energy Board. The grant-in-aid for this body for 1992 is £970,000. A sum of £190,000 is being provided in 1992 in respect of the national radiological emergency protection plan, the aim of which is to provide a co-ordinated response to radiological emergencies. The plan will be published by the end of the month.
Turning to electricity, earlier this year the Government approved my proposal for a major review of the ESB future structure of Ireland's electricity industry. I think all sides of the House will agree that the ESB have served the country well in developing a reliable electricity system. In the early stages of the development of the system considerations of economy of scale dictated that the ESB should operate as a monopoly. The ESB are now operating in a quite different economic environment and the justification for a monopoly is less apparent. With the advent of the internal market and the movement towards Economic and Monetary Union the ESB will be increasingly exposed to international competition. For this reason I saw a need to review the existing structures with a view to introducing competition into the electricity sector and increasing transparency of costs.
The European Community have also presented proposals for greater competition in the electricity sector in the context of the completion of the internal market in 1993. The review which I am undertaking will be an important element in formulating Ireland's position at discussions in Brussels on the draft electricity directive on common rules for the internal market. I have recently appointed consultants to assist my Department in the review and I would hope to report to Government on the outcome of the review later this year.
The area of hydrocarbons exploration and development is one to which I attach great importance. The Ballycotton gas field was brought into production in July 1991 three months ahead of schedule and only two years after discovery.
In April 1991 I announced that a frontier licensing round would be held in mid-1993 involving a large number of specified blocks in the largely unexplored Erris and Slyne Trough areas. This is very challenging acreage but initial indications of interest have been good.
On 3 December 1991 I concluded an exploration agreement with Marathon under which a total of seven exploration wells will be drilled. The first of the wells will be drilled in 1992 and the programme will continue to 1996. Bula Oil are also committed to drilling a well in the Celtic Sea this year.
The year 1992 will be one of major significance for hydrocarbons exploration in offshore Ireland. A regime of taxation measures specific to the petroleum exploration and development sector has been included in the Finance Act. The exploration sector will therefore have an important measure of certainty regarding its financial treatment.
In addition, I have been most anxious to ensure that Ireland's tax treatment of this sector will prove clearly competitive vis-á-vis other countries and will provide a stimulus to intensified exploration efforts off our coasts. That view has been shared by the Government, as is evident by provision in the Act for the availability of a corporation tax rate of 25 per cent for early discoveries. In order to place themselves in a position to qualify for the reduced tax rate it will be necessary for exploration companies to commence exploration drilling within the next few years. The availability of a tax rate of 25 per cent makes Ireland the most competitive location in north-west Europe and a location that no company should overlook when deciding on exploration activity.
Turning to Bord na Móna, in recent years the board and management have undertaken, with the co-operation of the work force, a major reorganisation and restructuring designed specifically to address the company's financial problems. While this process has proved successful in returning the company to profitability, there clearly remains much to be done if the level of indebtedness is to be reduced to manageable levels. This is a primary task indicated to and accepted by the board. Costs are under rigorous scrutiny and productivity measures in all sectors are being sought.
A sum of £300,000 is being provided in the 1992 Estimates for energy conservation activities. The Government continue to attach a high priority to energy conservation reflecting the fact that improvements in this area can save money for the individual consumer, improve the competitiveness of our economy and reduce the emission of harmful pollutants into the atmosphere.
The development of renewable sources of energy has a role to play in the diversification of our energy supply base. I am pleased to say that work has commenced on the construction of Ireland's first windfarm at Bellacorrick, County Mayo, and it is expected that this important project will be operational by the end of October.
A major challenge now facing the energy sector is to continue to meet the energy needs of our industries and citizens in a way that will minimise harmful emissions into the environment. My Department are co-operating closely with the Department of the Environment on policies and programmes which will bring this about.
Turning to mineral exploration and development, we are on the threshold of exciting times in the minerals industry, with a high probability that two major lead-zinc projects are about to come onstream at Galmoy and Lisheen. Clearly, the issue of most concern for the future of the industry at present is that of environmental protection. The Government, as evidenced by the setting up of the Environmental Protection Agency, are absolutely committed to the protection of the environment. However, a balance must be struck if we are to realise the potential of the mining industry. It is essential that these controls be operated in a fair and consistent manner and not in a way which is seen as anti-development and anti-job creation.
I now wish to turn to the Forestry part of my portfolio. Deputies will be aware of the Government's emphasis on forestry as a key national development activity. It is an emphasis that is shared by the EC authorities, who have committed very substantial financial resources in recent years to the expansion of Ireland's afforestation programme. Under the current EC Forestry Programmes Ireland will receive about £75 million from the EC. Without this very welcome funding, we would not have seen the rate of progress that has been made and I think it is a point that is very pertinent in the content of the choice that people will have to make on the Maastricht referendum later this month.
The improved forestry grants which I announced earlier this year reflect the Government's and the EC's determination to ensure that there is no slackening of effort in the aim of increasing the area of forest cover in this country and anticipated the adoption by the Community of proposals to reform the Common Agricultural Policy, including an enhanced role for forestry. At the moment only about 7 per cent of Ireland is coverd by forest — it is a long way behind the Community averge of almost 25 per cent. My aim is that we should reach about 10 per cent cover by around the turn of the century. The increased grants support this aim.
Good progress continues to be made in narrowing the gap between this country and the Community at large. Last year was another record-breaking year for planting. Coillte planted over 12,000 hectares in 1991 and the private sector — predominantly farmers, I am pleased to report — planted over 11,400 hectares.
Trading circumstances in the timber industry continue to be extremely difficult, but despite the fall in timber prices Coillte were still able to turn in a modest operating profit last year. In the context of continuing pressure on Exchequer finances the equity provision to Coillte has reduced from £15 million in 1989 to £10 million this year. Notwithstanding this substantial reduction over that period, I hope that Coillte will be able to repeat the 1991 planting performance in 1992.
I am also hoping that private sector planting can scale new heights in 1992. The provision included under subhead C would permit the planting of over 12,000 hectares. I believe that farmers particularly are increasingly coming around to the view that forestry can play a very important role in supplementing incomes. In a Common Agricultural Policy reform context the importance of forestry to rural communities is identified and I intend to actively promote the advantages of forestry throughout the coming year.
The planting figures undoubtedly attract most attention, but forestry is an integrated industry. For that reason grants are also available under subhead C for harvesting and extraction machinery, nursery developments and various other innovatory studies and pilot projects that support better usage of timber.
I have just mentioned the integrated nature of the timber industry. Now that potential timber supplies are increasing rapidly, there is, in my view, an urgent need to take a strategic look at the way in which the whole industry can be developed to the maximum advantage in the years ahead and particularly to gear the industry towards export markets. Downstream development is obviously an area of particular interest. The Government are committed to the development of an overall strategy for the timber industry in Ireland and I hope to see good progress being made in that regard in 1992.
Forestry research is also increasingly important in the light of the expanding afforestation effort. The increased provision under subhead D will allow Ireland to participate in the EC STRIDE research programme. The health and protection of our forest crop are particular priorities and the funding under subhead D will enable research to continue on such areas as species diversification and tree improvement, forest protection, increased efficiency and environmental and social issues.
Given the historic summit now taking place in Rio, it is appropriate that I should now focus on the environmental dimension of forestry. Events in Rio are certainly heightening awareness of the role which forestry can and must play in reducing the threat of global warming. While tropical forests have received a lot of attention, it is not, of course, an issue for resolution by Governments in those countries alone. All countries have a responsibility, and those in the developed world have a special responsibility to take a lead. Ireland's expanding afforestation programme demonstrates in a very real sense our readiness to put our own house in order before asking others to do likewise.
The role of forestry in the environment is taken fully into account in our forestry programme. My Department have produced detailed guidelines on the impact of forestry on archaeology and fisheries and further guidelines on landscape considerations will be published shortly. All relevant agencies involved in wildlife management, fishery development or preservation of national monuments or areas of scientific or landscape interest are consulted by my Department. If those agencies feel that afforestation would be inappropriate in certain areas, their views are taken into account. In addition, I have announced special attractive grants for the planting of broadleaf forests and for recreational forests, including urban forests, and for diversification of species in suitable locations.
I wish to state clearly that environmental as well as economic considerations lie at the heart of forestry policy, leading to a balanced development which will enhance our countryside as well as providing much needed employment and development.
I have outlined the many significant developments in all spheres of the energy area. The gas interconnector link to the UK is well advanced and our oil stocks are in a healthier position than ever before. A review of the future structure of the electricity industry in Ireland is under way and a major reorganisation is in progress in Bord na Móna, with a view to improving the company's financial position.
