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Dáil Éireann díospóireacht -
Tuesday, 30 Mar 1993

Vol. 428 No. 5

Gas (Amendment) Bill, 1993: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Deputy Ray Burke is in possession and he has 20 minutes.

I warmly welcome this Bill which provides for the construction of the gas interconnector from the UK, from Scotland to Ireland. The interconnector is very important because it will augment the gas being supplied by the Kinsale Head field which came on stream in 1978 and is nearing the end of its life. It will provide security of supply to existing domestic, industrial, commercial and horticultural users and also for power generation. Second, the interconnector should encourage a greater level of exploration for further gas finds as any promoter will have available to him markets not only in the Republic but in Northern Ireland, the United Kingdom and in Europe. In relation to the security of supply, at present we have one pipeline from the Kinsale Head field, coming through Cork, Dublin, Limerick, Clonmel, and other areas where supply is available, to Dundalk. A scenario too dreadful to contemplate is that in the case of sabotage or an accident serious disruption would be caused to domestic, industrial and horticultural areas. It is vital that we have an alternative supply to the Kinsale Head field. The interconnector will remove the threat of disruption that we face at present.

The pipeline should encourage exploration. We want to see the greatest level of exploration of our own territory, both inland and offshore. It is vitally important that we have terms and agreements that encourage exploration. This pipeline will allow an alternative source of supply to the Irish market of 3.5 million people and will encourage any potential investors in exploration on the basis that they will have available to them an interconnector to a vast market beyond our shores.

The whole exploration area has been dogged down the years by inadequate exploration terms. I recall going into the Department of Energy as Minister in 1987 and finding the ludicrous situation that Marathon had not been allowed inside the door of the Department for many years by my predecessor. Following negotiations, as they were our only suppliers, I encouraged them in every way possible and in 1988 they agreed an extensive programme and entered into new contracts. Promoters can be encouraged to engage in exploration. Also in 1991 there was agreement that seven wells would be drilled over a five-year period. The Finance Act, 1992, is designed to attract extra exploration here. The interconnector project, costing in the region of £290 million, will help greatly to encourage exploration and give a greater sense of security of supply to those using gas in Ireland. I welcome the provisions of this Bill which will extend the borrowing requirement, for capital purposes, of BGÉ to £350 million, thus facilitating the construction of the interconnector.

In relation to the expenditure of £290 million, I am disappointed that only £20 million of that contract will have an Irish content. I understand that the laying of an interconnector pipe under the sea is very specialised work but at the same time an Irish content of £20 million is a very small sum. It brings up a general point, which it is no harm to raise at this stage about which I would encourage the Government to be very careful. We have heard much about the £8 billion we are to secure from the European Community in Structural Funds over the next number of years. The intention is that the £8 billion will be used to upgrade our infrastructure and to help to provide long term jobs, but it should also provide short term jobs in the construction phases of many of these projects.

I have been disappointed to learn of two different projects in the past week which are using extensive public funding. One is the restoration of the B&I vessel in the docks where much of the work is being done by a UK contractor using UK registered vans and workers. I realise Irish workers have been well received in the UK in the past and of that I make no criticism, but at a time when we have an unemployment rate of 300,000 it behoves all State and semi-State sectors to ensure that the contracts are given, as far as possible, to Irish contractors using Irish workers and components. It is vital that we tackle the unemployment problem. One way this can be done is through our use of Structural Funds and public contracts.

I encourage the Minister for the Environment, Deputy Michael Smith, to ensure that contracts which are open to public tender and to European tender, on the basis of their scale in many cases, remain with Irish contractors. I want to ensure that not only are Irish contractors appointed but that professional teams of architects, engineers, structural engineers and all the various support staffs are Irish so that we can use this money, a once-off windfall, to get the greatest number of Irish jobs from any of these contracts.

As we expand our economy, the interconnector will play a significant role in meeting our increased energy demands. At present, the potential demand is 3 billion cubic metres and is expected to grow to 4 billion cubic metres by the year 2000 and to 5 billion cubic metres during the next 20 years. Gas is a clean, versatile and competitive fuel, transported by pipeline, available on tap, and requiring no storage. It is vitally important to us as a fuel.

I take the opportunity to congratulate BGÉ on what they have achieved during the past number of years. They are a model operation. In 1991 they declared a profit of £24.9 million on a turnover of £165.6 million and surrendered £31 million in dividends to the State. They have 195,000 customers. They represent 17 per cent of our primary energy demands and there are 22,500 new central heating customers per annum. They are doing an excellent job in connecting gas to non-gas housing estates. I compliment and encourage them to continue this work. The use of natural gas has resulted in savings to date of over £2 billion in our bill for imported fuels. BGÉ have paid in excess of £300 million to the State over a number of years and they should be complimented on what they have done.

I was Minister for Energy when Bord Gáis Éireann took over from Dublin Gas in 1987 and proceeded to take over other city and town gas supplies in the following years. The success of BGÉ in securing thousands of new customers every year is based on the fact that they concentrated on a safety mandate I gave them in 1987. When we came into office in 1987 approximately 800 holes per week were being dug in the streets of our city by Dublin Gas which was under examination by Mr. Somers at that time. There were horrendous accidents and, unfortunately, safety was not a top priority. When I nationalised Dublin Gas and BGÉ took over responsibility I set it the task of coming to grips with the safety factor. Dublin Gas used manufactured as distinct from natural gas, the composition of natural gas affected the various seals in the pipes causing serious problems. We all remember the position in the city at that time.

Bord Gáis Éireann rose to the challenge and I compliment it on its achievements. It has done a superb job which is reflected in the fact that it acquires 22,500 new central heating customers per annum and the demand in every housing estate to provide a gas facility. Residents' associations and householders generally in my area of north Dublin want natural gas extended to their estates. I compliment BGÉ and wish it well in the future.

I welcome this project which has made it possible to bring gas onshore and the extension of the gas grid to Dundalk, a decision made by the Government in 1987. The gas grid can be extended from Ballough in north Dublin to Drummaney in Loughshinny and from there to the United Kingdom. A number of routes were considered by the Department before deciding on the Scottish one. There are some local concerns about that route, but in general, people welcome the proposals and the fact that natural gas will be available for our horticulture sector. I would encourage greater expansion of gas at reduced rates to the horticulture sector so that horticulturalists can compete with their competitors in Holland and Spain. It is important that the pipeline goes ahead. I ask the Minister to also ensure that farmers affected by the pipeline will be adequately compensated.

Construction standards are vital. There is some local concern in Loughshinny in regard to leakages from valves. The proposed pipeline will have a safety valve onshore at Loughshinny, but I would like the Minister's view on the possibility of having this valve placed offshore instead. However, I do not know if that is technically feasible. I do not want the Minister to give the exact details of the security arrangements for the protection of the pipeline but will he assure me that adequate security arrangements are in place for its protection from sabotage? This is causing some concern locally.

This project will change people's lifestyles in Loughshinny, a quiet fishing village which has expanded in recent years by people working at Dublin airport and in the city setting up home there. It is a delightful place to live and, as good corporate citizens, BGÉ should be involved with the community. The pipeline comes onshore at a very historical location. BGÉ has done a great job on a park at its headquarters in Cork and it should be encouraged by the Minister to get involved in similar projects in the Loughshinny area. I am aware that it has set aside a small sum of £10,000 or £15,000 for pathway work in the area but that is a pittance in the overall contract of £290 million. A number of projects need to be carried out in the Loughshinny area, for example, cliff walks and proper restoration of Drummona. Such projects would cost BGÉ very little but would mean a great deal to the residents of the area whose lifestyles are being disrupted by this project.

The gas pipeline will be a major boost to our economy. I would encourage the Minister to re-enter negotiations with the ESB to ensure that it becomes a full partner in this project. It is regrettable that, as our other major energy supplier, it is not involved at present. Bad relations in recent months may have prevented such involvement but it would be in the national interest to encourage the ESB to get involved in this project with Bord Gáis Éireann.

I welcome this legislation, there has been general agreement from all sides of the House and with the Whips that we all welcome it. Nevertheless, it is essential that it gets the approval of the Oireachtas as quickly as possible because the work outlined in the legislation, which makes it necessary in the first place, has started and is due for completion at the end of this year. Some people doubt if Bord Gáis Éireann has the legislative power to work outside the jurisdiction on this project. Legislation will have to be introduced to deal with the matter.

If we want to be outward looking and get involved in a Europe where there are no barriers or borders, it is essential that Bord Gáis is legally empowered to construct and operate pipelines outside this jurisdiction. The Bill provides for an increase in BGÉ's borrowing powers from £170 million to £350 million. This is necessary for the construction of the Ireland-UK gas interconnector, as it is called in the business. It also provides for an increase in the limit on State guarantees of BGÉ borrowings from £80 million to £190 million.

The people of north County Dublin will be the initial beneficiaries of the interconnector. Deputy Burke identified the benefits which can accrue to an area which has within its boundaries a tremendous natural resource such as gas. The State undertook to reorganise the previous gas company and set up An Bord Gáis with the specific function and direction of improving the supply of natural gas throughout the country. Until recently, most of that gas came from Cork. The pipeline winds its way from Cork, through Munster and the midlands to Dublin.

Concern was expreseed by the previous speaker about the need for sensitivity both in environmental and economic terms in areas where the pipeline has been developed. Work on the construction of the gas pipeline from Cork to Dublin was undertaken expeditiously and with a degree of concern for rural Ireland and the rights of property and landowners. There were intensive negotiations, debate and consensus in regard to compensation for landowners and a measure of agreement was reached to everybody's satisfaction. Anyone who traces the pipeline from Dublin, through the midlands and Munster to Cork will find that it has blended into the countryside. One can say without contradiction that, apart from the construction period, there was little disturbance caused to the countryside in the construction of the pipeline.

This pipeline also meant that towns in rural Ireland could benefit from a supply of natural gas. In this regard the administrative capital of my constituency, Clonmel, is a case in point. The Tánaiste and Minister for Foreign Affairs, Deputy Spring, a former Minister for Energy, was directly involved in the decision to approve the extension of the line to Clonmel. Clonmel Corporation took over the function of the gas producing corporation which, of course had used coal to generate gas. The industries which have used this tremendous commodity have benefited enormously. One need only look at the balance sheets of some of these companies to see how they have benefited from using natural gas. Examples of this can be seen throughout the town of Clonmel. The magnificently successful company, Tipperary Crystal, which is located halfway between Carrick-on-Suir and Clonmel, has also benefited enormously from using natural gas. The company, which has a major energy requirement, was almost unable to meet the prohibitive ESB charges. If it were not for the advent of natural gas it is possible that that company would not be as successful as it is today. The company is world famous for its wonderful crystal products. The availability of natural gas has played a major role in ensuring the viability of Tipperary Crystal.

The 1976 Act gave Bord Gáis permission to extend its facilities to other areas. In this context I should like to refer to the needs of towns which are located near the main pipeline. We agreed at the time to extend the pipeline to Limerick city. The spur from Mitchelstown to Limerick city passes near the town of Tipperary which is in my constituency. The co-operative movement has indentified a need to extend the spur to Tipperary town. In view of the changes in the Common Agricultural Policy, all the changes in GATT and the attitude of the French to GATT, the co-operative movement knows that if it is to survive it, like other industries, will need to be able to avail of natural gas. I suggest to the Minister that additional powers should be given to Bord Gáis to extend the pipeline into towns like Tipperary so that industries such as Tambrands of Ireland, ATARI Ireland Limited etc., can benefit from lower costs.

It is appropriate when dealing with this legislation to commend Bord Gáis on its past achievements and its efforts to service the needs of industry and housing estates where the availability of natural gas was, in the past, beyond the wildest dreams of people. Gas is a magnificent, environmentally friendly energy source, and one of which we should be proud. We have a certain knowledge about the time span of our existing gas fields. In the context of a Single European Market, co-operation between nations and the elimination of borders throughout Europe and Ireland, the construction of this interconnector is an example of co-operation between two sovereign states. I believe Members on all sides of the House will commend the construction of this pipeline for that reason and urge the Minister to proceed with all haste in enacting this legislation. This Bill will give Bord Gáis statutory power to work inside and outside this jurisdiction. This tremendous project is estimated to cost £300 million. Construction on the interconnector has already begun and is due to be completed at the end of the year. Agreement has been reached between the Whips that we will be as forthcoming as possible in facilitating the speedy enactment of this legislation. I fully support this Bill.

(Limerick East): I welcome the fact that Bord Gáis are in the process of constructing a pipeline to connect us to gas supplies in the UK and in that context I welcome the Bill. However, I have some problems with it.

I am disappointed with its being brought forward out of the context of an overall energy policy. It is well beyond time for the Department of Energy and the responsible Minister to come forward with an energy policy for the whole island instead of approaching it on a piecemeal basis, in effect carrying out the bidding of the major agencies who are charged with the supply of energy rather than having any overall policy directive that is identifiable as a Government policy in this respect.

I also have a problem with the conditions in the Bill in respect of the borrowing to enable the capital to be put in place to pay for the construction work and, in particular, the levels of guarantees being requested from the State.

First, I would like to praise Bord Gáis for all the good work they have done over the years. They certainly are a good company, a profitable company; they have added to the growth of the economy and to the facilities available for householders in terms of domestic energy supply, and central heating facilities and they have been of benefit to industry and to horticulture. Pipelines extend extensively now since the first pipeline was constructed to bring the gas ashore from Kinsale Head field. Deputy Ferris waxed lyrical about how the pipeline meananders through Munster and into Leinster and eventually gets to Dublin. Bord Gáis had some difficulties taking over the clapped out facilities in the old town and city gas systems but they have done that effectively and should be complimented on now being a modern efficient supply company. I wish them success. They are also profitable and the profits are returned to the Exchequer periodically.

This concept of linking into the UK gas system is quite clearly dictated, on the one hand, by the fear that the gas supplies at Kinsale will run out and, on the other hand, by the hope that as the pipeline goes in both directions we might be successful in exploration activity and be in a position to sell gas to the British mainland or even further afield if we were lucky enough to strike it rich between now and the end of the decade. Be that as it may, it is certainly worth doing. There is no point in having a very expensive facility for the distribution of gas around the country if there is no gas available after a certain point. I would like the Minister to quantify, if he can, the life that is left in the Kinsale field at present draw down rates. In this respect also I would like the Minister to comment on the efficacy of the new exploration provisions brought in by Deputy Molloy when he was Minister for Energy but presented to these Houses by way of amendment to the last Finance Bill introduced by the Minister for Finance, Deputy Ahern. Very extensive amendments to the law governing the issue of licensing and explorations were introduced in June of last year and, so far as I can see, they have had little or no effect despite the optimistic prognosis about further exploration activity which they would generate. I would like now, almost a year after the first announcement of the Minister's intent, if the Minister of State could give us an indication of how the new provisions were received by the industry and if they are likely to give rise to any activity in the future.

This Bill, according to the explanatory memorandum, puts beyond doubt the issue of whether Bord Gáis has the right to construct the pipeline. Any legal question should be put beyond doubt. I have some concern about it, even though it is a minor enough Bill in a statutory context, and is underpinning a major infrastructural project. In particular I have a problem with section 3. I would like the Minister of State to explain again for us why he considers it necessary at this point to introduce a section which will allow conditions, which apply to Bord Gáis now, to apply in future times to another party or to any subsequent transfers. Is this simply a piece of legal belt and braces engineering or is there an intent that the pipeline, or part of the pipeline, would be transferred to another agency? Is there, on the one hand, an intent that the pipeline would be controlled, for example, by another commercial State body so that Bord Gáis would not have a total monopoly of supply of gas on the island? The same question arises when we talk about an ESB interconnector. Bord Gáis now has a monopoly of Kinsale gas. At the time when Kinsale gas and UK gas are both running into the economy, there will be a strong case to be made that the one commercial State agency should not have control over the two and that, in effect, there should be price competition put in place so that the consumers, whether they are commercial or industrial, will benefit. The Minister would be familiar with this proposition and with the case that is being made in other countries that if there is an interconnector, if there is a pipeline bringing in foreign gas, the monopolistic supplier should not be given the monopoly control of the imported gas and that it would be impossible to have price competition if people had a choice as to whether to buy domestic or foreign gas.

If this is not the intention of the section, will the Minister explain what he has in mind? Is he thinking that sometime Bord Gáis will be privatised? Is he thinking of a situation where the pipeline would be under the joint control of the British and Irish Governments? Is he thinking of a situation where there would be some selling off of the assets of Bord Gáis? What exactly has he got in mind? How is he going to answer the question that will be put again when arrangements are in place for an ESB interconnector? Will the monopoly State agency be given the monopoly over the delivery of the outside energy source as well as the domestic energy source? If so, how does the Minister propose to get any element of price competition operating in the whole area of energy?

The second area where I have a problem is on the level of State guarantees being sought here. I can understand a situation where absolute State guarantees will be sought for borrowing, but that is not the case here. Section 4 provides for an increase in the borrowing powers of Bord Gáis from an existing level of £170 million to £350 million. This is fair enough if this is the amount of capital that is necessary. However, section 5 provides for an increase in the limit of State guarantees on the borrowings from the existing level of £80 million to £190 million. I would like the Minister to justify the figures.

Why does a profitable company like Bord Gáis need State guarantees at all for extra borrowing? It is quite clear it needed them at the start because it had no profits, it needed the guarantee of the State to put in the original infrastructure. However, it is one of the big boys now; it is up and running and is returning very big profits to the Exchequer on an annual basis. I cannot see why State guarantees have to be further extended at this point. If the Minister says they have, would he try to justify the exact provision here? Why guarantee £190 million and not £350 million? Why guarantee £190 million and not £250 million? Why guarantee £190 million and not £100 million?

Now that Bord Gáis has become profitable, why not reduce the element of State guarantees? Does a company like Bord Gáis need a State guarantee? Until the mid-eighties State guarantees were the norm, for all activity, even in commercial State activities that were profitable, but State guarantees should not be the norm now. If a commercial State company is making a profit, is run efficiently on commercial grounds and is not carrying out a particular social mandate, which is the case with Bord Gáis, surely there is no necessity for a State guarantee? I should like the Minister to justify State guarantees in prinicple and then to jusify the amount of guarantee being sought under section 5 of the Bill.

Deputy Ray Burke made an important point when he spoke about making sure that there was a significant Irish element in the construction work. The Deputy quoted figures suggesting that the Irish element would not be significant and that the benefit to the economy in terms of jobs or investment in industrial firms would be small in relation to the total cost. I had correspondence with the Minister's predecessor, Deputy Molloy, when he was Minister for Energy, concerning the case of a firm in my constituency that had tendered to import the pipes from the United Kingdom, which would subsequently be laid to provide the interconnector. The pipeline contract required that the pipes would be provided to a certain quality and specification and delivered on site. Therefore, the submissions made by the firm in my constituency was not entertained. There was no opportunity for the involvement of an Irish transport company. In that instance, one in which a significant number of jobs could have been provided, Irish companies were ruled out. It is my understanding that the total contract went to a United Kingdom company.

I had the pleasure — if I am using the correct term — to be in east Germany in the first week of October. It is recognised that that part of the Federal Republic of Germany is in an economic shambles, whole towns have closed down. One striking aspect is that even though the east German Mark was given an exchange rate on a par with that of the former west German Mark and as a consequence pensions and all other social welfare payments are paid in the harder currency, money only stays in east Germany for about 48 hours. What goes into east Germany in salaries and social welfare payments immediately goes out of the economy in west German or imported consumer goods. Certainly the money has left the east German economy within a week and has little or no effect on that economy. I am concerned that in the expenditure of the £8 billion Cohesion and Structural Funds expected in the next seven years something similar might happen. If Ireland is involved in vast infrastructural projects for which contracts are offered on a European wide basis and overseas contractors come in, providing materials from overseas and expertise in design and construction, many of the benefits of the Structural and Cohesion Funds will not be retained domestically but will flow through the tender system to overseas contractors. The matter at issue here is a case in point.

I should like the Minister to state whether the figures given by Deputy Burke are correct and whether the investment stimulus to the Irish economy for the expenditure of £350 million, the capital sought and which, I presume, approximates the borrowing requirements, including the cost of laying the new pipeline, is as small as the Deputy outlined. It would be facile to think that the construction of major infrastructural works in this country would provide jobs and stimulate the economy if the providers of the infrastructure were basically overseas firms. This issue has not been raised to any great extent in the past, for the simple reason that Ireland was always in a position to ensure that eligibility to tender was confined to Irish nationals. The Minister will probably recall the water scheme in County Louth in which pipe specification became an issue before the European courts and the Irish Government lost the case. From that point on, it was clear that the Government could no longer operate as it had done historically.

The case referred to was taken by an Irish company.

(Limerick East): That is correct. Ireland has a free market and private companies cannot be prevented from seeking recourse to the adjudication process in Europe. The fact that it was an Irish company which took the case to the European courts only reinforces the point I made. That issue is no longer one for the courts. Since 1 January, with the establishment of the free market and the various directives that govern matters such as that to which I referred, it has been a requirement for contracts to be offered on a European wide basis. I remember the Minister for Health, Deputy Howlin, saying some weeks ago that the delay in the construction of the Tallaght Hospital was due to the fact that the tender had to be put out on a European wide basis. I ask the Minister to examine the figures involved in this project, the first big one to come up under the regulations of the free market. A major investment is being made by the State through Bord Gáis and I imagine that European funds will be used. I should like the Minister to take account of the amount that will be spent in the Irish economy. Very little can be done at this stage in relation to this project but maybe general lessons could be drawn from this experience. However, one has to be optimistic and I hope that if exploration proceeds and a major gas find is again struck the gas will flow in the opposite direction.

My final point concerns the Minister and his colleagues and the Minister for Foreign Affairs. It would be economic lunacy for the authorities in Northern Ireland to proceed with the construction of another gas pipeline from Scotland into Northern Ireland. I had the great pleasure of being on the negotiating committee when the Anglo-Irish Agreement was negotiated. It was always intended that the Anglo-Irish Agreement would go beyond the realm of high politics and would also have a social and economic impact. Will the Minister state whether the issue of supplying gas to Northern Ireland from the interconnector coming into north County Dublin has been put on the agenda for the Anglo-Irish Conferences? Has that matter been put on the agenda for any of the conference meetings by the Tánaiste since the change of Government? Was it put on the agenda of any conference meeting before the change of Government by the former Minister, Deputy Molloy, who frequently attended the conference meetings? On Thursday this House will debate Northern Ireland and many Deputies will express their views. I have no doubt that I shall agree with many of the views put forward because there is no huge divergence in the House on this issue.

I should like to refer to something that is not about the high politics of a thirty-two county Ireland but the idea of a single economy for the island. It is well worth considering what the Government could do through the economic Ministers to provide a single all-island economy. The provision of infrastructure is obviously one factor to be taken into consideration. What a great difference there would be if Belfast and Dublin were within an hour and a quarter of each other by road, which is the length of time that journey should take if there were a proper motorway between those two great cities. The construction of a motorway between Belfast and Dublin would do more for the economic and physical unity of this country than much of the "grá mo chroí" talk by the "wrap the green flag round me" brigade. North County Dublin is only a stone's throw from the Border and if gas is to be brought into north County Dublin it would be eminently sensible to lay the pipes north of the Border. The pipeline is already designed to go as far as Dundalk and if the source is secure and there is no longer reliance on Kinsale there is no reason that the pipeline could not be used to provide gas to Northern Ireland. I also cannot understand why arrangements with the ESB are not in place, if we brought in electricity from the United Kingdom — and I understand that a decision has been taken in principle to do so — electricity would be fed into an all-island grid rather than into a Republic of Ireland grid, with power being drawn down right across the island as required.

I am sure the Minister would agree that in parts of Donegal and in some other Border counties electricity could be provided from Northern Ireland much less expensively than from here. I understand that some arrangements are about to be put in place to supply electricity to parts of Donegal from the other side of the Border. That would be a form of lunacy if we have an electrical interconnector, either along the lines of the gas pipeline, which I do not believe is feasible, but more likely across into Wexford, which could be fed into the national grid, now defined as a 32 county grid. I should like the Minister to comment on this when replying.

It amazes me that people who talk most about the unity of this country always have to be involved in high politics and can never do small little things that would unite people on a day-to-day basis. While this is an aside, I hope you will forgive me, a Leas-Cheann Comhairle, for pointing out that if you live in Dundalk and work in Newry, when your tax is adjusted for your Southern domicile you cannot obtain either a PAYE or PRSI allowance. Yet the patriots of our land will stand over this position. I put this matter to the Minister's colleague, the Minister for Finance, a Fianna Fáil Member of this House, a representative of the Republican Party. He still cannot do anything about it. I cannot understand the mentality which says: we are for 32 county Ireland, but if you live in the South and work in the North we are going to penalise you; you will not get either a PAYE or PRSI allowance. That is the kind of daftness underpinning policy in this country. I hope it will not be extended in here as well so that for some kind of partitionist reason——

Surely the Deputy is not suggesting the Minister for Finance created the daftness?

(Limerick East): Nobody has full power to change it. The Minister has full power to change tax law.

Provided he can ensure that it is a viable thing to do.

(Limerick East): Of course it is a viable thing to do. It obtains only because of a piece of bureaucratic nonsense. There is no good reason whatever for not changing it. I hope the same kind of idiosyncrasy will not be applied to the gas line so that when United Kingdom gas becomes available in Dublin it will suddenly be transmuted into green, Republican gas and that it will not be acceptable in Northern Ireland; or that when it comes across from Scotland into Northern Ireland it will be transmuted into orange gas so that we will not be able to use it down here. This is what the Anglo-Irish Agreement was about — that there would be agreement between the two sovereign Governments whereby all issues in which there was a joint interest could be discussed.

I am asking the Minister to put this on the table, to ask his colleagues in Government, particularly the Tánaiste, to place this on the agenda. The Minister will be aware that there were talks in the past about the supply of Kinsale gas to Northern Ireland. At that time a viable economic proposition, acceptable to the British Government and the people of Northern Ireland, was not feasible despite the best efforts of the people down here. I contend it would be feasible now in conjunction with the interconnector. I should like the Minister to make every effort to place this on the agenda.

Otherwise this Bill will prove to have been merely another great illustration of the process toward Dáil reform. We should remember if we vote against this Bill that the pipeline is at present under construction. Therefore, it is hardly viable for any Members of the Opposition here to endeavour to stop it when it is half constructed, when it is out to tender. The pipes have been ordered and, I presume, some are being laid. In addition I presume the on-shore stations on both sides are well on their way to being constructed. Therefore, we are back to the pretence that this House is irrelevant to what happens in the country.

It is extraordinary that a Bill like this, which puts forward the issue of whether Bord Gáis has power at all to construct this pipeline, which allows the conditions being applied to Bord Gáis to be applied to any other owner of the pipeline subsequently, a Bill which raises the amount of capital Bord Gáis can borrow and which changes the amount of borrowings on the part of Bord Gáis to be guaranteed by the State — it is extraordinary that it should be introduced at a time when we are faced with a fait accompli, which means in effect that we have no say in the matter.

I am pleased to be afforded an opportunity to contribute to the debate on this Bill. With the development of the natural gas industry here it was inevitable that such a Bill would be introduced in this House. To date it has been impossible for Bord Gáis to undertake work outside this State, the provisions of section 2 of this Bill will render such an undertaking possible.

It is estimated that this project will cost in the region of £290 million. That money will have been well spent if this investment is translated into a better, more reliable and cheaper form of natural gas in the future, whether coloured green, white or gold.

I a familiar with the development of the industry here since the first natural gas was piped to this country in the early seventies via the Aghada power station in my constituency. The Marathon company had acquired exploration rights and at that time considered selling natural gas in the greater Cork area. However, in 1974, with the assistance of the Government of the day, some pipelines were extended to the new ammonia plant being built by Nitrigín Éireann Teoranta, the State fertiliser company, at Cobh as well as to the two ESB power stations in the Cork area. I contend there is no reason natural gas should not be extended to the towns of Cobh, including the dockyard, as well as to Midleton, Youghal, Mallow, Mitchelstown and Fermoy since the pipeline is located in that area and the people of the region could enjoy the benefits of natural gas at a cheap rate. Indeed its supply should be extended to every other town nationwide. The extension of the operations of Bord Gáis outside this State should be carefully controlled and monitored at all times for the benefit of our people.

I welcome the opportunity to contribute to this debate. I welcome also the proposed project in that anything that can reduce the difficulties of our peripherality — a word very much in vogue at present — will have a lasting, worthwhile impact on our economic life. It is welcome that this project should be undertaken as a general principle vis-a-vis the resources needed to drive the engines of industry and maintain a reasonable level of supply in the domestic market.

We are aware, to our cost in recent years, of the difficulties experienced through our being now the only country within the EC without a land link to the Continent. This is always an important matter debated at numerous conferences in terms of our transport, telecommunications and energy costs. Within the context of this interconnector being put in place, at least we shall be able to maintain a guaranteed level of supply in the future, being linked into the European gas grid.

Nonetheless this gives rise to a number of questions many Members have raised in the course of this debate with regard to who will be responsible for the maintenance and distribution of the gas nationwide. With regard to both electricity and gas supplies, competition is badly needed in the marketplace. I do not at all subscribe to the view that monopolies, whether obtaining in the private or public sector, represent a healthy way of conducting business. Indeed, all of the proof available from any industry we care to examine points to the fact that when competition enters in by and large it leads to greater efficiency, cost controls and more dynamic development of the business concerned.

The distribution network of gas and electricity should legitimately remain under State control but I believe there is room for competition from various sources in regard to access to the distribution grid. However, I have seen no mention of that possibility in the Minister's remarks. Given the lack of a clear statement from the Department of Transport, Energy and Communications I wonder what policy is being developed. It would be wise — this would be welcomed by industry in general — to enunciate a clear long term policy now. One hopes that there will be other offshore gas finds and, consequently, other suppliers of gas to the system.

Notwithstanding who will control the gas supplies to this country through the interconnector, would we not be wise to look at the possibility of introducing competition in the market place? This is not to suggest — I want to make this clear — that one should rush out to privatise Bord Gáis Éireann to achieve this; it could remain a State company. However it could be forced to compete with other companies, if the distribution network was separated from the supply end of the business. I am not necessarily saying that because a State company has a monopoly the only way to solve the problem is to privatise that State company. I do not necessarily hold that view but what I am looking for is competition between the different companies that could contribute to the wellbeing of industry in this country. I am disappointed that no policy has been enunciated in this area. Experience in other countries clearly shows that where competition exists the consumer, particularly major commercial and industrial consumers, can benefit.

There is much scope to get Irish industry to convert to natural gas. Now that they can see that the supply of gas will be consistent and can be guaranteed into the future because of the interconnector we should encourage other industries to switch to natural gas, that is if there will be competition within the sector because competition will have a bearing on the cost of gas. However, because there is a monopoly in existence one is left to the whims of one supplier which controls the market. This is not a healthy way in which to develop a natural resource such as gas.

I also note that there is going to be an electricity interconnector. I welcome this. However, having regard to the number of people and the equipment that will be available on site in constructing the gas interconnector would it be possible to undertake both projects in tandem? Perhaps there is a sound reason this cannot be done but it strikes me that it would be a possibility having regard to the expertise that will be available on site in constructing one interconnector. Perhaps the reason is that one could not have a major electricity power line running alongside a major gas line, nevertheless, given modern technology and systems, this may be possible if some thought is given to it. I would appreciate it if the Minister could respond to this point. Given that resources are scarce there is no question but that there is duplication in this area.

I rose specifically — Deputy Noonan dealt with this question succinctly — to deal with the question of separate economic developments in both Northern Ireland and the Republic of Ireland. I attended a conference organised by the CII, as it was then known, within the last 18 months to two years when they spoke at length about the contacts that had been made with their counterparts in Northern Ireland. They clearly identified the need for cohesive economic development on the two parts of the island. They argued that this would contribute far more than all of the words spoken by politicians to the process of finding a solution to the many difficulties that exist between the two countries on this island.

It is extraordinary that the European Community is supporting two projects involving two interconnectors to a small island — I presume that they will be located within 100 miles of each other. Surely, this will lead to more artificial economic barriers being created when clearly it is unnecessary to do so. As I said, it is extraordinary that such a decision would be made for whatever reason.

Although there has been a fall-off in trade during the past decade are people not aware that much business is carried on on a daily basis between the North and South which is of vital importance? The new Europort in my constituency in Waterford is a case in point. It is expected that there will be substantial traffic on the rail network to that port having regard to the fact that the most efficient and cost effective way of transporting goods to Europe is to use that port. This is happening because business people can sit around the table without being hampered by politicians, can see the logic in economic development and do not have any of the political "hang-ups" or baggage which seems to accompany such developments.

I understand that we are to have an interconnector to Northern Ireland and another to the South. This is economic madness. I do not understand why there cannot be two connections off the one pipeline. It is extraordinary that this should occur, there is no logic to it other than political——

(Limerick East): Prejudice.

Perhaps, but it is unacceptable and school-boyish in the extreme. We are creating further economic barriers, unnecessarily, to co-operation between both parts of this island. If work has not commenced on the other interconnector, and I do not believe it has, I urge the Governments involved and our own in particular to reconsider this matter as it is not necessary to have a second interconnector. That would be a welcome step forward for all those who live on this island.

I want to deal now with the question of State guarantees. My colleague, Deputy O'Malley, has tabled a number of amendments in this regard. It strikes me that it has not dawned on the banking institutes in this country and externally, in particular the European Investment Bank, that there is an economic basis to any project which may be undertaken in this country. The banking institutions involved will take the simplistic approach, that there will be State guarantees. That is the simple way for them to issue the funding required, using the State as a guarantor in regard to any debts that may be incurred. At present the State guarantees must be on the table before the banking institutions or investment companies look at the viability of a project. Change is long overdue. The banking institutions, not alone in this country but outside it as well have had it too easy. We need to change direction and I urge the Government to do so. I want to be very careful in the words I use, but because the lender has no concern about the use of the funding — his money is guaranteed anyway — a more diligent investigation of the viability of the project is not necessary. I am not suggesting for one moment this has or is happening, but that possibility exists. No matter what the borrower does with the money, it is safe, as the Government has given a guarantee. That principle has existed for some time but it has to be seriously considered. I have no doubt that the BGÉ project is viable. It is a commercially successful company and I applaud it for that. On merit it deserves not to be forced to provide State guarantees to the banking institutes.

Government policy needs to be identified and clearly examined. I am not aware of the fine detail but there seems to be some doubt in general about what stage of construction the project is at. Very substantial sums of money are involved with an increase in BGÉ's borrowing powers to £350 million and an increase in the limit on State guarantees to £190 million. I hope we have learned from our experience in the past and that a wide range of submissions were sought for the construction of this project. We know from past experience that prices can go askew if one does not look at a range of options. Will the Minister indicate if a very full and thorough examination of the cost of the project was undertaken?

I will be moving amendments in Deputy O'Malley's name to reduce the sums of money involved. I understand the project cost ranges from £250 to £270 million. We will be seeking to amend section 4 of this Bill by reducing the borrowing powers from £350 million to £300 million as this more accurately reflects the cost involved. I think we are owed an explanation why the figure of £250 million was proposed. We will be seeking also to amend section 5 of this Bill, which seeks to increase the State guarantees to £190 million. We are not satisfied that the sums involved should be of this dimension. If these moneys are not needed in the short to medium term but are contingency funds for some future date, I think it is a bad idea to allow for that funding to be made available now. I think the company should be constrained in order to keep it on a commercial as opposed to the comfort route unless the Minister can outline the reasons from A to Z why these funds should be required to complete the project satisfactorily.

If new sources of gas are not found in the short term and our existing resources begin to run down, where does that leave BGÉ in the light of the deal it entered into with NET and IFI? I spoke at length about this before and I will not go into it in detail now. Will BGÉ have to offer them the same deal when the gas comes from the interconnector? I do not believe the same deal could exist if imported gas only is available. There are welcome reasons for what is happening but we are not going far enough in deciding on the best policy for our natural gas and oil reserves. We also have to decide on a policy for imported gas and whether it should remain under the control of BGÉ or whether there will be competition in this market. Once the interconnector is in place the gas will be available indefinitely and therefore there could be an indefinite monopoly. I would not like to see this as there should be real competition in the delivery of our energy requirements. Today we are dealing with gas, but I believe there should be competition for the supply of energy. This would be healthy for State companies as well as for the private sector and there should be real benefits for the consumer, particularly industrial consumers, whom I have no doubt welcome this. I look forward to hearing the Minister's response.

I join with other Members in welcoming this Bill which will enable BGÉ to supply gas should our natural resource run out with the passage of time. Naturally there is a cost involved in commencing the work and allowing it be completed. There is also the need to ensure that legislative backing is put in place for work carried out outside the State before substantial work is carried out in this area. The Bill is urgent.

When I first looked at this Bill I assumed it was enabling legislation to allow the Ministers for Finance and Energy to increase the amount of funding available to BGÉ and to increase its borrowings to carry out the work. However I am concerned that semi-State bodies are encouraged to extend their borrowings to carry out the job in hand and over the years we have seen that this approach is somewhat dangerous. There seems to be reluctance to increase the equity in State companies and instead they are encouraged to increase their borrowings. I do not think this has a beneficial effect on semi-State companies such as Bord na Móna, NET and indeed Aer Lingus. The huge interest bill on borrowings may be very damaging for the company. Indeed, the most recent case causing concern has been Aer Lingus, who must repay the heavy level of interest on payments for their extended borrowings over several years. The level of £40 million per year increased interest repayments is causing the company considerable concern. A profit is being made on operations and in various other areas but the level of interest repayments is crippling the company.

We recently debated the NET Bill. That company must be reconstructed to provide special arrangements for interest accrued over the years. The company has operated successfully since the reorganisation, nevertheless the general feeling is that it is a loss making operation because of its heavy interest repayments.

I need not go into detail regarding Bord Na Móna because its history is similar. State companies should not be allowed to borrow huge amounts for their activities, they should be examining more closely an increase in equity, which might be far more beneficial, and paying a dividend back to the State when they make a profit which would be preferable. The hike in interest rates over the last few months was crippling many people not only in the semi-State area but in private business. We cannot know when these interest rates will fluctuate to an extent where it will be beneficial to have borrowings rather than increased equity.

Decisions made outside this country by the Bundesbank or other institutions, could mean semi-State companies being put in danger because of the level of interest rates. This problem has bedevilled so many commercial semi-State companies that it must be reviewed by the Government as a matter of urgency, having regard to the way we fund our semi-State companies.

Bord Gáis, because of its monopoly, can and does make considerable sums of money. In this respect perhaps they would be in a position — similar to the ESB — to make the repayments. Their concern would not be the same as that of other semi-State companies where options are obvious and where there is competition from the private sector. Nevertheless, the point should be made.

Over the years, and during the debate on NET, the hidden subsidy, as it was described, of Bord Gáis to NET was examined. I defend that subsidy for the reasons I set out when we debated the Bill. At that time some Members of the Opposition, Deputy Bruton and Deputy Cullen, considered it the most efficient and cost effective way of selling gas to the domestic user and in that respect would probably bring the greatest return. However, I do not believe Bord Gáis was established simply for the benefit of the domestic user. It was obviously set up to benefit our industrial operations and to attract greater industrial activity to this country by making various sources of clean energy available. It would also encourage indigenous companies to set up here. Indeed, in accepting industrial development as one of the benefits of a gas supply, this Bill is welcome as it will ensure that there will not be an interruption in the supply. It will have the effect of encouraging greater employment through setting up more indigenous and foreign industries here.

As other speakers said, the grid covered by Bord Gáis is very limited, although it may provide energy for the larger populated areas. It will have the effect of concentrating industry in those areas it serves. In that regard I make a plea for my own constituency of Wicklow east and Kildare with which I am sure the Leas-Cheann Comhairle will agree. It is the responsibility of Bord Gáis to draw up a plan outlining where additional energy should be distributed. In debating this Bill we should have some indication whether the gas pipeline will be extended to areas other than those served at present by the Kinsale gas supply. Bray, part of my constituency, is connected to the natural gas supply and was traditionally supplied by the Dublin Gas company. The people of Bray were certain that when natural gas became available in Dublin it would be extended to Bray. I remind the Minister that the main gas pipeline to Dublin came through west Wicklow and east Kildare. I wrote to Bord Gáis on one occasion and asked them if, having disrupted farming and other activities in west Wicklow, it would provide compensation for the people in that area by extending the gas supply to towns and villages there, but that was not considered to be practical. I suggest to the Minister that it would be beneficial for the gas supply to be extended down the east coast through the large urban areas of Greystones, Kilcoole, Wicklow and Arklow which have an industrial tradition. Over the past ten or 15 years those areas have been devastated by the loss of traditional industries and if they are to be revitalised we must provide not only good roadways but the most efficient energy available for the setting up of industries along the east coast. If those areas do not receive that energy supply they will be in competition for industrial development with other areas with a choice of energy supply. I am sure the Minister, who represents a rural area, agrees that if we continue to supply a limited area with a choice of energy we will put the rest of the country at a considerable disadvantage. Semi-State bodies have a responsibility to taxpayers to ensure that their money is used efficiently and that must be applied to all companies. Competition between coal, oil, gas and electricity, the main energy providers — there are others such as bottled gas — provides a choice.

People are concerned about the environmental effects of the use of these products. It is interesting that in the past week the Environment Commissioner, Mr. Paleo Krassas, a Greek gentleman, extolled the virtues of an energy tax. He pointed out what the great benefit of such a tax would be in the United States and said a similar tax should be introduced in the Community. If any energy tax is applied in the Community it would be to the disadvantage of areas that depend on coal, oil and petrol. It is vital that there be a level playing pitch before the introduction of an energy tax, which would impose an additional burden on those in rural areas. I hope that at EC meetings on energy the Minister will emphasise the effects of an energy tax, particularly in rural areas. Those areas would be at a disadvantage compared with areas with a choice of energy such as electricity, gas and oil.

I am a traditionist in that I do not like any hint of privatisation in legislation, and section 3 leaves the door open for future privatisation of Bord Gáis. I do not mind being at odds with my colleagues in Fine Gael and the Progressive Democrats in saying that I hope the more lucrative end of the business will not be offered to the private sector while the State is left with the less lucrative sections. It is not acceptable that the State simply owns the distribution network, the pipes and so on, while handing over the profit making section, the provision of energy to domestic and industrial users, to some agency in the private sector who would monopolise that area. It should be ensured that the profits of a company almost guaranteed to make profit go into the State coffers. In that way other semi-State bodies, which do not have a monopoly and which provide much needed employment, can be maintained.

I hope the Minister will give an assurance in regard to section 3 in terms of opening the door to privatisation, as is being considered in the case of Greencore. The profits of semi-State companies should be returned to the State for the benefit of the taxpayer. Not all semi-State companies are in the privileged position of making a profit every year and as soon as they start making a loss it is felt that certain action should be taken to reduce the workforce or whatever. Everybody agrees that employment creation is essential. This Bill will enable greater industrial activity, thereby increasing employment in industry. For that reason I particularly welcome it. Finally, I hope that as many parts of the country as possible are provided with a gas supply and that employment creation is spread as evenly as possible throughout the Country.

Firstly, let me thank all Deputies for their interest in this Bill and for their contributions to this very important debate. I appreciate the support given by the Members of the House to this Bill. It reflects their recognition of the importance of the Ireland-UK gas interconnector to our security of supply and indeed to our overall future energy supply strategy. This is a major and exciting project and heralds a new era in Irish energy policy.

A number of points have been raised during the course of the debate, which I would like to address. With regard to the number of Irish people employed on the project, I would like to remind Deputies that not all of the contractors on the project have yet been announced. Those contracts which have awarded to date have resulted in about 180 Irish jobs. There may well be more as other contracts are awarded later.

This project is attracting substantial EC grant-aid under the REGEN initiative. It is important therefore, that Bord Gáis, which is undertaking the project, is careful to comply with EC requirements such as those on public procurement. For example, the BGÉ board took a commercial decision on the basis of cost to place the contract for coating the subsea pipe in Scotland. Not to do so would almost certainly have been open to question by the EC and it would have increased the project cost.

The provision of a large subsidy by the Government—because that is what it would have amounted to—in order to enable the work to be carried out in Cork would also have endangered EC aid as it would have placed other firms tendering at a disadvantage and would therefore be regarded as a barrier to trade.

The economics of the project and the price of imported gas were mentioned. Let me assure the House that a comprehensive feasibility study of the economics of this project was undertaken by our Department. This study was based on cost estimates provided by internationally respected consultants. This again was examined by the EC Commission and in turn by their consultants, who professed themselves satisfied and they agreed to grant aid the project. I am very pleased that the bids received from the contractors on this project bore out the estimates used in the feasibility study and the decision to build in 1993. The quotations received have confirmed that the BGÉ budget figure of £290 million for the project was not unreasonable.

The project is currently on target and within budget. This is the ideal year to build this pipeline. Prices have never been keener. Competition for contracts has been intense. Deputies rightly pointed to the very good record there has been in the execution of gas infrastructural projects.

I can assure them that this project will be no exception and that costs are being tightly controlled. I am satisfied that this is an excellent project, both from an economic and national point of view. It will provide gas supplies during the 50 year lifetime of the pipe, and from the end of this year onwards will give us access to supplies in the event of any interruption to the flow of our own indigenous gas.

The Minister, Deputy Cowen, mentioned in his introductory speech that Bord Gáis had entered into a five year security gas agreement with National Power in the UK. It has not yet negotiated a long term gas purchase contract for the interconnector. However, BGÉ are now back in the market for gas as are the ESB.

It is not possible to say what the cost of imported gas will be for BGÉ or the ESB, but it will be related to the market price in the UK, which is of course higher than the price of Kinsale Head gas now. I can assure Deputies that there will be no problem with supplies of gas for generations to come. For example, Norway has over 60 years of reserves at current levels of production and Russia has 40 per cent of the world's known gas reserves, most of which is untapped. Some Deputies rightly pointed out that there is a global trend to link networks and it is not improbable that before long we could be buying gas from as far afield as Siberia. I would like to allay any fear also that Ireland might be held up to ransom on price. Gas will be available through the interconnector at open market prices. Deputies should note that price is but one element, though very important, in a gas supply contract.

It is not the cost of gas alone which dictates the retail price of gas. It is sold by utilities everywhere on the basis that it must compete with oil, that is heavy fuel oil or gas oil, as the case may be. BGÉ operates on the same principle and sells its gas in competition with oil products. The profits arising from its operations are subject to the right of the Minister for Transport, Energy and Communications, with the consent of the Minister for Finance, to take a dividend for the State. This dividend, which has amounted to over £300 million to date, reflects in part the relatively low input price of Kinsale gas in comparison with international gas prices.

In addition, BGÉ has been required to operate its business and to make its investment decisions as if it paid import prices and has striven, with the encouragement of successive Ministers for Energy, to operate so as to ensure that a viable gas industry will survive beyond Kinsale, based on import costs and on the same retail pricing principles in the market place, that is, competition with oil products.

I assure the House that that principle will continue to serve as the basis of gas pricing and that domestic consumers will not face price hikes only because gas is being imported via the interconnector pipeline. It will mean however that certain bulk users may face some increase. Bord Gáis will still have to remain competitive with other energy sources.

This will mean a tightening of the board's margins, improved efficiency and a big reduction in the amount of profit which can be transferred to the Exchequer by way of dividend. The curtailment of dividends will be inevitable as indigenous supplies run out. It would be unfair to blame the interconnector for this. BGÉ's cash flow must inevitably reflect the expense of building this pipeline. If future profits allow the extraction of dividends that will remain an option.

As regards private sector investment in the project, we would welcome an equity partner for Bord Gáis. I recognise that this is a long term, infrastructural project which, while it is strategically important to us, may not give the kind of short term payback which would make it attractive to many private sector investors.

The pipeline will probably be operated by a subsidiary of Bord Gáis. I do not consider this to be unreasonable, given its importance to us, and the current stage of development of the Irish gas industry. Large users, such as the ESB, will be able to negotiate access to the pipeline to transport gas will be able to gain access for sales to large users or, indeed, for exports. This represents a significant incentive for gas exploration offshore Ireland. It has been suggested that the project could be postponed until about the year 2010 and that substantial savings in interest payments could be effected if BGÉ stopped supplying gas to the ESB and NET. This is not a practical proposition under any circumstances.

Bord Gáis is contractually bound to take or pay for certain quantities of gas each year. Even if it leaves the gas in the ground, it still must pay for it. That is how gas fields are developed everywhere. Almost 70 per cent of all gas sold by BGÉ goes to the ESB and NET. It quite simply would not make economic sense for BGÉ not to sell 70 per cent of the gas for which it has to pay the producer every year. The revenue shortfall would have to be made up by borrowings. Deputies can imagine what the finances of the company would look like in a few years if BGÉ were to be restricted in its expansion programme.

Every gasfield has an optimal production profile which enables the producer to maximise the amount of gas which can be recovered. Leaving gas in the ground may mean that a proportion of it would be lost. We also have to be aware of the operating costs of the field in its later years — they would be likely to be higher than the revenue. Maintenance costs would also be very high on the platforms. In addition, a reduction in the potential market for gas here would be likely to have a seriously detrimental effect on prospects for exploration in our offshore.

Finally on this point, Bord Gáis has contracts with both the ESB and NET to supply them with gas. Both companies rely on the gas supplied by Bord Gáis. If Bord Gáis were to be ordered to renege on those contracts it would call into question the credibility of any contract entered into by the State or by State companies.

I take issue with the suggestion that the price paid for gas is anything other than an energy related one. The ESB has not been sheltered. NET is, of course, an entirely different matter, but that is for another day.

The increased use of natural gas in the domestic sector is an important element in the improvement of air quality in our major urban areas. Bord Gáis is currently engaged in a five year project to offer a gas suply to customers in non-gas estates where this is commercially viable. Gas is already the most popular choice for new housing in the gas supply area and BGÉ has laid gas pipes in practically all the new housing estates in Dublin, Cork and Limerick.

What about Waterford?

I am optimistic for the future there, too.

In the gas supply area natural gas is already the dominant fuel for industry. The major future growth opportunities in gas sales will be in the domestic and commercial sectors. These are now being targeted. The board must view each housing estate on the basis of commercial viability, whether it is a private estate or a local authority one. The question of a subvention for central heating of any kind in local authority housing would be more appropriately addressed to my colleagues, the Minister for the Environment and the Minister for Social Welfare.

Energy efficiency is a central plank in the programme for Government. It is our policy to use as little energy, per unit of GDP, as possible. Deputy Sargent seems to be against increased use of gas, but I would like to hear what the realistic alternatives are. The Deputy referred to Oilean Chléire. The ESB wind power experiments there are now finished. We have, in fact, established a new wind farm at Bellacorick in County Mayo. We will continue to explore such possibilities, but in the meantime we must cater for our immediate energy needs.

I cannot accept that gas is not a suitable fuel for electricity generation. Modern combined cycle plant operates at a highly efficient rate of around 55 per cent. Gas is now recognised throughout the EC as the fuel of the future for power generation, so much so that the European Council has seen fit recently to revoke an earlier Directive restricting its use for that purpose. Combined heat and power is also a plant of the programme for Government. We are now beginning work on that aspect of the programme. The Taoiseach has pioneered this for a long period and totally supports it.

On the question of global warming, Deputies will be aware that the EC is committed to keeping Co² emissions to the 1990 levels by the year 2000. However, as a peripheral nation, Ireland has to ensure that its economic growth is not hindered. Gas is the most benign fossil fuel and therefore figures prominently in our national strategy for Co² abatement to meet our EC commitment. As Deputy Owen rightly poointed out, gas does not contain Co².

On tariffs, Bord Gáis already publishes tariffs for the domestic and small-to-medium industrial and commercial sectors. The majority of its customers are on those tariffs. The board also makes returns to the EC Statistical Office on prices charged in the domestic and industrial sectors in compliance with the price transparency directive. We are in favour of a more transparent tariff structure for industrial users. We recognise that larger users can expect to pay less than domestic users reflecting lower unit costs. We recognise also that competing fuels are not bound by published tariffs and could pick off specific customers. Nevertheless it would be in the interest of all gas customers to have more comprehensive published tariffs. We are having this issue examined.

I am gratified by the favourable comments made about the environmental impact statement produced by Bord Gáis Éireann. This was, strictly speaking, not a legal requirement, but it is proper that it should have been undertaken. The work is of the highest quality and, in fact, in Scotland the Bord Gáis Éireann study was so well regarded it will now be used as a benchmark against which others will have to be compared.

Bord Gáis Éireann is very conscious of its obligations in protecting the environment in north County Dublin and the archaeological heritage in the area. In the past, where sensitive sites were uncovered, Bord Gáis Éireann has funded archaeological studies. Bord Gáis Éireann will ensure that there is the very minimum possible disruption to local amenities during the construction of the landfall and onshore pipe, and will carry out a full re-instatement. In particular, I can assure Deputies Burke and Ryan, that the boulder clay cliffs will be put back, as far as is technically possible, in their original configuration. There is a right of way along the clifftop and the public path there will be restored. I can assure the Deputy that the shore station will be screened and landscaped to the greatest extent possible.

Landowners can also be assured of proper re-instatement. Bord Gáis Éireann has taken pains to protect that land along the route of the pipeline and all topsoil, fencing, hedging and so on will be replaced. The level of compensation to local growers will reflect the value of crop losses. If landowners are not happy with what is on offer from Bord Gáis Éireann, they can, of course, have recourse to the arbitration process.

The question raised by Deputy Ryan with regard to one of his constituents is, I understand, being addressed by Bord Gáis Éireann who have been prepared to offer a compromise solution. Discussions on this matter are ongoing.

I appreciate Deputy Owen's explanation as to why Loughshinny was chosen as the landfall for the interconnector. I should add that what was needed was a connection coming into Dublin from the northern end of the grid for the reasons, already explained, of security of supply to the largest market.

Wexford was examined as a possible route, but was judged to be out of the question technically and environmentally. The British Gas transmission system does not come far enough towards the west coast of Wales, so it would have required a much longer onshore pipeline in the United Kingdom.

Bord Gáis has examined the possibility of a supply of gas to Wexford on a number of occasions but it has not been found economically viable to bring gas there, from Waterford because of the lack of large industrial customers to take the base load. The Wexford Gas Company closed down about three years ago and, in fact, Bord Gáis Éireann assisted in the orderly shut down of the old town gas system. The board also assisted in the provision of alternative cooking facilities for the customers of Wexford Gas.

Deputy Ray Burke inquired as to the location of the safety valve, offshore if possible. This is not feasible. As far as I am aware it would be counter productive because it would weaken the structural integrity where it is especially difficult to access it. Deputy Burke also requested an assurance on security. I assure the House that the main pipe, and the land based pressure reduction station at Loughshinny will be absolutely safe and fully secured. As regards the involvement of the ESB with Bord Gáis Éireann in this and other projects, I assure the House that this will be kept under review.

In response to Deputy Noonan who asked about an overall energy policy, I should say that this measure is designed to facilitate a very important project. It is urgent and it would be right to leave it until a major national energy policy has been concluded. The pipeline is being built in furtherance of our overall energy policy, that is to secure adequate energy supplies at a reasonable cost. The Kinsale gas field has a life until circa the year 2000.

Deputies Burke and Noonan spoke about the involvement of Irish companies and the need for Irish job opportunites. It is a fact that Irish companies are not generally involved in this very specialised area of sub-sea pipe-laying. Even worldwide, a very small number of companies was competent for this job. We are a member of the European Community and we benefit from European Community resources. This project is also benefiting from European Community resources. We are obliged by EC directives, and various trade agreements to provide opportunities for international competition in all contracts over a particular figure under public procurement rules.

Deputies Noonan and Cullen referred to the Northern Ireland pipeline and put forward a very good idea. However, it is primarily a matter for the United Kingdom and the Northern Ireland authorities. They have found it suits them to do it their way. We are facilitating them by sharing part of our pipeline in Scotland. There are advantages in both sides of the argument. A Northern pipeline which may eventually enable us to connect up with the Northern grid would enhance security of supply. We have collaborated with both the United Kingdom and Northern Ireland authorities on this project. These matters had been discussed at Anglo Irish and other levels. We will facilitate and are cooperating with them. We are sharing part of our pipeline on reasonable commercial terms with them and will continue to cooperate.

Deputies Noonan and Cullen asked, why not an ESB interconnector and a gas interconnector together. These are very separate matters from both economic and technical viewpoints. They should stand on their own merits. There would, I understand, be technical difficulties and risks about running them together. I understand the electricity interconnector is still under study regarding its feasibility. We have no problem with the notion of access to the gas network for large users and producers. We must have regard to the security of supply and the capacity of the system. The European Community has proposed third party access but without success so far. Gas is sold in competition with oil in every market sector. Gas vis-à-vis gas competition is a little further down the road.

This pipeline will be operated by a stand alone subsidiary of Bord Gáis Éireann. It will be at arms length, and transparently so, from Bord Gáis Éireann. Large users, for example, the ESB, Nitrigin Éireann Teoranta and other producers will have access to the pipeline at a reasonable cost. We welcome private sector investment in this pipeline. Company joint ventures are not ruled out.

Deputies Kavanagh and Mulvihill requested an extension of the gas supply to all towns where possible and feasible. Deputies can rest assured that Bord Gáis Éireann will always be anxious to extend supplies to domestic markets that are commercially viable. It has a statutory mandate to do that but only where it is economic and practical to do so.

It is a long way to Tipperary.

Clonmel has done very well. The Deputy gave us a very good dissertation on how Bord Gáis Éireann ensured that the pipeline was laid to the satisfaction of the people there. I hope other opportunities will be created.

Finally, I thank all the Members who made positive contributions to this very important national and international project which is of major energy and economic significance to our country.

Question put and agreed to.
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