Dáil Éireann díospóireacht -
Wednesday, 29 Jun 1994

Vol. 444 No. 6

Written Answers. - NET/IFI Debt.

Liz McManus

Ceist:

38 Ms McManus asked the Minister for Enterprise and Employment, in regard to the current difficult situation facing NET/IFI, the proposals, if any, he has to write off or otherwise reduce the level of debt facing the company; and if he will make a statement on the matter.

Minister for Enterprise and Employment (Mr. Quinn)

Since the matter is rather complex, I would like to go into some detail on the NET/IFI situation. In 1987 NET's fertiliser operations and the compound fertiliser operations of Richardsons in Belfast, owned by ICI, were brought together to form IFI. IFI is owned 51 per cent by NET and 49 per cent by ICI.

The old accumulated NET debt, which was £164.6 million on 30 September 1987, remained with NET with the intention that NET would service its borrowings from its income on profits on the sale of gas to IFI and dividends from that company. Because the legislative limit in operation in September 1987 on borrowings by NET which could be State guaranteed was £150 million, legislation was enacted in November 1987 to increase this limit to £180 million. It was necessary to enact further legislation, NET Act, 1993, to provide for a further increase in the £180 million limit to £200 million because NET's combined income from IFI was insufficient to fully cover the interest payable on NET's borrowings and the resulting shortfall in interest had to be converted into new State guaranteed borrowings.

The NET Act, 1993 also provided for an increase in the authorised share capital of the company from £77.5 million to £100 million. To date there has been no increase in NET's guaranteed borrowings under the 1993 Act. However, because NET's income from IFI continues to be insufficient to allow it cover its interest payments the Minister for Finance has taken up £18.5 million in equity in NET to date.

For some time now the NET board has been examining the options for its future. In an interim report submitted to me last year it was stated that, even in the most benign of scenarios, income from IFI to NET will be insufficient to avert a further significant increase in the level of NET's debt. I expect that the final report, which I understand I will have within the next day or so, will confirm that NET's cash flow position is such that it can meet only a relatively small proportion of its interest obligations and has no capacity to reduce its debts. In such a scenario one option for the State would be to absorb NET's debts into the national debt. This and other options will be considered in the context of a thorough and expeditious examination of the NET report.

It is NET's debts we are talking about here and these are all State guaranteed. We are not talking about IFI's debts which are IFI's responsibility to manage.