Vol. 524 No. 3
114 Mr. Stanton asked the Minister for Public Enterprise the benefits the proposed sale of the Whitegate refinery and Whiddy oil terminal will bring to the State, the consumer and the employees concerned; and if she will make a statement on the matter. [22681/00]
The non-binding heads of agreement signed in July 2000 by the Irish National Petroleum Corporation and Tosco Corporation in respect of the sale of the Whitegate refinery and the Whiddy oil terminal include a commitment by the intending purchaser to operate the two facilities for at least 15 years on a commercial basis, to invest in their development subject to commercial criteria, and to maintain the existing workforce on the basis of, as a minimum, existing terms and conditions. The cash consideration in the trans action is $100 million gross but, when existing INPC loans are repaid, the net receipts to the Exchequer will be substantially less.
As matters stand, both the refinery and the terminal are restricted by their limited capabilities and scale and their lack of integration into the mainstream oil business. The refinery, in particular, is small and relatively unsophisticated in technical terms and is completely exposed to the vagaries of international oil and currency exchange markets making it impossible to operate on a fully commercial basis. Since it came into State ownership in 1982, the ongoing operation of the refinery has depended on the availability of additional income in the form of a levy on consumers under the mandatory regime (MR) to supplement its income from commercial sales.
The MR, which is based on the view that the refinery fulfils a vital security of supply function, is subject to annual review by the Government. In the course of these reviews, successive Governments have had to take into account, inter alia, the fact that the justification for maintaining Whitegate has been strongly challenged on a number of occasions by expert opinion in the context of both the EU and the International Energy Agency. Consequently, it has never been possible to guarantee the future of the MR, and hence, the continuation of operations at Whitegate, from one year to the next. In addition, it is necessary to take into account the likelihood that further investment will be needed at the refinery in coming years to comply with new requirements relating to continuing developments in EU environmental policy, such as the EU Auto Oil 2 specifications for road transport fuels which are due to come into effect in 2005. Funding that investment under the existing system is likely to place an additional burden on the taxpayer-consumer.
The proposed sale, on the other hand, offers the prospect of creating a solid basis for the continued operation of the two facilities for at least 15 years as part of a major oil industry undertaking and without the need for artificial support measures. If the proposed sale goes ahead, it will underpin for the foreseeable future the contribution which these facilities make to security and diversity of oil supply in the Irish market at least cost to the taxpayer and to users of oil products while allowing the State to refocus attention and resources on building up strategic oil stocks and related issues. For employees, the Tosco deal provides, for the first time, security of employment without any disimprovement in conditions over a substantial period of years. It is also reasonable to expect enhanced training and career development opportunities for the workforce in the context of a major international oil refining and marketing operation.
