(Mayo): I wish to share my time with Deputy Stanton.
Adjournment Debate. - Petroleum Company Sale.
Is that agreed? Agreed.
(Mayo): While the decision to sell the Irish National Petroleum Corporation Limited, Whitegate Oil Refinery and Whiddy Island Terminal for US$100 million is being dressed up in positive terms – that is, the $100 million and a drop of 0.4 pence per litre of petrol – I am less than enthusiastic about the sale.
The Tosco/Phillips acquisition will place a significant national asset in the hands of a large non-EU company unfettered by Irish strategic concerns. The State will be beholden to a large multinational energy company for its refining and storage facilities. I am particularly concerned about the issue of the 90 day oil reserve. The existing arrangement with the INPC is that the State has a 90 day oil reserve guarantee but this is not included in the deal approved by Government yesterday. Why was it not included? This is an issue of vital national concern. Why did the State not insist that the 90 day oil reserve, so essential as a safeguard for our national interests in the event of an emergency, be included?
The purchase price of the refinery and terminal is US$100 million. Last week in a reply to a written parliamentary question from Deputy Stanton, the Minister for Public Enterprise stated:
. . . the purchaser has sought a ministerial guarantee which would have the effect of the State being liable for any of the INPC's liabilities under the legal agreement should the INPC be unable to discharge them . . .
We know that the cost of the refurbishing work carried out by the INPC is £60 million which gave rise to the annual levy of £14.5 million on consumers. The Minister has now guaranteed that whatever outstanding liability there is for refurbishing and other liabilities is to be paid off by the Government as part of the deal. What I want spelt out clearly is what are these liabilities? What do they come to in financial terms? How much of the purchase price of US$100 million will be eroded by the discharge of these liabilities by the taxpayer?
Again, when referring to this underwriting guarantee last week the Minister went on to state:
This guarantee could cover certain potential environmental liabilities. The details of the latter have been the subject of substantial negotiations between the parties and I am satisfied that it would be against our commercial interest to disclose them at this time.
I genuinely do not wish to be negative in relation to the Tosco Corporation and I wish them every success. However, the Minister knows full well that concerns have been expressed about Tosco's environmental record in the United States leading to a considerable number of clashes between the State, the company and environmental groups. How can it be "against our commercial interest" to disclose what level of guarantee has been given to pay for environmental accidents or negligence on the part of a private company? Are we not giving Tosco a blank cheque? Even if Tosco never had a difficult environmental track record, why should the State pick up the tab for any environmental incidents for which the company itself should be solely responsible? As regards the 235 workers, how copper-fastened is the 15 year guarantee of employment? When will the employee share option trust come into being and what are the details of same?
I thank Deputy Higgins for sharing time with me.
As an island nation, Ireland depends on foreign imports of oil by sea more than other nations. At present there is a tightening in the availability of refined petroleum product locally, in Europe and globally. We must be sure that we are doing the right thing in selling this State asset to Tosco.
I understand that Tosco itself is in the middle of being taken over by Phillips and is going through a period of uncertainty. Perhaps we should hasten slowly and wait until the dust settles on that take-over before we allow this sale to go through. I want a proper debate on this issue. There are jobs at stake. It is important for the economy, for the consumer, for the workers and for the environment that we get this right.
The refinery at Whitegate has a proud record. It is making a substantial profit at present. People have said that we are giving away this facility to Tosco. I want to know how sure the Minister is of the 15 year guarantee. Is it worth the paper on which it is written?
Last week the Taoiseach told us three times that legislation will be produced in the autumn but today he said legislation would be produced before the end of this session. It strikes me that this is being rushed and I caution the Government to hasten slowly and get it right. There is no hurry. Whitegate is going extremely well and it is making a great deal of money at present.
As my colleague said, we also must be careful about the strategic reserves. Last winter certain parts of the country were very close to running short of petrol and home heating oil. We cannot take a risk with this. We must be careful. We must be sure. There is too much at stake. I look forward to the Minister's reply but I am also demanding a full debate in committee and in this House. I do not want this legislation guillotined. I want everything on the table. When it happens we need to know what we are voting on.
I thank Deputies Higgins and Stanton for raising this important issue.
On Saturday, 26 May, a milestone was reached in the proposed transaction involving the disposal of the business and certain assets of the Irish National Petroleum Corporation to the Tosco Corporation, a major US refiner and marketer of oil products. On that occasion, legal documents were signed by the two companies which set the sale process on course for completion on 16 July next, subject to certain significant conditions being met in the interim.
The main assets involved in the proposed sale are the Whitegate refinery and the Whiddy Island oil terminal in Bantry Bay, which are operated by subsidiary companies of the INPC. A third subsidiary company, the National Oil Reserves Agency, which maintains Ireland's strategic oil reserves, is not included in the proposed sale and will continue to operate in the State sector.
The process of finding new arrangements to underpin the refinery has been going on since early in 1999. In approving a major investment in the refinery, the Government wanted all options for commercialising the operation considered afresh and requested INPC to scope out all the possibilities.
An extensive search process was carried out by INPC in response to the Government's request. INPC's detailed evaluation of the various proposals received confirmed that the bid submitted by the Tosco Corporation was by far the most advantageous to the State in both financial and strategic terms. This conclusion was subsequently endorsed by the independent consultants engaged to advise the Minister for Public Enterprise and the Minister for Finance in the matter. INPC was accordingly authorised to enter into heads of agreement with Tosco to confer preferred bidder status and to facilitate negotiations.
The Tosco proposal, which has been refined in the course of the extensive discussions which have taken place between all of the parties in the interim, involves the payment of a gross consideration of US$100 million, although the net proceeds to the State will be less, after taking account of a number of factors, including the retention of INPC's existing debt and the costs associated with a proposed ESOP for the work force.
Most importantly, Tosco is undertaking to operate the refinery and the terminal for at least 15 years on a purely commercial basis, without the benefit of the mandatory regime or any other kind of artificial support, while maintaining existing jobs and conditions of employment. This is in marked contrast to the situation that has applied since the State got involved with Whitegate in 1982. Since then, because of the reliance on the mandatory regime, which is subject to annual review, a Minister with responsibility for energy has not ever been in a position to guarantee the future of the refinery from one year to the next. Crucially, the new owners have indicated that they will be in a position to meet the increased investments required at INPC going forward. With tougher and more stringent environmental rules coming into effect in the future significant sums will be required for INPC in order for the company to meet oil product emission standards. Tosco Corporation has the experience and the resources to ensure that the new exacting standards for refining oil products will be met.
The transaction includes the normal allocation of responsibility for ongoing environmental liability for a transaction of this kind. The time available does not permit me to go into detail, but we can be quite open about it on another occasion.
While the proposed transaction as it now stands represents a balance of the interests of the various parties, there are clear advantages for INPC, for the work force and for the economy generally. Assuming the sale proceeds to completion, it will provide a solid basis for refining and terminal activities for at least 15 years and will offer security and career development opportunities for the employees in the context of a major oil industry undertaking without the need for artificial support measures. From a national strategic perspective, the contribution which these facilities make to security and diversity of supply will be underpinned for the foreseeable future at least cost to taxpayers and consumers.
The Minister, Deputy O'Rourke, intends to bring forward legislative proposals before the summer recess to empower her to discharge certain functions without which the proposed transaction cannot proceed to completion. This will provide an opportunity for the House to debate the proposed transaction and, I hope, be convinced of its merits.