JOINT COMMITTEE ON TRANSPORT díospóireacht -
Tuesday, 24 May 2005

National Roads Authority: Presentation.

Chairman

I welcome the representatives of the National Roads Authority, Mr. Gerard Murphy, PPP manager, Mr. Fred Barry, chief executive; and Mr. Eugene O'Connor, head of project management and engineering. I draw their attention to the fact that while members of the joint committee have absolute privilege, the same privilege does not apply to witnesses who appear before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I call on Mr. Barry to make his presentation. While the joint committee has discussed the submission forwarded by him yesterday, members have not had time to go through it in-depth. They feel there is not enough time for Mr. Barry to make a 25 page submission followed by questions. It is proposed that he take questions in the order they were submitted by members.

It is fitting that the joint committee should express its sympathy to the families bereaved as a result of yesterday's tragic bus accident outside Navan. I would appreciate it if the clerk would convey our sympathies to the families and communities affected and pass on our good wishes to those who were injured. It was a tragic accident in which many young lives were lost. It highlights that the entire school transport system needs to be examined in the context of the facilities provided.

I have raised this issue on a number of occasions because, unfortunately, a fatal accident involving a school bus occurred in my constituency many years ago. Deputy Connaughton also raised the issue in the context of an incident in Galway a number of years ago which, thankfully, did not result in fatalities. However, the joint committee might discuss the issue at a later date.

I ask Mr. Barry to make a short introductory presentation. We will then take Deputy Glennon's questions.

Mr. Fred Barry

The introductory document is long because many questions were asked. Members may wish to read the replies and take it from there. I thank the joint committee for the invitation. We are happy to be here.

Deputy Glennon

Asking questions first is usually an advantage but it is a distinct disadvantage today because I have only just received the submission. It is technical, particularly in response to my queries. If Mr. Barry is agreeable, I may come back to him with queries in writing. However, I have one question about motorway access and egress, a matter addressed on page 6 of the submission. While I thank him for his response, will he explain why roundabouts have been built at a number of motorway junctions while traffic lights are used at others? Will he outline in layman's terms the difference between them? It is often said traffic lights on motorways is a uniquely Irish experience. I do not know if that is the case but I would like Mr. Barry to comment on it.

Mr. Barry

The only reason a roundabout or non-separated junction is built on a motorway is to save money. If only so much money is available, as was the case with the M50 originally, junctions are put in place that are not grade separated because it is a cheaper way of building the road.

Deputy Glennon

What is grade separated?

Mr. Barry

A flyover arrangement is the preferred way to build a properly functioning motorway but flyovers cost a great deal and if one does not have the money for them, one does something less. Motorways do not have roundabouts on them. One is coming off the motorway when one reaches a roundabout.

The next thing one does is move to a roundabout which is cheaper than a flyover arrangement. For roundabouts to function effectively, they need to be big enough to accommodate all the traffic using them. If a roundabout is not big enough — that may be the case from the word go because there is not enough land available or it may have enough capacity initially for traffic — and as time passes traffic increases, it may not be able to function properly. Traffic lights are installed because otherwise traffic becomes gridlocked.

Those are the stages one goes through. Fundamentally, it is a question of money.

Deputy Glennon

Will there be significant changes to access points following the M50 upgrade?

Mr. Barry

Yes, on most junctions there will be a full free flow arrangement. Virtually all of them will be improved. Not only will they be free flow for cars, the improvements are also intended to accommodate bus corridors and so on. Much of the investment will address junctions as opposed to the main route.

Deputy Shortall

It is difficult for us to scrutinise road building and value for money in transport projects generally because the Minister is not answerable to the Dáil. Invariably, when we table questions, we are referred to the NRA. Mr. Barry will appreciate this difficulty, given that he appears before the joint committee a few times a year and when he does, a long list of questions is waiting for him. Members are interested in their own areas but that is not satisfactory in terms of accountability or of us scrutinising spending. Will Mr. Barry consider putting in place a system which would facilitate members of the committee in accessing information?

Mr. Barry

Yes.

Deputy Shortall

I do not wish to put Mr. Barry on the spot but I ask him to give the matter some thought.

Mr. Barry

I am quite happy to do so. We have had an internal discussion as to how we might arrive at presenting estimates and cost out-turns in a manner more easily digestible by the public and the joint committee. We can do a number of things. However, 600 projects or more are under way and we do not want to get into a situation where we would get lost in the detail of reporting on 600 individual projects. We can do something that will give the committee a better sense of where we are on costs. We are considering producing cost estimates that reflect costs in today's terms but which will also, given that we have a multi-annual programme, enable us to say with reasonable confidence when major projects are likely to go ahead. In that environment it would be fair to ask us to produce estimates of the ultimate cost of projects as they began construction.

Deputy Shortall

I do not expect Mr. Barry to come up with proposals now. However, he might consider having a named senior person in his organisation who would respond to members when they request information.

Mr. Barry

This is an example.

Deputy Shortall

This committee also requested Mr. Barry's predecessor to provide it with quarterly progress reports on all of the main projects in terms of both construction and costs. We would welcome that undertaking being honoured.

For today's meeting I requested the Chairman to arrange for the NRA to discuss specifically the Kilcock-Kinnegad scheme. I did so because, looking over the records of previous meetings and correspondence I had received, there seemed to be a huge discrepancy in the figures being used for the cost to the State of the scheme. The Government has signalled that it intends to proceed with a number of schemes on the basis of public private partnerships but it is very difficult to find out exactly what the costs involved are.

Chairman

We agreed before the meeting began that we would stick to the questions submitted. I accept the Deputy spoke to me last week regarding the N4, or M4 as it will be called. I suggested that, if necessary, we would deal with it on its own rather than trying to deal with it in the context of today's meeting. We are now dealing with Deputy Glennon's question which relates mainly to the M50.

Deputy Shortall

I thought we had moved on to my question.

Chairman

No. We have not nearly reached the Deputy's question.

Deputy Shortall

Is it the intention to go around the table on every single question?

Chairman

The Deputy intimated that she wanted to contribute on the M50.

Deputy Shortall

I presumed the Chair had called me because I was next.

Chairman

No. I called the Deputy because I thought she wanted to get in on Deputy Glennon's question on the M50. We will reach her questions. There will be no problem regarding that.

Deputy Shortall

We will be here for a month if we proceed on that basis.

Chairman

I have no problem with being here for a month. Certain questions were submitted in writing to the NRA, to which we asked for replies. We should proceed on the basis of getting answers to the questions members submitted. I said last week that I would have no problem with arranging for the NRA personnel to come back on a suitable date to deal with the issue of public private partnerships, an issue which the Deputy seems to be raising in the context of the M4.

Deputy Shortall

I wrote to the Chairman asking for a meeting to deal specifically with that topic. The Chair then proceeded to invite everybody to submit questions on everything under the sun.

Chairman

Every member of the committee will be afforded the same tolerance regarding the submission of questions, irrespective of whether they are the spokesperson for a party. The Deputy's question will be reached when we reach page 13.

Deputy Shortall

Given that I was next in line to Deputy Glennon, I assumed we were moving on to it.

Chairman

No. I understood the Deputy wanted to raise a question regarding Deputy Glennon's questions on the M50. Deputy Lowry's questions are next. Does anybody want to raise an issue?

Deputy Eamon Ryan

If I want to ask a question regarding Deputy Glennon's question on the M50, is now the time to ask it?

Chairman

Yes.

Deputy Eamon Ryan

I thank Mr. Barry. As I have only just received the written presentation, it will be tricky to go into the detail.

Chairman

We all had the same problem today. I apologise to members of the committee. This should have been circulated earlier because it is a serious document with an amount of reading in it.

Deputy Eamon Ryan

At the oral hearing on the widening of the M50 it was clear that demand management measures would be required. The An Bord Pleanála conditions for the road state such measures should be prepared and outlined within three years. In circumstances where almost everyone seems to be agreed that the approach should not involve traffic lights or physical measures and that other demand management measures should be utilised, I presume some variable tolling system would be the only alternative. It is the alternative the NRA and the consultants, Ove Arup & Partners, promoted at the oral hearing.

Given the necessity of introducing such a system, will the NRA review the tolling operations that might apply on the Kilcock-Kinnegad road, the M3, or any of the other roads approaching the motorway? If we are examining the possibility of introducing demand management facilities on the M50 and the other roads are to be tolled as part of a revenue generating scheme rather than as a demand management measure, does that not require the NRA to review its tolling arrangements on the approach roads to the M50?

My second question relates to the timing of the upgrade that the NRA considers will now take place. It seems clear the NRA must take into account what An Bord Pleanála, Ove Arup & Partners, and others said at the oral hearing on the need to move towards a demand management system. Will the NRA wait until it has worked out exactly what it will do and what will be agreed by the Government? Is there not a requirement on it, for the purposes of proper planning, to be clear about its proposals for the M50 and its future management prior to proceeding to construction? I would be interested in hearing whether it has reviewed its timetable in that regard, given the uncertainty surrounding the future management of the road.

Chairman

Deputy Kirk has a related question which we will take. That will conclude the discussion on the issue.

Deputy Kirk

My question relates to safety barriers in the central median of the M1. It is a contentious issue. There are no barriers on long stretches of the M1 and, unfortunately, there is a high accident rate involving vehicles regularly crossing the central median of the motorway. Has the NRA examined best practice across Europe? Are there variations of best practice? Is it intended to eventually standardise an approach towards the provision of barriers on all motorways in the country?

Mr. Barry

I will respond first to Deputy Ryan who raised the issue of the impact of tolling on approach roads to the M50. Members will be aware from the An Bord Pleanála decision that the introduction of demand management measures is an matter we must examine but not necessarily immediately. We have not yet examined it in any detail. However, I make an early observation that most of the tolling on approach roads is so far away from the M50 that it is unlikely to have any significant impact on traffic on the M50.

On the timing of the introduction of demand management measures, it is not yet certain that they will be required. I appreciate, however, that An Bord Pleanála has said we should look at the matter and we will do so.

In the EIS statement the traffic levels for a small section of the M50 will be at or slightly above congestion level at or about the time we finish. However, we all know on our side of the table that traffic forecasts are notoriously inexact. Traffic levels may be higher or lower. As we get closer to the event, we will do more traffic studies and see whether control measures are needed. That is not to say, however, we will not introduce such measures. If they are needed, they will be introduced but An Bord Pleanála has not stated absolutely that they must be implemented. It stated we should have a plan and we will.

I agree with Deputy Ryan that introducing physical barriers, traffic lights and so on is not the way to proceed. We want a way that will allow traffic to flow freely and that will happen.

On timing, it will be a while yet before we figure out what demand management measures, if any, are needed on the M50.

Deputy Eamon Ryan

The point that the other tolls are so far away that they will not have an effect in terms of demand management is probably right. However, does Mr. Barry agree with the political point that asking someone paying a toll at Kells or Kinnegad to pay another 20 miles further down the road would be very hard to push? Someone driving from Kinnegad would not see it as a long way.

The other main point relates to Mr. Barry's statement that modelling is very inaccurate or notoriously inexact. The traffic experts at the hearing with An Bord Pleanála stated the reliability of those modelling estimates on a timeframe up to 2008 was, allowing a variability of 2% to 3% on either side, of the order of 98%. In that regard, the NRA is providing a facility that modelling figures show will not work. Mr. Barry has presented the figures and given an estimate figure of traffic flow as 190,000. Given, however, that the congestion reference flow for the road is 187,000, as soon as the road opens it will be above its congestion reference flow.

We are considering an investment of €1 billion in the upgrade of a road. If we know, within a probability of 2% to 3%, that from the day it opens it will be above its congestion reference flow, for Mr. Barry to suggest that the NRA delay planning for another three years — An Bord Pleanála requested it only to consider a plan — on the basis that it would wait to see what will happen in respect of the road, is an imprudent use of the State's resources and a very bad example of engineering planning.

Chairman

Will the Deputy put a question rather than make a statement?

Deputy Eamon Ryan

As an engineer, would Mr. Barry not plan for a 20-year horizon rather than the immediate timeframe? I would not see it as good engineering practice to do something that one knows will not work and then look at what happens.

Mr. Barry

I did not say that we would not look at it until the road opened. If I did, I apologise because I had not intended to say that. I believe I said that we had not looked at it yet and that An Bord Pleanála requires us to have looked at it down the road, which we will do. That is not saying that we will wait five years until we start to examine the position. That is not true.

At the current capacity of the road, it is carrying about 86,500 AADT. The expansion will take it up to 180,000. For a stretch of the road, that 180,000 will be very close to the forecast demand at the time of opening. I do not believe that the traffic forecast — any more than other forecasts — can be so fine tuned that it comes within 1% or 2% of traffic demand five or six years down the road. I would defy anybody at this committee or elsewhere to tell me what economic growth rates will be with that level of accuracy over a five-year period. I do not think I could do so. I am not saying that we will not have an issue to deal with. We will deal with it but I cannot give the committee details about that matter today. I have not started working on the details of what the demand management will be.

Chairman

On a previous occasion we discussed the question of putting in place an outer road beyond the M50. When does Mr. Barry expect to be in a position to have a definite route for a proposed outer road to alleviate the traffic by taking the through traffic off the M50 in the long term?

Mr. Barry

A number of issues arise from that question. On the previous occasion we stated that we had advertised for consultants and that if we are to follow the European Union procurement directives, we will not have consultant in place until August or thereabouts. They must do a great deal of spade work, including carrying out traffic studies. We estimate that it will be spring or into summer of next year before the study work is completed. That work is intended to examine, in a broad sense, the feasibility of an outer orbital route which may be close enough — this, of course, depends on whether the consultants recommend building a route — to Dublin to alleviate traffic on the M50. It may, however, be further away, which will perhaps benefit the interlying areas but which will contribute very little to alleviating traffic on the M50.

I would not like to prejudge what will emerge from the study by saying that it will or will not be of benefit in terms of reducing traffic on the M50. The NRA would expect the consultants to look at the issue and give advice as to the alternatives of building relatively close to Dublin, thereby alleviating M50 traffic but perhaps contributing to urban sprawl out towards the second road, or building much further out and giving better regional development to interlying areas but perhaps not assisting in terms of alleviating pressure on the M50.

We will not have that study until next year. If there is a decision to proceed, it will be a long time after that before we get to the point of having specific routes.

Chairman

Has the NRA included a reporting timeframe in the tender so that the consultants must report within a specified period, such as, for example, six or nine months or whatever?

Mr. Barry

We will have made an indication but we will also be asking those who tender how long they think it will take them to carry out the work in question. If those who tender are in the position to do it faster than we think, we will have the report earlier. If, however, the best qualified people tell us that it will take a longer period of perhaps ten or 11 months to do it, we will give them the time to do it properly.

Chairman

Does the NRA have figures relating to the envisaged volume of traffic coming from the port tunnel on to the M50? Would the NRA expect, 8,000 to 10,000 extra vehicles a day?

Mr. Gerard Murphy

As a rough estimate, we anticipate that approximately 7,000 heavy goods vehicles, HGVs, will be taken through the tunnel per day and they would not all distribute on to the M50. There would, therefore, be fewer than 7,000 vehicles.

Chairman

Where does Mr. Murphy expect the HGVs to go?

Mr. Murphy

Some of them will go up the M1 corridor and some will distribute on to the M50. I do not have the splits between them but I would expect that fewer than 7,000 heavy goods vehicles from the port tunnel will be attracted to the M50.

Deputy Eamon Ryan

Am I correct that the modelling figures do not include the additional traffic that would come from the location of a store such as IKEA on the interchange of the M50? Would that not also bring additional traffic of approximately 10,000 vehicles per day on to the motorway? Has this been taken into account?

Chairman

The proposed IKEA store is not a definitive site, so I think the question does not arise.

Deputy Eamon Ryan

The Minister for the Environment, Heritage and Local Government seems hell bent on IKEA being developed there.

Senator Norris

The witness should be allowed answer the question.

Chairman

I do not think the answer is available.

Mr. Barry

The studies, generally speaking, are not predicated on any one individual commercial enterprise.

Chairman

The next question——

Mr. Barry

I did not respond to Deputy Kirk's question on barriers. We have revised our policy and I refer members to pages 1 and 2 of the written documentation, which contains a little more detail. We have standardised the performance requirements which leave it open to individual contractors when they are bidding on the design-build projects to come up with alternative solutions that meet the performance requirement on barriers. However, all of those must comply with the European standard. The latter is also referenced in the documentation. Members will see a few variations in the barriers on roads. These depend on what is most cost-effective for contractors operating in different parts of the country at particular times.

Deputy Kirk

Why would there be a variation from one location to another?

Mr. Barry

The price of steel might be higher this month than last month and they are choosing between concrete and steel barriers. That is one of the aspects that will come into consideration.

Mr. Kirk

What about the overall safety issue?

Mr. Barry

There is a safety performance standard which the barriers must meet. However, there are different ways of addressing that standard.

Chairman

I am aware that concrete barriers have been erected. For example, there is a concrete barrier outside Mullingar at McNean Bridge. At other locations, there are steel barriers.

Mr. Barry

That is correct.

Chairman

Is there any definitive information as to which is the better of the two?

Mr. Barry

They both meet the EU performance standard.

Chairman

Standards can be met but is there information as to which is more successful?

Mr. Barry

There are many papers on different styles of barriers and the pluses and minuses of each type. We have been at pains in the notes we have supplied to the committee to express the view that there is no such thing as a barrier that gives absolute safety in any circumstance. Barriers, in themselves, are hazards and the original thinking behind having a wide median without barriers was that in the region of 85% of vehicles that go on to a median recover and continue back on to the road without any accident. By putting in place a barrier, vehicles would be put in a situation of possibly coming into contact with it. Barriers, depending on the angle of impact as well as other issues, introduce different levels of danger to motorbikes or to cars. There are a great many technical papers on the issue.

Chairman

There are three types of barrier, namely, wire, steel and concrete.

Senator P. Burke

I have a brief question. If a design-build contract has been agreed, is it not the case that it will stand and that the price of steel will not matter to the National Roads Authority? Why would it affect what was to be put in place? If a design and build contract is agreed and the price of steel increases, will the contract price change? Do contracts vary?

Mr. Barry

No. The point I am making is that when a contractor bids for work, he or she has a choice in terms of providing a concrete or steel barrier provided it meets performance requirements. It is at that point he or she will be exercised by the price of materials. We are prevented by the European Union from discriminating between steel or concrete. We must supply a performance specification and allow contractors to submit alternatives.

Deputy Shortall

One of the main functions of this committee should be to oversee spending on major transport projects. If we deal with everything at the same time, nothing will be closely examined and it will be difficult to get to the bottom of things.

Chairman

I agree with the Deputy. I suggested that the joint committee would have no problem with setting aside a specific meeting to deal with the issue of public private partnerships only. I have no problem with the Deputy dealing with it briefly today but if she wishes to discuss it in detail, we should do so at a separate meeting before the summer. I do not wish to put it on the long finger. The Deputy can enter into a general discussion today.

Deputy Shortall

I wrote to the Chairman three weeks ago requesting that this meeting be devoted to a discussion of the scheme. We could learn much by examining one scheme and getting to the bottom of the matter in terms of cost.

Chairman

The project was examined by some members of the committee prior to Christmas. We learned a great deal on-site that we would never have learned here.

Deputy P. Power

When Deputy Shortall made her suggestion, I immediately agreed that the project was worth examining but only in the context of the overall public private partnership programme. We either do it today or set aside a specific day. I have no problem with discussing the issue in general. We could then pick a particular example to see how it applies to a particular project. I accept we need time to discuss public private partnerships.

Chairman

I am suggesting that if the joint committee is in agreement, we set aside a specific day to deal with the issue of public private partnerships. Those who have not had the benefit of examining the N4 should do so to see the work done in a very short time. Those of us who are monitoring the project on a weekly basis have witnessed the progress being made.

Deputy Shortall

I do not doubt that. However, I am interested in finding out how much the project is costing.

The Government is promoting the use of public private partnerships for motorway projects. We are told they are more cost effective and represent better value for the taxpayer. The difficulty is that we do not factor in the fact that taxpayers — motorists — will pay tolls on such roads for the next 30 years. It is hard to know at the start of a project whether it is in the public interest to procure a motorway by way of a PPP or through traditional methods.

At a meeting last year, in discussing the Kilcock-Kinnegad bypass, the Chairman asked Mr. Tobin how much the scheme would cost the NRA. Mr. Tobin referred to the three €60 million payments involved but Mr. Murphy cut across him to state the scheme was costing €60 million. I am informed, in correspondence from the NRA, that the project will cost the State in excess of €200 million. I am asking Mr. Barry to tell the joint committee what the total cost of this scheme will be leaving aside revenue from future tolls. What will be the total cost of developing the scheme and how much of the total cost will the private sector bear? We have been told the consortium, Eurolink, will raise a loan of €200 million. How much will the public sector — the taxpayer — contribute to the overall cost?

The NRA document which includes all external costs states the developers will pay corporation tax. As I understand it, that is not true. I also understand the Government has made special provision to allow the developers to write-off the corporation tax element of the scheme against construction costs. We are trying to establish how much such projects are costing? Are we getting value for money? Is it in the taxpayer's interest that they are procured by public private partnerships or is this simply another scam to enrich the private sector?

Mr. Barry

I will answer the Deputy's questions as best I can. With respect, she is mistaken on her first point. Tolls are taken into account when doing a value for money analysis.

Deputy Shortall

I did not ask about value for money. I asked Mr. Barry to give the joint committee the cost of construction of the project.

Mr. Barry

I will get to that point. However, the Deputy's first point was that the NRA did not take tolls into account; it does.

Deputy Shortall

Not in terms of value for money. I am asking Mr. Barry to give us the cost of building the motorway.

Mr. Barry

I will come to that in one moment.

Deputy Shortall

Mr. Barry had notice of this question.

Chairman

The Deputy should allow Mr. Barry to answer her questions. She can then ask further ones.

Deputy Shortall

I tabled this question to the Chairman three weeks ago. I presume it was forwarded to the NRA at the time.

Chairman

If the Deputy reads her notes, she will see that that was done. The specific quotation outlined by her is also contained in the reply.

Deputy Shortall

Mr. Barry said he would get the figures for me.

Chairman

The Deputy should allow him to reply.

Mr. Barry

The costs associated with the scheme are made up of a combination of scheme development, land and other costs which are set out in tabular form on page 15 of the written reply. The figure for scheme development and land costs is €83 million. The NRA, through direct payments in respect of construction and further payments in respect of operating costs, is contributing a total of €151 million. The revenue share which the NRA expects to secure from Eurolink comes to €84 million, leaving a net NRA outlay to Eurolink of €68 million. Eurolink will make payments amounting to €58 million to State bodies other than the NRA, leaving a net——

Deputy Shortall

On what is that based?

Mr. Barry

It is based on its contributions in taxes, rates and VAT.

Deputy Shortall

As I stated, the developers will be allowed to write-off corporation tax against construction costs.

Mr. Barry

I expect that, as in any business, it will write-off its costs against revenue before arriving at a profit figure. The NRA believes the developers will pay tax on their profits, although I may be mistaken. The net Exchequer outlay will be approximately €10 million. The NRA outlay amounts to €151 million. The net Exchequer outlay, on the same basis, amounts to approximately €93 million. The total cost of the scheme to the toll road company — this amount is not included in the figures provided — will be of the order of €642 million. Members will appreciate that the company is carrying the outturn risk and I cannot say exactly what the cost will be. It may cost more or less depending on how well construction goes and on running costs.

Deputy Shortall

What is the company's revenue income?

Mr. Barry

I will get that figure for the Deputy.

Deputy Shortall

The figure for the State is included in the document and it is only fair the figure for the developers should also be included.

Mr. Barry

I am not unwilling to include it; I will give it to the joint committee. It is approximately €400 million. All of the figures for costs, including cost projections, are based on the traffic levels included in the environmental impact statement.

Deputy P. Power

Is the figure of €400 million over the term?

Mr. Barry

Yes, over the term. It is calculated as net present value at current costs over 27 years.

Deputy P. Power

I do not wish to interrupt the line of questioning. However, €400 million plus the net State contribution comes to less than €600 million. Is that correct?

Mr. Barry

That is a different question. It may do so. On the face of it, this seems to be a good deal for the State. The developer may use a different discount factor than the Department of Finance when looking at future cash flows. When the NRA refers to the toll revenue to the developer at present values, it uses the discount levels as prescribed by the Department of Finance for these exercises.

Deputy P. Power

It appears to be less than the total projected cost to the developer.

Mr. Barry

Yes.

Deputy P. Power

Ostensibly, it appears to be uneconomic for the developer to proceed on that basis.

Mr. Barry

At first glance, this is a good deal for the taxpayer. The Deputy might recall that the project was given an international award for securing a good deal for the public by a body with no vested interest in the project. The people concerned examined it and thought "Holy cow".

Deputy P. Power

Is this the award Mr. Barry referred to in answer to my question?

Mr. Barry

Yes.

Deputy P. Power

That is fine.

Deputy Shortall

It is strange that Mr. Barry includes revenue income when I asked him about basic construction costs. The joint committee is discussing whether it makes more sense to procure through the traditional method or by way of public private partnerships. In February 2004, Mr. Murphy's reply put the cost at €60 million and he went on to note that money will also come back from the NRA's share in revenues. Discussing the State's toll revenues while not including them for the developers confuses the issue. Mr. Barry has mentioned a figure of €642 million. Can he tell us how that cost will be met, given that EuroLink is raising a loan of €200 million?

Mr. Barry

No, I cannot. It is up to the concessionaires to work out how much to invest by way of equity, what to borrow and where to borrow. I cannot provide the joint committee with the details.

Deputy Shortall

Of that total cost of €642 million——

Mr. Barry

That is the NRA's estimate of its costs.

Deputy Shortall

Right.

Mr. Barry

Its costs may be higher or lower.

Deputy Shortall

Mr. Barry stated that the net cost to the State of the motorway construction, including land costs, is €235 million.

Mr. Barry

In the 2003 costs, the net cost to the State, including land costs, after allowing for revenues returning to various arms of the State, was calculated at €93 million. The latter sum does not include the toll revenue that will be paid by the public.

Deputy Shortall

This figure is difficult to accept because correspondence which I received from the NRA refers to a total project cost of €550 million. I have that correspondence to hand. It states that the total cost is €550 million and that the State will pay €166 million, excluding land costs, which come to €83 million. Hence, it appears that the cost to the State is in excess of €230 million.

Mr. Barry

Yes, before the tax take and other revenue takes from the project are considered. This brings the cost back to the figures provided by the NRA.

Deputy Shortall

However, there will not be a tax take.

Mr. Barry

There is a tax take associated with the costs.

Deputy P. Power

There is a revenue share from EuroLink.

Deputy Shortall

I am not talking about——

Chairman

There is a clear Revenue take which goes to the State.

Deputy Shortall

I am not talking about that. I am referring to the construction cost. The revenue take amounts to——

Chairman

I should not answer the Deputy's question for her but she has asked what was the net cost to the State. The net cost is the cost less any tax accruing to the State from the developers and others. Potentially, it includes capital gains tax which may be due on foot of the land acquisition. The State will take back tax on a number of fronts including VAT, PAYE and corporation taxes. The figure has been provided and Mr. Barry has answered the question. With respect, the project would not have won an international award for competence and value for money had it not been done this way. Moreover, had it been carried out any other way, its progress would have been much slower. The fact that it will be completed ahead of schedule is a tribute to both the NRA and the contractors.

Deputy Shortall

I can see the Chairman is a big fan of PPPs. That has been clear from the time he accepted this meeting.

Chairman

I am not. However, I am a fan of ensuring that people in the west have access to Dublin.

Deputy P. Power

I want Mr. Barry to clarify a point because some confusion exists. Is it the case that the revenue share due back to the NRA under the concessionaire agreement is completely separate from money due to the Revenue Commissioners?

Mr. Barry

Yes it is. The money back to the State sector includes——

Deputy P. Power

This reduces the cost.

Mr. Barry

It does. It includes irrecoverable VAT which remains in the State's hands, corporation tax on profits and rates payable to the three local authorities to which rates will be paid in this scheme.

Deputy P. Power

I have two questions. The figures are based on projections which, as we all know from the experience with the M50 and the West Link toll bridge, are an inexact science. Revenue over the concessionaire period may substantially exceed the €400 million covering their construction costs. A doubling of that sum is not an unreasonable possible projection when one takes the increase in traffic volumes over the last 20 years into account. In that instance, what are the provisions in the concessionaire agreement concerning super profits?

Mr. Barry

The revenue to the concessionaire is capped. I understand that approximately 80% of the excessive revenue at peak levels would revert to the State in one form or other. I give an approximation because while the Deputy wants the exact answer, which is available, I do not have it to hand. I would happy to provide the joint committee with a written reply on that topic.

Deputy P. Power

Mr. Barry used the term "excessive revenue". Was he referring to traffic-driven excessive revenue or toll-driven excessive revenue?

Mr. Barry

If the traffic volumes turn out to be much higher than projected, it means the State will be the primary beneficiary. The company will not enjoy "super profits" and the State will receive extra revenue.

Deputy P. Power

How is that calculation made in the agreement? I completely accept Mr. Barry's assurances and I do not doubt them. However, similar assurances have been given in the past and super profits were made in the first PPP. Members all accept that it has turned out to be a very bad deal for the State. This particular deal has been done but with the benefit of hindsight and Mr. Barry's presence, the joint committee is trying to ensure that a similar situation does not develop in the future with other deals. How is the cap calculated?

Mr. Barry

It is tied by a fixed formula. The formula is fixed in the contract and is tied to traffic levels.

Deputy P. Power

Is Mr. Barry stating that if the traffic levels exceed the environmental impact statement's projected figures——

Mr. Barry

As the traffic levels increase, a greater proportion of the toll revenue collected accrues to the State.

Deputy P. Power

I apologise for going back and forth over the issue but is Mr. Barry stating that the tolls could potentially decrease in order to cap the revenue due to the concessionaire?

Mr. Barry

As a separate issue, I imagine that the tolls could decrease. However, that is not part of the revenue-capping scheme. The revenue-capping scheme simply increases the proportion of the revenue going to the State rather than staying with the company.

I wish to make a number of other comments on this issue. I appreciate the frustration of people outside the process who look at what is going on and try to understand all the different figures. It is a complex process as we take figures and future revenues and discount them to present values. We examine revenues to the NRA or cost to the NRA and to the State as a whole and so on.

Perhaps some members feel that the NRA is not being scrutinised in this regard. I remind them that we begin with outside consultants, who are all competent in their own right. They help us perform the initial analysis. We must also get by the Department of Finance and the Office of the Comptroller and Auditor General. Neither body is short of people with expertise in this area. They are not short of people willing to put the NRA through the wringer, particularly in light of all of the figures at their disposal.

We do not put all of the cost data in front of this committee or into any public arena because of confidentiality issues. However, we place information regarding every last euro and cent before the Comptroller and Auditor General. Over and above that, the European Investment Bank has elected to participate in three out of three schemes that the NRA has launched. The European Investment Bank provides low cost financing to toll projects — particularly those involving toll roads — if it is satisfied that they meet EU environmental regulations and other regulations and satisfy the Union that they represent value for money for it. The bank has its own criteria; it does not use the Department of Finance guidelines but has completely separate guidelines. The bank carries out a detailed analysis and in three out of three cases it has decided to invest. This does not guarantee that the bank will invest in all future schemes but it is an additional point of reference for anybody who wonders whether anyone examines what we do and passes judgment on it.

Deputy Shortall

Just to correct the record, I received a confirmation from the Revenue Commissioners that the construction costs for this particular project can be fully offset against corporation tax over a 30-year period. It is not accurate, therefore, to include the potential tax revenue from this project in terms of the cost to the State.

One cannot discount the contribution of the motorists who will be using this scheme during the next 30 years and the effective cost of this project to taxpayers. If Mr. Barry is saying that the developers of this project stand to make a profit of €400 million over the next 30 years, that figure is a cost to the taxpayer who will have to meet it during the same period. This is the kind of calculation that must be done by the committee or somebody in the House to establish what is in the public interest, whether we are getting value for money or whether the entire PPP approach to these projects is merely a way of putting money into the hands of private developers.

Mr. Barry

I believe I said that the figure of €400 million was a revenue figure rather than a profit figure. As we all appreciate, there is a world of difference between these two figures. The committee should bear in mind that the developers in these schemes must win them competitively. They are not in a position to put in enormous potential profits until they win the project.

Deputy Shortall

The same thing was said about the West Link.

Chairman

Mr. Barry did not interrupt when Deputy Shortall put her question.

Deputy O. Mitchell

I apologise for my late arrival. I was unavoidably detained and I intended no discourtesy to the committee as I had put down a number of questions.

My first question relates to the Dublin Port tunnel overrun, which I am sure Mr. Barry will accept is enormous. I appreciate that it went through various manifestations and that the only valid comparison is with the contract price, which is eventually signed. The overrun has increased from just under €500 million to €750 million in five years, so it is substantial and almost inexplicable. I am sure, however, that it can be explained. On page 12 of Mr. Barry's explanation, it says that €449 million was only the main contract. Other costs involved matters such as design, supervision. I believe the document says "design supervision". Is that what was intended?

I understood that this was a design and build contract so the tender price would have included the cost of design. Outside of those costs and bringing the figure up another €100 million are things such as land, insurance and utilities. I am not sure whether design is included in that context. Even on that €500 million figure, the cost is still up to €755 million. It appears to be almost entirely due to a change in working hours. I find this difficult to believe. I accept that there may have been unforeseen circumstances found by the contractor and that things turned out to be more complex than the contractor envisaged. If it was a design-build contract, however, is that not the contractor's problem? Will the taxpayer be forced to pay the €250 million overrun or will the contractor be obliged to foot the bill in that regard?

Matters such as the interface between DART rail lines and the tunnel made the job more challenging. However, these difficulties were known at the outset. Surely they should have been factored into the design and the cost of the tunnel. If they were not taken into account with regard to the cost of the tunnel, is that not the contractor's problem? Is this tunnel, which is continuing indefinitely and becoming an albatross, good value for money? I ask this because the tunnel appears to be generating additional costs, apart from those relating to the overrun. There is considerable concern about the fact that it will spew huge quantities of traffic out on to the M50-M1 motorway interchange, which will have to be upgraded when traffic begins exiting the tunnel. I am, of course, assuming that the tunnel will be completed in 2006.

At its other end, the tunnel appears to be generating a need for an eastern bypass. From a rail perspective, we hear that although we are about to spend €750 million to take traffic off the quays, there will be a need run a tunnel under them in order for trains to pass. I wonder whether the port tunnel was a good idea. Will Mr. Barry explain the overrun?

Mr. Barry

I will cover as much of it as I can. Will Deputy Olivia Mitchell remind me if I miss some of the points she raised?

Regarding the cost overrun and the cost estimates of €535 million in 2000, the straight inflation in land costs and construction cost indices bridge some of the gap between it and the current estimate of over €750 million.

Deputy O. Mitchell

Was this not a fixed price contract?

Mr. Barry

No, the contractor is entitled to avail of cost increases-price variation clauses.

Deputy O. Mitchell

Even though it is a design-build——

Mr. Barry

Even though it is a design-build contract. The current design-build contracts involve the contractors absorbing inflation up to approximately a 5% level in the construction costs. This particular contract, which was an earlier model, did not.

Deputy O. Mitchell

Is the contingency fund that is being set up intended to cover all the increased costs or will the contractor bear some of them? It appears that the design and pricing of this job was done badly.

Mr. Barry

Perhaps I should invite Deputy Olivia Mitchell to attend some of the meetings we are having with the contractor at present. The job is still 15% to 20% over budget, even when we allow for inflation. I will not suggest that there are not major cost overruns on the project. It was a design-build contract and, consequently, the contractor took on considerably more risks than would otherwise have been the case. Some of the issues that we referred to here caused the contractor and Dublin City Council, which is managing the contract, considerably more trouble than they would have expected when they started. The relationships and the working practices between them and Irish Rail proved to be very difficult, particularly when there was some subsidence of earthworks around the rail track. Special measures had to be put in place for safety reasons to ensure that the DART and the train lines could keep functioning safely. One can anticipate some of that and allow for it but only to a certain degree.

The changes in working hours did not account for all of the cost but they contributed to it and to delays. All of these factors go into the mix. DCC and the contractor are in negotiations at present about the final account. The negotiations may be fruitful and it may be worked out fairly quickly or it may end up in long-drawn out arbitration procedures. I do not know what will be the outcome. We have made an assessment as to where we think the costs will end. In our assessment, we have allowed for what we would see as legitimate entitlements of the contractor, notwithstanding the contract under which he was operating. They are not allowances for everything the contractor is seeking. Equally, however, they are perhaps more than one might say he is strictly due.

Deputy O. Mitchell

Did Mr. Barry say the overrun was 20%?

Mr. Barry

No.

Deputy O. Mitchell

I do not expect him to settle the contract here.

Mr. Barry

I do not want to discuss detailed figures in respect of the contract or final account but significant moneys are in dispute at present. The matter is being resolved and the contractor will get that to which he is entitled but no more. That does not account for the 20% but it is part of it.

Deputy O. Mitchell

What does the 20% represent?

Mr. Barry

When the €535 million is adjusted for inflation, what is left is a cost overrun in the order of 15% to 20%. I acknowledge that this is a significant increase. However, the rise from €535 million to €750 million is not all represented by the overrun.

I do not believe the building of the Dublin Port tunnel necessarily requires the construction of an eastern bypass. If the tunnel is built and is seen to be a great boon, political pressure to build an eastern bypass might increase. However, people might be of the view that because the tunnel cost so much money another construction project should not begin in a hurry. The fact of the tunnel's existence does not mean that an eastern bypass is a good or bad thing.

Deputy O. Mitchell

Those arguments are being made because large quantities of traffic will be brought into the port area.

Mr. Barry

Yes, those arguments are being made. The critical factor is that this proejct was primarily designed to move traffic in and out of the port and to transfer it on to the motorway system. It will do that. Arguments are being made in many quarters that it would be even better for the port if another tunnel was built to take traffic south.

Deputy O. Mitchell

Away from the M50.

Mr. Barry

Or perhaps to the other end of the M50. The latter would be convenient for the port. Whether it is worth trying to further facilitate the port by incurring the cost involved is a major question. I appreciate that traffic other than that destined for the port would be facilitated and that there would be benefits but the costs associated with building another tunnel would be huge.

Deputy O. Mitchell

Has any analysis been carried out in respect of that matter?

Mr. Barry

Yes, we have commissioned studies and given some information to the Department of Transport. Projects of this nature depend on when they are going to be built and what extra costs will be involved when the various risks have been factored in. The cost of an eastern bypass would be measured not in hundreds of millions but in billions of euro. It is an open question whether that money, if available, would be best spent on that project or whether it would be better to invest it on all the other good projects that could be initiated throughout the country. We are not particularly pushing for an eastern bypass, nor are we saying it should not be done. This is more a political question than a matter for decision by the NRA.

Deputy O. Mitchell

I suppose it would be hugely inappropriate to ask about the level of the NRA's contingency fund.

Mr. Barry

It is not unreasonable to ask but, given that we are in commercial discussions at present——

Deputy O. Mitchell

Mr. Barry will not answer it.

Mr. Barry

No, I will not. I apologise.

Chairman

When is it expected that the port tunnel will open?

Mr. Barry

I could offer several dates, all of which have moved in the last few months. I understand that the opening will be in April or May of next year. The contractor is committed to have the civil construction completed by December of this year. We are of the view, without prejudice to any discussions with him, that there may be an overrun of a few weeks. The major issue thereafter is that there are a wide variety of mechanical and electrical systems which must be operational and functioning in order to facilitate the safe operation of the tunnel. Getting these — and, in particular, the software that controls them — commissioned is somewhat like asking about the length of a piece of string. We have been given indications that the tunnel might be open as early as spring but I think that is unlikely. In my opinion, it may be June before the tunnel opens.

Chairman

Any date prior to that will be a bonus?

Mr. Barry

Yes. We would like it to be much earlier but there in indicating a date now and another at some later stage.

Deputy Healy

The document states there are five different projects in progress or at planning stage in respect of the N24. Am I correct in stating that only the short stretch at Cahir is catered for under the current roads programme?

Mr. Eugene O’Connor

: That is correct.

Deputy Healy

Does that programme extend to 2010?

Mr. O’Connor

The date for the completion of the programme is 2009.

Deputy Healy

The other fourprojects are not included in the current programme but they are the subject of planning applications at present. Is there any possibility that a project smaller in scale than those involving the Carrick-on-Suir and Tipperary-Bansha-Oola bypasses could be progressed in the more immediate future? The latter projects are critical parts of the N24 upgrade and, as matters stand, it will be 2010 or 2012 before they commence.

Mr. O’Connor

With regard to the Carrick-on-Suir bypass, we have considered a shorter bypass scheme which would cost less and be delivered earlier. However, we have found that it would not be feasible on foot of the proximity of the railway line to the road. We would be obliged to provide an additional railway crossing at very high cost. The ultimate scheme would not necessarily have to cross the railway at the same point. So it would prove uneconomical provide a shorter bypass at Carrick-on-Suir. We have not considered the detail of the other scheme to which the Deputy referred but we can do so.

Overall, we are progressing the N24 schemes as far as possible through the planning process and in terms of the preparation of contract documentation. They will placed be on a standby list and will be ready to proceed if additional funding should become available from whatever source.

Mr. Barry

If we have cost underruns on some of the major inter-urban projects, that money will be used to advance standby schemes. If things go well in the next few years, some projects which, theoretically, might take four to six years to progress might be brought forward. It is our ambition to bring them in as fast as possible.

Deputy Healy

Mr. Barry may hope to do that but is there any realistic indication that it will happen?

Mr. Barry

We have enough hostages to fortune without offering any more.

Deputy Kirk

Has a detailed cost benefit analysis been carried out in respect of the east-west link?

Mr. Barry

I do not think so.

Mr. O Connor

Matters have not progressed to the level that would allow a cost benefit analysis to be carried out on the east-west link.

Deputy Kirk

Can we anticipate that it will reach that stage at some point?

Mr. O’Connor

There is no immediate or even short to medium-term prospect of that happening. I am looking three to four years down the line in that regard. The National Roads Authority has a substantial programme of works, including major inter-urban and other schemes, to deliver. I do not see a prospect of that scheme being advanced in the medium term.

Deputy Kirk

In the longer term, is it a realistic project that will be considered?

Mr. Barry

It is not that we are unwilling to consider schemes. It should not be taken that the NRA will not look at particular schemes; we will consider all schemes. There is a waiting list, if I might call it that, of important standby projects. Some of these projects have already been referred to and it has been established that they are definitely needed. If funding was available, we would commence work on these projects tomorrow. However, our programme of work is going to occupy us for some years. As we make progress on the latter, we will carry out studies, traffic analysis, etc., in respect of potential schemes, such as that involving the east-west link, and if a cost justification can be arrived at, they will be placed on the standby list. We have, however, many more projects on hand for the coming years than we are in a position to carry out. It would be unfair of us to hold out an expectation that the project to which the Deputy refers will be addressed further in the short term.

Deputy Kirk

Do the criteria for cost benefit analyses for projects the NRA is examining vary? Do they depend, for example, on geographic factors? What are the core elements that would come into consideration when deciding on criteria? Is there a variation in the criteria for deciding cost benefit?

Mr. Barry

There are specific requirements for cost benefit analysis. The Department of Finance sets out a list of guidelines that states when analysis has to be carried out and what criteria are to be used. I am subject to correction by either of my colleagues but I do not believe these criteria are dependent on where a project is located. There are other criteria that affect the selection of projects for advancement.

We receive Garda Síochána accident reports every year. We analyse these and they raise issues of safety throughout the country. In that context, our first priority is to try to address accident blackspots. If accident rates remain at existing levels it is because we obviously do not succeed in addressing everything. After that we look at economic analysis, which includes cost benefit, traffic analysis, the regional divide and the spatial strategy. All these are considered as we decide the order in which projects will progress. We try to strike a balance between the BMW region and other regions.

Chairman

Has a decision been made on the route? It is obvious that nothing has been done. In the reply it is stated that there is a certain preferred route corridor and that work on the corridor is currently being advanced to scheduled improvements in the national development plan. As various questions have been raised on this matter, is it possible to get a copy of the suggested route?

Mr. O’Connor

Yes.

Chairman

I want to raise one other matter of a parochial nature. The N16 would be part of any proposed east-west corridor because it is the road that serves the west and Northern Ireland. There is a definite need for a link to the M1 as early as possible. Certain projects on the N16 that were to be done between now and 2009, including the bypass at Manorhamilton, have been postponed. Perhaps a member of the delegation could explain the position in respect of this matter.

It is stated that the NRA takes into account road accident figures for projects such as the N16. Everyone is aware that there have been a number of serious accidents on the section of the N16 that runs from the Border to Manorhamilton and on to Sligo. Thankfully, not too many of these have been fatal. Has this been taken into consideration, particularly in light of the high volume of heavy goods vehicles? There is going to be a major disaster on this road.

Mr. Barry

We hope not.

Chairman

Yes. Anyone who knows the road is aware that while it is listed as national primary route, some regional roads are of better quality. It is seen as a road that is neglected by the NRA, despite the authority's best efforts.

Mr. O’Connor

I would like to respond to those points. We specifically mentioned that the N16 will form part of a west-east route once its path is determined. Work is ongoing, albeit at a slower pace than one would like. We are doing a regular tranche of pavement work every year on the N16 and the design of the Manorhamilton bypass is under way. The difficulty with the west-east route is that once one comes towards Cavan, it leaves the national primary and national secondary network.

Chairman

It enters Northern Ireland.

Mr. O’Connor

Yes, it enters Northern Ireland and open country.

Chairman

If one considers the Northern Ireland section of the road, it is going to be 15 miles. It is approximately 15 miles from Aghalane Bridge to Blacklion. There is sufficient political support in Fermanagh to make progress on this issue. The same problem exists in Fermanagh, the people of which people need the road for access to Dublin in the same way others need access to Larne. Perhaps the counterpart of the NRA in Northern Ireland could assist in advancing this matter. There is funding for these kind of projects and, if a combined effort were made between the NRA and the roads authority in Northern Ireland, it could be directed towards a project of this nature.

Mr. O’Connor

We will do that. As requested, we will also provide a copy of the report carried out some years ago and a copy of the proposed routes.

Chairman

There are problems on the N16. Route selection is expected to be completed this year on the section from Manorhamilton to the Border. It is causing many problems for locals trying to build houses.

Deputy Kirk

On route corridors for intended routes, is there a protection policy implemented by the NRA in conjunction with the local authorities vis-à-vis planning?

Mr. O’Connor

Yes.

Deputy Kirk

Is that in place on this route?

Mr. O’Connor

No. We are at an earlier stage of route selection now. We have a broad range of options at this stage. It would be premature to freeze routes at this stage in the scheme. We are confident that options will present themselves in any event, without the NRA having to control development unnecessarily.

Chairman

Is now not the appropriate time to try to fix a route so that problems will not be encountered in terms of development taking place on that route? Does the NRA know the cost of the providing route selection for that road?

Mr. O’Connor

Bearing in mind that it is a long scheme, I think the figure would be a number of millions.

Chairman

I ask that because millions could be saved in the long term if the route were selected. On other projects, relatively new properties had to be removed at enormous cost.

Mr. Barry

Could we undertake to respond in writing when we have had the opportunity to examine and discuss this issue?

Senator P. Burke

I am delighted that the Charlestown bypass has been given the go-ahead and I hope the contractor will be on-site in early 2006. When does Mr. O'Connor envisage this being finished? The status of work on the N5 from Castlebar to Westport has been reclassified. I appreciate that Mayo County Council gave a higher priority to the Charlestown bypass in order to improve road access to the county. I did not realise that the Castlebar to Westport route was given a lower status than the Bohola to Ballina route. From what the NRA says, it would seem that the Westport to Castlebar route is perhaps ten years away. What is the position? Everything is ready and yet the Foxford to Bohola scheme is not even at compulsory purchase order stage. When will the Westport to Castlebar route be reconsidered? Who recategorised it?

Mr. O’Connor

On-site work on the Charlestown bypass will commence in early 2006 and is due for completion in early 2008. The priority afforded to the Charlestown project and the Ballina-Bohola route — phase 2, above Westport-Castlebar — reflects the strategic importance of those routes. The latter is more a commuter link than a route for long-run strategic traffic.

Senator P. Burke

The Castlebar to Westport route had a high priority and then Mayo County Council gave a higher priority to the Charlestown bypass in order to have it recategorised. The busiest stretch of road from Westport to Maynooth is the Castlebar to Westport route. From a tourism point of view, it carries a high traffic volume. Who has suggested it is a lower priority than the other route?

Mr. O’Connor

The NRA and Mayo County Council are in agreement on the priority.

Senator P. Burke

When will the Castlebar to Westport route be progressed to the next stage?

Mr. O’Connor

The statutory documentation is complete and it is on a standby list for completion by 2010. If it does not happen by then, it will happen very shortly afterwards.

Senator P. Burke

Is it ten years from completion?

Mr. O’Connor

No, it is six or seven years from completion.

Senator P. Burke

I thank Mr. O'Connor.

Deputy P. Power

I thank Mr. Barry and his colleagues for coming before the committee and for their document. I have read the document, including the replies concerning the high quality dual carriageway and the western corridor. The latter aspect relates to a motorway crossing the north of Limerick and our guests advise us that it is not under consideration. Who makes these decisions? People in the mid-west would see the northern motorway as being of critical importance because it would fit in with the national spatial strategy, the objective of Limerick-Shannon operating as a gateway city, the proposed development of Shannon Airport and proposals to provide access to the latter from the midlands. Who is responsible for deciding whether a project should proceed? How does the NRA formulate its decisions in terms of the projects that should move forward?

Mr. Barry

The process begins with the regional design offices, RDOs, which function as groupings of the local authorities. They are not just involved in executing projects under way but also with examining forthcoming projects in their relevant counties. They devise the various ideas they would like to undertake. These projects are married to the original roads needs study, which is now old but which still helps to prioritise what is needed and when. Much of the traffic data is updated when new data is made available to us but the road needs study is still a point of reference. We go forward and back with the road authorities and local authorities. Taking Limerick city as an example, we are ad idem with those road authorities that the southern ring is of much higher priority than putting a motorway to the north of the city.

Deputy P. Power

Now that this is virtually in place and the final section will commence shortly, does Mr. Barry see the NRA's role as saying it believes something fits into the overall picture?

Mr. Barry

Yes. Beyond that, we and the RDOs have examined projects that might go into a ten-year plan. We have shared our thoughts on this matter with the Department of Transport, which will have shared them with the Minister. On the issue of potential funding over the ten years and beyond, the projects that may be involved are part of the mix and the discussion. No one individual says that he or she has decided that something is going to happen. We work to achieve a consensus between the RDOs, the authorities, the Department and the Minister.

Deputy P. Power

The main aspects of my question relate to the public private partnerships, PPPs. We discussed a particular project earlier but I wish to refer to PPPs in general. A programme was recently broadcast by RTE concerning the roll out of national roads infrastructure. The programme could be described as being critical of the NRA in regard to the latter.

Chairman

The authority must be successful or people would not be criticising it.

Deputy P. Power

Does Mr. Barry think the programme put forward an objective representation in respect of the roads programme?

Mr. Barry

Overall, I found the programme interesting and entertaining but I am not sure that it qualified as true investigation. The programme rediscovered a fact about the NRA that has been well known to this committee, the Committee of Public Accounts, the NRA and newspapers for four or five years. I refer here to the differences between original estimates for projects dating back to the mid-1990s and current levels. The programme went further back and found other estimates that were produced but not by the NRA, as the NRA did not exist until 1994. The programme revealed estimates that were produced in the 1980s and declared that current projects are costing more than was estimated at that time. I do not know how this could be regarded as either an investigation or a constructive criticism.

Deputy P. Power

Mr. Barry said the programme could not be described as a true investigation.

Mr. Barry

I say so because the investigation did not discover anything about the NRA that is new.

Deputy P. Power

In Mr. Barry's opinion, was the analysis or research deficient?

Mr. Barry

Not much research in any real sense of the word was done. The programme's makers asked us for data on alternate costs for projects, which we were happy to give. We have much of the information on our website. We have been through the mill with the Comptroller and Auditor General, the Committee of Public Accounts and this committee regarding original estimates and outturns and what is involved therein. The RTE investigation did not add anything. Saying that projects cost far more than was originally believed is not untrue. The programme's makers were right because projects are costing much more than initially estimated. No one here suggests otherwise but it is old news and was not a discovery of any sort.

On the matter of toll revenues, to take information we have already published on our website for the world to see and to say they "discovered" it is stretching of that word.

Deputy P. Power

Bearing that in mind, would Mr. Barry describe the programme as lacking balance?

Mr. Barry

As a programme, I would have been happier with it if it had said a little more than it did on certain issues. For example, RTE produced a gentleman from Denmark which it claimed is an international expert. I had never heard of him but I asked around, obtained a reference and checked some of his publications. I agree with him when he wrote explicitly that the validity of comparing initial estimates with final costs, unless adjusted for inflation, is wrong. Failure to do so is a major source of error. In another of his papers he wrote that cost escalation for tunnels after adjusting for inflation is 48% on a worldwide average basis. We discussed earlier a tunnel project with a cost escalation of 15% to 20% after adjusting for inflation. We are not proud of being so much over budget and I do not wish my statement to express satisfaction with this situation. However, it is still much better than the gentleman's published 48% figure. Adding some of this information would have given a better balance as to what is happening.

Deputy P. Power

The programme did not have balance in that respect.

Mr. Barry

Agreed.

Deputy P. Power

On PPPs in general, I am interested in a statement made on page 21 of the delegation's document. As stated earlier, I have not yet had time to analyse the document. However, it states "In the context of the multiannual funding envelope, the NRA is expected to secure private funding over and above this funding envelope, i.e. the private funding is incremental". Mr. Barry discussed the efficacy of PPPs versus traditional procurement methods with Deputy Shortall. In making such a statement, does he feel there is a drive to go down the PPP route irrespective of whether it provides value for money because it forms part of the NRA's remit under the programme? I know that the NRA performs its analyses and so forth, which has been explained in detail. Paraphrasing his own words, does Mr. Barry think the corporate judgment of the NRA could be clouded in terms of a requirement to provide certain PPP projects because it is expected to do so? As the NRA takes that route and starts negotiating with preferred bidders and so on, it becomes impossible to withdraw from it, decide it is wrong and go down a traditional procurement route with normal borrowing. Is this a fair suggestion?

Mr. Barry

The Deputy has asked a reasonable question. There is pressure on us to find PPP projects that work. This is a part of the national development plan and the NRA has said it can find such projects. However, all projects we examine do not become PPP projects. For example, we examined the feasibility of doing the Nenagh to Limerick project on a PPP basis. Notwithstanding that — we would have been happy to produce a good case for doing so — we decided it would not work and moved on.

Regardless of the pressures, this is an example of where we said it would not work. Anybody who goes a long way down a certain path, whether it is the NRA or anyone else, will want to continue in that direction. It is fair to say that we would be reluctant to abandon a scheme if we had gone a long way down the PPP path. If we discovered the figures were marginal, we might decide to work in favour of it. This is why so many people are examining the cost data we produce. That is what the Department of Finance and the Comptroller and Auditor General do to try to ensure that whatever we do is substantiated by objective analysis. This is a protection against our becoming overly bullish about PPPs as a methodology.

The NRA, as an entity, has no ideological view on whether the State should, as a matter of principle, use more or fewer PPPs. We have a programme to deliver. While there is an opportunity to raise finance in this manner, our real concern is whether we get good value for the public in doing so. If so, we are happy to go with it and, if not, we will not do so. We have no view either for or against using PPPs.

Deputy P. Power

Will the N18, the Limerick-Nenagh project, which has changed from a PPP to a traditional project, slip down in terms of priority or in the context of the timeframe within which the NRA expects to deliver it? In the overall decision on whether to go down the PPP or traditional procurement route, does the NRA take account of the possibility that a PPP project may be quicker to roll out and of the overall economic benefits to a region? How can the roads authority quantify this?

Mr. Barry

In regard to inter-urban routes generally, we have been given a direction to have them built by 2010. In order to do so, we must invest much time and effort into making this happen in the coming years. In examining resource constraints within the NRA and the construction industry, we will have to work hard to try to balance construction activity during the next four or five years. We are seeking to balance the workload for everyone in that period. We are trying to keep a flow of PPP projects going through the bidding cycle without having too many going on at the same time because this would overload the bidders and perhaps lead to higher pricing.

We are examining the funding availability for each year. While we have the envelope, we can commit so much this year and a lesser amount for next year and so on. As we work on all of these issues, we find that we are somewhat constrained in terms of what we can and cannot do. We are also constrained by where we stand at a particular time, what projects have gone through an Bord Pleanála, where we stand with court challenges in respect of projects, etc. This leads to us examining, on a regular basis, the progress of various projects. The Nenagh-Limerick project is proceeding a little earlier than it might have done. All of these issues go into the mix. There is no one factor involved. We must try to balance all of these diverging needs.

Chairman

What has been the cost to the NRA of legal challenges to various roads projects?

Mr. Barry

I do not have the figure at the moment but it is significant.

Chairman

How significant is it because the public should be aware of the cost? Perhaps Mr. Barry will let the committee know the cost involved to the various projects.

Mr. Barry

We will work out something.

Deputy P. Power

Mr. Barry referred to the fact that the National Pensions Reserve Fund may be investing in one of the PPP schemes being tendered at present. Which one is it?

Mr. Barry

It is the M50.

Deputy P. Power

Discussion took place about designing projects which would be over-capacity during their envisaged lifespan. Does Mr. Barry agree with the criticism that some projects being designed and rolled out by the NRA are over-designed and will have a capacity which will not be reached? This was one of the key points made in RTE's "Prime Time" programme.

Mr. Barry

If one examines traffic levels, some of the routes move from motorway or dual carriageway to single carriageway, back to motorway and single carriageway and so on in a necklace fashion. If one were to examine this purely as a traffic engineer, one might say one should go from a motorway to a single carriageway and so on. If one examines it more strategically from the safety point of view, one would say it is wrong to move from one type of road to another. From a strategic point of view, if the main urban centres and the main corridors are to be maintained to a high and consistent standard, it makes sense to do what is being done.

Deputy P. Power

That may be taking safety as a factor but will there be an over-capacity?

Mr. Barry

No, there will be over-capacity in some sections as against the traffic needs envisaged some years ago. In every study we carry out, the traffic forecasts appear to increase rather than decrease. We are criticised on many projects because we did not take adequate action early enough. The M50 is a prime example of this. We are also criticised for some of the bypasses which began as simple schemes and we are now asked why did we not build motorways. We get it from both sides.

Deputy P. Power

Mr. Barry should not get me wrong, we should err on the side of over-capacity.

Mr. Barry

On whether inter-urban roads should be high quality dual carriageways, while the NRA did not specifically set out to do all of this, we do not believe there is anything wrong with it. When our children or others are travelling these roads in 20 years' time, we will thank God that we do not have to rebuild them.

Deputy Shortall

Mr. Barry's response appears to be that there was nothing new in the "Prime Time" programme rather than that it was not accurate. The organisation has been criticised severely by the Comptroller and Auditor General and the Committee of Public Accounts on its estimating capabilities and financial management. What steps have been taken to deal with these shortcomings in the organisation? Is the documentation on the requirement for financial comparitors and cost benefit analyses available to the committee?

Mr. Barry

On what the NRA has done, my predecessor made fairly comprehensive statements to the Committee of Public Accounts last year on two separate occasions. He also made such a statement the previous year. I have nothing to add to what he said at the time in regard to what was done until that point. We are currently considering obtaining further assistance to help us produce estimates and projections of cost outturns in a manner that will be more easily comprehensible to those outside the organisation so that those who are reviewing us, including this committee, will be able to look at apples and apples cost figures.

Deputy Shortall

That is not the only reason the NRA is doing it.

Mr. Barry

It is primarily the reason we are doing it. There appears to be a great deal of confusion in the public between estimates that were produced at one time, the actual nature of projects and the cost turnout to the point where the public would be forgiven for thinking that money was being wasted. The position is that projects were either costed wrongly in the first instance or the scope of what is being done has been changed significantly since the projects were carried out.

Deputy Connaughton

I refer to road safety, which is mentioned in the submission. Perhaps Mr. Barry will respond in writing later. I refer to the step down in speed limits near rural schools from 100 km/h. The NRA's diktat is there can only be one step down from whatever is the speed limit on a road. In many areas, this means a speed limit reduction from 100 km/h to 80 km/h. A school warden system could not work where an 80 km/h speed limit applies outside a rural national school. This is a serious issue in a number of areas. Can the speed limit outside schools be reduced to 50 km/h for safety reasons?

Mr. Barry

With regard to the speed limits outside schools, I completely agree with the Deputy that speeds should be reduced to a safe limit. I cannot reply to his question now but I will come back to him directly in respect of it.

Deputy Connaughton

I would greatly appreciate that.

Mr. Barry

If an appropriate response includes applying step-down speeds near schools, we will examine it.

Chairman

Senator Paddy Burke referred to the N5. The NRA encountered problems at Rathcroghan. Did it consider putting in place a diversion between Frenchpark and Carrick-on-Shannon? This was mooted as a way of solving the problem. I do not know whether it can be done but the Rathcroghan project is causing serious difficulties. It is a dangerous stretch of road. What alternatives have been considered, given the potential legal minefield associated with Rathcroghan?

Mr. Collins

We recognise the minefield and it is most unlikely that a route will be driven through Rathcroghan in upgrading the N5. We are continuing with more strategic studies that could involve taking the line mentioned by the Chairman. Work is ongoing in this regard. Implementation is probably a bit down the road and it is not in the five-year horizon. We will, however, be in a position to implement it thereafter when we have determined the appropriate route.

Chairman

I raise this because the delay on the Rathcroghan project is something the west cannot afford. The N4 will be upgraded between Carrick-on-Shannon and Longford and it will still carry extra traffic with other roads feeding into it at Strokestown. When the Strokestown-Lanesboro section is completed, the road will join the new Longford bypass.

Mr. O’Connor

We are keenly aware of that option and are examining it. Bearing in mind that the Kilcock-Kinnegad scheme will open shortly, Mullingar is bypassed, Edgeworthstown will be bypassed shortly and Longford is bypassed. The N4 is a good route and it is appropriate to examine this in that context.

Chairman

I refer to the proposed bypass of Carrick-on-Shannon. The NRA allocated money to this in 2005 but it is becoming the Edgeworthstown of the N4 in this area. The roundabouts outside the town are clogging up. When will the bypass be progressed?

Mr. Barry

Are we allowed to give the Chairman the same answer as everyone else on this topic?

Chairman

Is it subject to money?

Mr. Barry

Yes, but we would love to progress the project. It is like all the other projects about which there have been queries.

Chairman

The amount of development in the town will mean the roads will clog up quickly. There is potential for an additional 2,000 cars an hour to use the road over the next four to five years. If something is not done, it will become the new Enfield or Edgeworthstown because there will be a serious problem there.

I thank Mr. Barry, Mr. O'Connor and Mr. Murphy for the information they have given us. We have dealt comprehensively with public private partnerships and there is no need to re-examine them in the short term. Deputy Shortall may not agree but the witnesses have been comprehensive in their replies and queries in this regard will be sent to the NRA and the witnesses may respond in writing.

The joint committee adjourned at 4.35 p.m. until 2.30 p.m. on Wednesday, 1 June 2005.