Thursday, 28 November 2019

Ceisteanna (1)

Jack Chambers


1. Deputy Jack Chambers asked the Minister for Communications, Climate Action and Environment the circumstances by which a company (details supplied) came to be an investor in the national broadband plan; the level of the investment; the level of investment by another company in the final contract; if another company will be contractually liable in the event that a company requires additional funding which a company cannot provide; and the details of this liability. [49579/19]

Amharc ar fhreagra

Freagraí ó Béal (18 píosaí cainte) (Ceist ar Communications)

This question relates to the sudden official appearance of a new investor in the national broadband plan on the day the contract was signed. While media reports mentioned Oak Hill on a few occasions regarding other matters, it has not been part of the general debate on the national broadband plan. The first time it will appear in the Official Report will be in this debate. What is Oak Hill's involvement in the national broadband plan? What are its responsibilities? When did it become involved, and why was its name not mentioned in previous parliamentary question responses related to those involved in the national broadband plan?

The Government is committed to delivering high-speed broadband to every home, farm, business and school in Ireland. It is vital that we ensure the people of rural Ireland have the same opportunities as the people in our towns and cities.

The fundamental building blocks of the project, which is designed to bring fibre to the home to over 1.1 million people in the intervention area, have not changed since the procurement process commenced. The project is led by Granahan McCourt, supported by key subcontractors Enet and the Kelly Group, with Nokia as the provider of electronic equipment.

After appointment as the preferred bidder, the sponsors are required to finalise a number of steps before a contract can be signed. The Department is also required to carry out the necessary due diligence.

These steps included closing out contracts with infrastructure access providers, civil engineering companies and so on; concluding the contractual provision in the 3,000-page contract; and the finalisation of the committed equity documents with the shareholders of the new company, National Broadband Ireland.

As is standard in large projects, including public private partnerships, PPPs, the final mix of shareholders to the project is concluded when all contractual documents have been finalised. The national broadband plan, NBP, process has been no different in this regard.

The bidder proposed for contract award that McCourt Global LLC be replaced by Oak Hill. The procurement process for the national broadband plan contract includes a mechanism for the Department to assess and approve, or reject, changes to the membership of bidders. This assessment is carried out by ring-fenced teams with similar make-up to the teams that carried out the evaluation of the final tender, and overseen by a review panel and the procurement board. The Minister has no role. This due diligence was carried out against the conditions set out in the assessment process and was approved.

As the Deputy knows, the project information memorandum sets out the procurement process and the documents are published.

As part of the assessment of a change, the relevant bidder is required to demonstrate that it continued to meet the economic and financial standing, together with technical and professional capacity, set out in the original pre-qualification criteria. The Department could not approve a change in bidder composition unless the relevant bidder met those criteria.

The funding commitments of National Broadband Ireland, including the equity investment commitments, have been contractualised as part of the contract award.

With respect, the Minister has not answered any of the questions I asked. The Granahan McCourt consortium has changed so many times it has been difficult to keep up. First, it was widely known as the Enet-SSE consortium and contained a number of other companies. John Laing, SSE and Enet then dropped out, leaving only Granahan McCourt. We then heard that Granahan McCourt is being backed by McCourt Global and Tetrad. We then heard only Tetrad was involved but that McCourt Global had helped Granahan McCourt to pass the relevant tests. We now find out that it is made up of Granahan McCourt, Tetrad and Oak Hill. Can the Minister clarify the level of investment provided separately by Tetrad, Oak Hill and Granahan McCourt? Is Tetrad providing €175 million? Is Granahan McCourt still providing €45 million? If so, how much is being provided by Oak Hill and to what end? We know that the scale of Granahan McCourt's investment is limited and that there may be issues with that but what we need to know is what the Minister has not answered. When did it become involved? Was McCourt Global simply used as a front to facilitate it through the process, following which it denied even wanting to be involved in May of this year?

What is Oak Hill's involvement? When did it get involved?

Will the Minister answer those questions?

The Deputy has to be aware that the make-up of a consortium changes over the course of a bid, particularly a PPP bid of this length. As he is aware, this has gone on since 2015. That was always recognised in the contract documents. The contract documents also set out very strict criteria to ensure that whenever a change occurred it did not in any way undermine the basic strength of the proposal. That process of pre-qualification approval was done entirely independent of either me, as Minister, or the Secretary General, by an independent team of experts with a panel, including the National Development Finance Agency, NDFA. This was an independent process.

What has happened here is that the finalisation of the investment includes Oak Hill, which will have a substantial minority shareholding, but Granahan McCourt will continue to be the controlling interest. It was always envisaged, and other PPP projects are the same, that the equity commitments of the different partners will only be decided at the concluding stage. That is what happened in this case. There is nothing unusual about it. I believe it can be said that Oak Hill has a very substantial financial strength that even a review online will reveal.

We need more than a review online. Is Oak Hill the same Oak Hill that was previously involved with Enet and Mr. McCourt in the past? The Minister might clarify that. The issue is extremely serious because it deals who will be responsible if National Broadband Ireland requires additional funding. For example, concerns about take-up in the intervention area have arisen. We hope that never arises but it is at the core of our concerns. The issue is that it is unclear why McCourt Global was required in this process at all, unless issues arose in the consortium. If it was the case that Granahan McCourt could not pass the financial bar and relied on McCourt Global, that is of public concern. If it was the case that Granahan McCourt could pass the test alone, the question to be asked is why McCourt Global was involved in the first place. There have been a small number of media reports about Oak Hill and the national broadband plan, although very few before last Tuesday, but they were not mentioned as part of the final tender by the Government. Why has Oak Hill only been associated with the tender by Government at this point? If it has been flipped and changed so often in the bidding process, is this what we are facing now-----

-----that the Minister has signed this contract? To whom will Oak Hill sell its equity investment? To whom will Granahan McCourt sell its equity investment? Will the taxpayer be on the hook for more liability because the Minister has facilitated this being flipped between vulture capitalists on a continuous basis? What are the protections for the Irish State? When did-----

-----Oak Hill become involved? What is its investment? We have no clarity-----

-----on the questions asked.

-----it is not fair to do that.

The Deputy will have to appreciate that what has happened here is that contractual commitments to an investment of both equity and working capital of more than €220 million have been made by the investors. The controlling interest in this is Granahan McCourt. However, one of the investors with less than 50% is Oak Hill and that provides a strong financial basis for the roll-out. As I indicated, the process of approving any change in the make-up of the consortium is undertaken by the very same review group, with the same expertise, advice and review panels, as has taken place throughout this process. That independent process has approved that not only have these investors committed the equity and working capital but they also meet all of the criteria set out from the outset in this process.

I ask Members to watch the clock. I do not want to give out to anybody as these are important issues. I do not stop anybody who goes ten seconds over their time but I ask Members not to go too far.