Committee on Finance. - Turf Development Bill, 1957—Money Resolution.

Wednesday, 15 May 1957

Dáil Éireann Debate
Vol. 161 No. 10

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Minister for Industry and Commerce (Mr. S. Lemass): Information on Seán F. Lemass  Zoom on Seán F. Lemass  I move:—

That for the purpose of any Act of the present session to confer additional borrowing powers on Bord na Móna and to provide for other matters connected therewith it is expedient to authorise:—

(1) the charge on and payment out of the Central Fund or the growing produce thereof of all moneys from time to time required to meet payments required to be made by the Minister for Finance to the board in respect of any stock taken up by him under such Act;

(2) the advance out of the Central Fund or the growing produce thereof of all moneys from time to time required by the Minister for Finance to meet sums which may become payable under any guarantee given by him under such Act;

(3) the repayment to the Central Fund out of moneys provided by the Oireachtas of any amount outstanding in respect of moneys advanced [1321] out of that Fund to meet sums which may become payable under any guarantee given by the Minister for Finance; and

(4) the charge on and payment out of the Central Fund or the growing produce thereof of the principal of and interest on all securities issued under such Act.

Mr. Norton: Information on William Norton  Zoom on William Norton  There is a matter which, perhaps, I should raise on the Fifth Stage of the Bill, but it might be as convenient to raise it now. When speaking on the Second Stage of the Bill, the Minister referred to the arrangements which had been made by the E.S.B. to utilise turf and said that in consequence of that Bord na Móna had proceeded with the development programme which presumed the consumption of a certain amount of turf each year. It turned out, after a close examination of the position, that the E.S.B. found they would not require all the turf they had previously given Bord na Móna the impression it would be necessary for the latter organisation to cut in order to fuel the proposed new generating stations.

The reason the E.S.B. found themselves in that position was the subject of some contention not merely on this Bill but on the departmental Estimates. Because of the Minister's statement on this matter on the last occasion, I want to put my view on record so that it can be read in conjunction with the Minister's view.

The position of the E.S.B. in 1955 was that they required a certain sum of money in order to develop their programme, the programme being contained in the White Paper of 1953. At the direction of the Government, the Minister for Finance and I saw the directors of the E.S.B. At that meeting, their whole programme was discussed, their financial requirements were ascertained and it then transpired, in the course of question and answer between the Ministers and the directors of the board, that in fact the board were planning for a plant development and plant utilisation scheme which, in fact, they would not be able [1322] to use if they adhered to the White Paper programme.

It was as a result of that statement by the directors and technicians of the board that the Minister for Finance and I said to the board: “Look here, if you believe the programme set out in the White Paper is excessive in so far as our national requirements are concerned, if you believe it will give you surplus plant which you cannot use, we suggest that you go back and examine the matter realistically, not in the light of the position in 1953 but of the realities and actualities of 1955”. Having gone back and examined the whole matter, the E.S.B. came back to the Department and said: “Here is our estimate as to when we will require the particular plant for which we have got notional provision under the White Paper programme.”

The revised programme of the E.S.B. showed clearly that they could not utilise in the prescribed period the plant for which provision was made in the White Paper. We said to them then: “Why did you embark upon a plant development programme in excess of what you can use?” The E.S.B. directors told us they felt themselves committed to the programme set out in the White Paper and did not feel free to depart from it.

I said to the directors: “You have got responsibility as the national electricity generating authority. It was your responsibility to tell the Government and the Minister for Industry and Commerce that the programme envisaged in the White Paper would lead you into a condition of over-planting.” The whole defence of the E.S.B. for continuing to embark on the White Paper programme was that they felt themselves committed to it, that the White Paper was not their programme, but one put over on them, that the programme was based on the assumption that the demand for electricity would double itself in every five-year period.

That was a reasonable enough estimate if you took 1953 when, because of the hunger for fuel during the emergency and post-emergency periods, it was not possible for people to use [1323] electrical equipment as they were able to utilise it when fuel became available. On the figures for 1953, it could have been said, perhaps, that the demand for electricity in that year would double itself in five to five and a half years. That estimate assumed a substantial and continuing percentage increase in the demand. As it happened, of course, in 1954, 1955, 1956, 1957, the demand did not maintain itself at the 1953 level. It did not maintain itself here or in any other country in Europe because once you got over the upsurge in the consumption of electricity following the war and acute post-war period, the demand petered off so that our increased demand last year was, I think, in the region of 9 per cent.

As O.E.E.C. said, that was the average increased demand throughout Western Europe. As it is increasing only at the rate of 9 per cent. per annum, the demand will not double itself in five years, but in 11 to 12 years, and any planting programme based on the assumption, as the White Paper programme of 1953 was based, that the demand would double itself in five years was completely unrealistic in the light of subsequent developments. It is because of that that we asked the E.S.B. to review their programme.

Their reviewed programme showed that the board did not need the stations to which they were committed in the White Paper. In fact, the board told me, and I put it on record in the Department, that, with the plant now available and in sight, they would have a surplus of electricity generating capacity until 1961 or 1962, and that is allowing them a surplus generating capacity, not in theory but in fact, of about 30 per cent. between now and that year. Any revision that took place of the board's programme occurred because the board would be committed to an extravagant programme which in fact was not necessary and at a time when money was difficult to get not only here but elsewhere in Western Europe. Consequently, the correct thing to do is to retard development to our actual needs.

It is perfectly true, as the Minister [1324] said, that at one stage, when I sought to get the E.S.B. to schedule one of the Offaly bogs—Derrygreena—so as to enable Board na Móna to erect a turf-briquetting plant there, the E.S.B. said this was required for, I think, a 100 megawatt plant and they did not want to give it up. Bord na Móna, however, wanted to get it, because the Derrygreena bog was one capable of producing briquettes and every bog cannot produce briquettes. The E.S.B., however, said they would have to keep the Derrygreena bog. Subsequently, when they revised their programme they did not intend to provide for the full utilisation of the Derrygreena bog and their proposals—as the Minister can ascertain from the Department— involved a postponement of the utilisation of the capacity of both Boora and Derrygreena. They said: “In any case, if you take Derrygreena from us, we will have to put up either a coal or an oil-fired station at a later date.”

I did not want to see a coal or an oil-fired station erected, if we could manage to keep the E.S.B. down to a programme of utilising our turf deposits. Reluctantly, I had to allow the E.S.B., on the strength of its technical representations, to keep the Derrygreena bog. That was before the E.S.B. had revised their programme. When they came to revise their programme, they then said that the revised programme did not provide for the fullest utilisation of the Boora and Derrygreena bogs. Consequently, we gave Bord na Móna rights to operate turf-briquetting plants on those two bogs and Bord na Móna were told to proceed with the erection of turfbriquetting plants on both Boora and Derrygreena.

The E.S.B. plea, then, that it needed the full production capacity of both bogs was still based on their belief that they were committed to the White Paper programme. When the shackles of the White Paper programme were taken off, they said: “We do not need the two bogs at the moment, we cannot utilise them fully at the moment”, and they even dropped the suggestion that the giving of any portion of either Boora or Derrygreena to Bord na Móna would involve the erection of a [1325] coal or an oil plant in lieu of either the Derrygreena or Boora bogs.

Those are the facts. Papers in the Department of Industry and Commerce will prove those to be the facts. The Minister for Finance will, I have no doubt, testify—the members of the Government to whom the matter was reported can testify—that the E.S.B. programme as set out in the White Paper was a programme which gave them a capacity which they could not use and that they have to-day generating capacity sufficient to meet all their requirements and provide for a surplus up to 1961-62. As I say, when the Minister makes the point that the E.S.B. wanted to erect an oil or coal station in lieu of the bog station, when portion of the bog was given to Bord na Móna, all that was part of their belief that they were committed to the White Paper. More than once I said to the directors of the E.S.B. that the responsibility was on them to report to the Department if they felt they were committed to a programme of production which they could not utilise and they were remonstrated with for not having brought those facts to notice.

Of course, proof that all that was right, that the revision of the programme was right, is to be found in the fact that nobody proposes now to alter the E.S.B. programme for the next five years, because the E.S.B. programme for the next five years is such as to meet our ascertainable demands. Now, if the present programme meets our demands then the earlier programme would have been excessive. I am sorry it was excessive, I am sorry the circumstances necessitated a revision of the earlier programme, but it would have been the grossest waste and inefficiency not to have revised the programme, once the demand for electricity did not stand up to the 1953 anticipation—and that anticipation was, I think, an overoptimistic one. It was pitched too high and to have continued to try to implement it in circumstances in which money was not easy to get would, I think, have been a most wasteful and unjustifiable course of action.

Because we wanted to avoid the waste, to avoid having surplus plant [1326] which we could not use, the board were asked to revise the programme to which they felt committed in the White Paper. The revision of that programme represents a realistic approach to the whole problem of our electricity requirements and I presume —not having heard anything to the contrary from any member of the Government Front Bench—that the Government is satisfied now that the present E.S.B. programme is one which takes care of the national electricity requirements.

Mr. Lindsay: Information on Patrick James Lindsay  Zoom on Patrick James Lindsay  In relation to Bord na Móna activity and that activity dependent upon money supplies, I should like to bring to the notice of the Minister a situation obtaining in both Dooleague and Bangor-Erris at the moment, where workers are being laid off on the one hand and no effort is being made to recruit the normal labour content which would be operative there at this time of the year.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  That is a matter of administration, not one which arises directly now.

Mr. Lindsay: Information on Patrick James Lindsay  Zoom on Patrick James Lindsay  Very good. I shall accept your ruling on that and, having made the point, might I make this inquiry from the Minister? If the situation I have described briefly to him is due to shortage of money and if this Money Resolution is being given a quick run through the House, will he in the meantime give a direction to Bord na Móna to see that the labour content in that particular area is not reduced as a result of such shortage?

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  There has been a great deal of discussion in this House over the last few months on the question as to who was responsible for the change in plans for electricity expansion in recent times. In spite of the long speeches which have been made by Deputies of different Parties, I am still no clearer as to who should accept final responsibility for this change of programme.

We are told that in the 1953 plan it was estimated that the demand would double itself in five years, or a little over that; and that it was then [1327] discovered that the hope or the estimate was too optimistic altogether. As a result of this hope being found too optimistic, instructions were issued to the E.S.B. to make a further revision and, I presume, reduce their programme accordingly. To bolster up that decision, we are told that demand in Europe was at a certain level for electricity purposes and that this corresponded generally with the figure in Ireland, namely, that the increase last year was only 9 per cent. and that this was somewhat similar to that obtaining in general all over Europe.

Now, people might get the impression from that, that we are keeping in step, in our expansion in the use of electricity, with European countries. Those people who utilise that excuse, that we are at a similar rate of development now as European countries, omit the fact that most of those European countries were using electricity long before we were. Most of those countries are highly industrialised and have been using electricity and, consequently, the percentage increase in demand for electricity in those countries could not be anything as great as we should expect it to be here for an undeveloped country like Ireland, which is only in its infancy in industrial expansion.

It is a very significant feature of our economy at the moment that the demand for electricity is not what we hoped it would be. It is to my mind the signal of danger in so far as industrial expansion is concerned——

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Deputy has extended the realm of the debate. This is a motion that the board be entitled to borrow money for certain purposes.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  If we are to give money to such undertakings, whether it is the E.S.B. or Bord na Móna, in future this House will have to know whether the E.S.B. and Bord na Móna have dovetailed their plans so that both bodies will know what is expected of them. It would appear from the information at our disposal that the E.S.B. did not consult Bord na Móna and that Bord na Móna were to be [1328] allowed to go ahead with their plans for development without receiving the necessary information on the reductions likely to take place in the E.S.B. programme.

If that situation is true, there is something lacking in the direction end and, with all due respect, I think the time is ripe for this Minister to ensure that the closest possible co-operation is made to obtain between these two very important State bodies. In any future development that takes place through both of these bodies—I believe the Minister will agree with me in this —priority must be given to the utilisation of our own resources.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  This is really a Second Reading speech, if it even could be allowed on Second Reading.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  I understood the former Minister for Industry and Commerce had referred here to the fact that the E.S.B. told him that if they did not get Derrygreena Bog they would be forced to erect an oil-burning or a coal-burning station. I think I am entitled to reply to that aspect of the argument put forward by the previous Minister. I say under no circumstances should any such argument from the E.S.B. be even listened to because in the programmes of the past —in the 1949 programme to begin with —priority was given by the then Minister for Industry and Commerce to oil-burning and coal-burning stations over the native turf-burning stations. I want to make sure that, if my vote goes here to-day to help increase the electricity supply, it is not for the purpose of helping to erect generating stations fired by imported fuel.

I would prefer at this stage, if there is to be this cut-back, small and all as it may be, on the use of electricity that, in spite of that cut-back, we should go ahead with a programme of erecting generating stations that will use peat and, if necessary, cut down the consumption or the utilisation of the stations already built.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Deputy knows he is quite irrelevant.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  I shall not elaborate on that. The question of the expansion [1329] of the briquette industry has been mentioned here. I welcome the fact that money is to be expended on erecting briquette factories and increasing the output. A tribute was paid here recently to a particular company for its part in subscribing funds towards this very desirable expansion. I would urge on the Minister to see that no time is lost in getting the necessary construction work done and getting those plans into operation. Every possible effort should be made in that regard for two reasons, first, the actual increase that will be given in employment on construction and, secondly, the importance that will be attached to the fact that it will mean a reduction in our import of foreign fuel.

As to the use of the briquettes, there is a tremendous demand for them at the present time. It has been growing for years past and it is a terrible criticism of ourselves as a Parliament that we had to wait to make a decision on this question of briquette expansion until we found that the price of coal was so dear. I challenge contradiction here when I say that there would have been no decision to expand the briquette output perhaps for years to come were it not for the increase that took place in the price of imported coal. Perhaps it would be a good thing if coal went up a little bit more so that we could return to the time when we would see the best of our bogs that were closed down reopened for the production of the semiautomatic turf. I would welcome that day, too.

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  Since I resumed office as Minister for Industry and Commerce I have been so preoccupied with the problems of to-day and tomorrow that I have not had time for the exercise of going back over the files of the Department either for the purpose of historical research or to find ammunition with which to reopen the arguments which Deputy Norton and I had when he was Minister for Industry and Commerce. I am more concerned with repairing the position which developed in the past two years rather than to investigate why it happened or [1330] if it could have been prevented. So far as I am concerned Deputy Norton can slap himself on the back, on the head or anywhere else he likes, because I believe that by the time it again becomes necessary for all of us to consider how we can best present our respective merits to the electorate, all these things will have been forgotton.

When speaking here on the Second Reading of the Bill I did not find fault with the E.S.B. for revising their generating programme in the light of the circumstances that had arisen. I think the board were quite right in 1954 in deciding to prepare their programme upon the basis of their experience to that date. I believe if I had come to the Dáil in 1954 with a Bill which revealed that the board's new generating programme did not provide for an increase in capacity paralleling the increase in demand, as it had been experienced up to then, Deputies would have found serious fault with the programme, and rightly so. But when by 1956 it had become clear that the growth in the demand for current was falling off, then the position had to be reviewed and the programme revised in accordance therewith.

Deputy Norton was wrong in his statement that I did not indicate an intention of re-examining the programme. In fact, I tried to make it clear that I had that intention. Even if the growth in the demand for electric power experienced in 1953 and the years before that was higher than it has since become, I do not think that is a reason why we should assume that the 1956 experience is a reliable guide for the future. I hope it will not be.

I am sure every Deputy in the House, including Deputy Norton, will join with me in expressing the hope that expansion in industrial activity and improvement in social conditions in the country will involve the stepping up of the generating programme to meet a growing demand for power and the subsequent extension of the board's programme for installing new generating capacity. It seems to me that there is another reason for having a second look at the board's present programme. It is true that programme provides for the installation [1331] of new generating capacity at the appropriate time to meet the growth in demand, if the growth in demand is at the 1956 rate. In our present circumstances I think it is worth while examining whether it would not be justifiable, even on a narrow financial basis, to proceed with the construction of stations to use milled peat in advance of the time at which new stations would be needed in the programme to meet the demand for current even if it involved working to less than full capacity, or putting temporarily out of commission existing stations using imported fuel oil. I understand the board has had a most favourable experience in the use of milled peat last year. It was the first year in which milled peat was used on a full scale for the generation of power and the indications are that fuel costs, per unit of energy generated with milled peat, were not very much more than half the present cost of using oil.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Comparing the new Cork station with the new Ferbane station, which are about equal age and capacity, would the Minister tell us the cost of generating electricity at Ferbane?

Mr. Lemass:  I said the fuel cost.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  What does the Minister mean?

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  The cost of the fuel in relation to output. Using milled peat is not very much more than half the cost of using oil. It may be that the reopening of the Suez Canal and other factors may bring down the price of oil and alter that calculation.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  What is the cost of producing a unit of electricity with milled peat?

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  I cannot say. All I can say is that all the indications are that it would be cheaper to generate electricity by using milled peat than by using oil. It may be possible for the E.S.B., assuming that the price of oil continues at its present level, to get some milled peat stations into their programme earlier even though it meant carrying some interest on [1332] capital invested in other power stations which might for a time not be in use. I am not attempting to intimate to the Dáil that any decision on that point has been reached, but I shall examine it, and I hope it will be found possible to apply that idea to the revision of the programme. It would have the further substantial advantage of getting employment increased on those bogs, the early development of which would be essential in any such revision of the programme.

I think there is some point in the argument advanced by Deputy McQuillan that the figures produced by European countries relating to their experience in the growth of demand for power are not necessarily a reliable guide for us. They are some guide, but we know we are at a stage in the development of the use of electric power which would make possible a more rapid expansion in the growth of demand than might be realised in some other country.

Deputy Lindsay asked a question—I am sorry he is not here for the answer —about the Bangor-Erris bog. The power station for Bangor-Erris has been dropped from the programme, I mean the programme that is to be completed for 1961. If that idea I have suggested could lead to the possibility of bringing that station back into the programme, with a view to its completion and its being brought into operation before 1961 then, of course, work on the bog development operations could be resumed very quickly. In the meantime there is no necessity for bog development work there for power purposes, because the utilisation of the bog for such purposes, as matters now stand, will not arise for some years. There is at present no fixed date relating to the Bangor-Erris power station.

Mr. Norton: Information on William Norton  Zoom on William Norton  The nearest I could get from the E.S.B. for the utilisation of the Bangor-Erris station was 1963-64.

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  That is right. The present programme extends to 1960 and not beyond that. The preparation of the post-1960 programme will, however, want to start soon. That is a fact which Deputy McQuillan should [1333] keep in mind in relation to his suggestion that there was some lack of coordination between Bord na Móna and the E.S.B. I do not think there was. Normally it takes a period of three years from the time a decision is made to erect a new power station of any reasonable size to the getting of that station into commission. If that station is going to utilise turf, then Bord na Móna must start its development operations some two years before even the construction of the station is begun.

Bord na Móna was proceeding in accordance with the programme prepared in 1954 and had to be in fullscale work on its development activities by 1955-56. When that programme was revised and amended it was, of course, a considerable upset to Bord na Móna to have to adjust their plans to the new E.S.B. programme. That does not imply any failure on the part of the E.S.B. to notify Bord na Móna of the new situation, and indeed it was, as Deputy McQuillan says, rather fortunate that at that stage the extension of briquette manufacturing became an economic possibility. It is, of course, quite true that the decision to extend the manufacture of briquettes only became possible when the price of coal had passed the point at which it was to be assumed that people would prefer to buy briquettes at the price at which they could be produced, than the coal at the price ruling.

As I mentioned before, I had in my previous period of office examined the possibility of increasing briquette production and was advised by Bord na Móna that at the price at which briquettes could be produced they would not be saleable in competition with coal, and we could have had quite a problem on our hands if we had attempted it. But, as the price of coal kept going up, a stage was reached when Bord na Móna came to the then Minister for Industry and Commerce and said: “It is now possible to extend our briquette production and we would like to get ahead with doing so. We have a bog which is in process of development for the E.S.B. and which we are proposing should be turned [1334] over to briquette production.” The E.S.B. would not part with the particular station then contemplated for that bog and they told the then Minister for Industry and Commerce that, if they had to drop that station, they would have to put up another oil-burning station instead, and the matter was then allowed to stand over.

Deputy Norton, as Minister at the time, told Bord na Móna they could not have the bog and he could not approve of their going ahead with plans for putting a briquetting factory on it because the E.S.B. required that station. In 1956, when the E.S.B. programme was cut down, the position was, of course, different. It was then considered more advisable to put up two smaller briquetting plants rather than the one large plant the board had originally proposed. These two plants are being established upon bogs which are being developed for E.S.B. purposes but the full output of which will not be required in the generating stations located near them because the capacity of these stations has been reduced under the programme revision.

I share with Deputy McQuillan and all other Deputies the desire to see these plans for the completion of the briquetting factories going ahead as rapidly as possible. This is a very desirable type of development and, so far as I am concerned, I shall give every encouragement to Bord na Móna to get ahead with them. They certainly are not being impeded in that regard by lack of money, and one of the purposes of this Bill is to enable to be brought into operation arrangements which they have made to procure the necessary funds with which to start.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  I should like the Minister to clarify one point. Would he give us the fuel volume of Marina, which is an oil-burning station, as opposed to Ferbane, which is a sod peat station?

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  It is a milled peat station.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  And Marina is oil burning?

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  The Deputy wants a comparison of milled peat with oil.

[1335]Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  The Minister says the fuel cost for milled peat is about one-half of that for oil at its present price, and the price of oil may go up or down in the future. I think it is important to know what is the cost of generating a unit of electricity at Ferbane and at Marina respectively.

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  A number of calculations would have to come in there. The Ferbane station is a new station and the capital charges might be substantially higher than at the Pigeon House, for instance.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Marina is a new station too.

Mr. S. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  I have no doubt all that information will be published in the annual report of the board. I have not got it with me.

Mr. Norton: Information on William Norton  Zoom on William Norton  It depends, too; on the length of time the station is operating.

Question put and agreed to.

Money Resolution reported and agreed to.

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