IRISH Water's controversial €50m spend on consultants occurred despite explicit government instructions to rely on existing expertise within Bord Gais during its establishment, a leaked confidential report has shown.
The revelations came as it was confirmed that ministers were kept in the dark about how much Irish Water was spending.
Junior Minister for Natural Resources Fergus O'Dowd, who brought the legislation through the Dail and Seanad, said yesterday that he first knew of the splurge on consultants when he heard Irish Water managing director John Tierney interviewed on RTE Radio.
"I was not -- I was never aware of the €50m figure until I heard John Tierney announce it on radio," he said.
On foot of the ongoing controversy, which has raged since last Thursday, Irish Water appeared last night to abandon its refusal to disclose the details of how the €50m was spent, saying it would provide a "full and detailed briefing on Irish Water, including set-up costs" to the Oireachtas Environment Committee tomorrow.
The confidential report shows that the Government demanded and expected the embattled utility company be set up using Bord Gais's "existing operational capacity" in IT, asset management, customer billing and other key functions.
The previously unpublished 20-page report made no specific mention of the need to rely on external consultants to establish the agency.
The report, revealed by RTE's 'This Week', said the decision to hand responsibility for Irish Water to Bord Gais was based on the "central element" that existing expertise within the system be used.
The document was drawn up by the Irish Water Consultancy Group, an inter-agency group made up of the Department of the Environment, Bord Gais and local authority employee unions.
The report from September 2012 was created just six months after the Government decided to create Irish Water as a subsidiary of Bord Gais.
"The Bord Gais Group has . . . specific skills from its own experience of transformation, customer relations, network management, metering and utility operation that can be deployed to assist in the successful establishment and operation of Irish Water," the report states.
However, as confirmed by the company, the €50m spend on consultants has gone to pay for consultants to advise on asset management services, customer services and other IT functions.
Transport Minister Leo Varadkar has said the accountability for expenditure at Irish Water rests with the company's executives.
Mr Varadkar said he believes it is important that Irish Water provides a full breakdown of the €50m spend on consultancy.
However Mr Varadkar refused to back calls for Environment Minister Phil Hogan to appear in front an Oireachtas Committee in order to answer questions about the massive spend.
Minister Varadkar said the accountability for expenditure lies with the company itself and chief executive John Tierney.
"The responsibility really lies with the chair and the CEO and they're the ones who will appear before the committee," he told independent.ie.
The minister added that wants to see a breakdown of the costs that have attracted massive criticism from TDs.
"There always were going to substantial costs in the establishment of Irish Water. If you were setting up the ESB, an post or either Rte from scratch, there would be very significant costs," he said.
"In the long term there would be savings. But I would certainly like to see a breakdown of all the costs. I don't believe for a second that it was all spent on consultants reports. I think when we get the details we will find out that a lot of the money was spent on setting up whole new systems like an IT system or a building system for example, which will always be expensive and of course would have gone out for tender."
Responding to the report, Irish Water said its establishment was "a complex task and there was always a short-term requirement for specific specialised skill-sets in the establishment phase".
A spokeswoman said: "The enduring organisation will be based on skills drawn from a combination of: the Local Authorities, Bord Gais and external recruitment. The expectation is that there will be minimal use of consultants in the enduring organisation."
Billy Timmins and Denis Naughten of the Reform Alliance highlighted the issue of transparency and accountability at Irish Water during a stormy committee stage hearing in the Dail on December 19 last.
They were critical of government TDs last night for whinging" about the lack of accountability when they rushed the bill through the Dail before Christmas.
Environment Minister Phil Hogan has become embroiled in the growing controversy over Irish Water's extraordinary spending on consultants.
As Mr Hogan has ministerial responsibility for Irish Water, TDs want to know how much he knew about the spending at the semi-state agency.
Chairman of the Environment Committee, Labour's Michael McCarthy, said he will be asking Mr Tierney and his colleagues about "how the money was spent, who sanctioned it, what it was spent on, and whether the cabinet was kept abreast of the spending".
Daniel McConnell Political Correspondent