Investor set to walk away from € 1bn Kerry project
SHANNON LNG will walk away from its planned €1bn investment in the Ballylongford landbank unless the Commission for Energy Regulation (CER) agrees to cut tarriffs that could cost the gas company €75 million a year.
The long-running saga of the LNG plant entered its darkest hour this week after the CER announced on Friday its proposal for swingeing tarriffs on gas suppliers.
The liquified natural gas terminal would create up to 400 jobs for the four-year duration of its build and turn the landbank into the thriving hub of industry locals have been hoping to see for decades.
Anger is becoming even more acute in Ballylongford and Tarbert this week, however, following the CER announcement. The tarriffs are principally being introduced to pay for the upkeep of the existing gas pipeline between Ireland. and Scotland. However, Shannon LNG has no plans to use this pipeline.
Based on its own calculations on foot of the CER document on Friday, Shannon LNG believes it would face €75 million per year in tarriffs on gas imports through the landbank. This led Shannon LNG CEO Paddy Power to make the ominous pronouncement on Monday that 'Ireland is closed for business to the energy sector'.
His statement is being taken as the darkest note yet for the future of the plan.
While Shannon LNG would not make a more detailed statement to the media on the matter, The Kerryman understands the company now believes it cannot invest in north Kerry unless the CER drastically changes its planned tarriffs.
The matter is also being compounded by the consultative nature of the CER process. Friday's announcement is a draft decision and open to debate into the future, further delaying the already long-drawn out process that has stymied progress on the LNG project for years.
The CER told The Kerryman that it would not comment on Mr Power's figure of €75 million per year saying it was a ' calculation for Shannon LNG to make'. But it said a final decision on the gas tarriff process would be made by the end of April. THE head of Shannon LNG, Paddy Power, has accused the Commission for Energy Regulation (CER) of putting obstacle after obstacle in the way of the conpany's plans to construct a billion-dollar gas plant in north Kerry that could essentially save the area from being devastated by recession.
Mr Power said the company is frustrated and utterly bewildered at the CER'S decision to suddenly change government and regulatory policy on gas pipelines tariffs, which he claims will now cost Shannon LNG up to €75m per year in tariffs.
At a meeting of Kerry County Council on Monday — three days after the CER published its draft paper on gas tariffs — Mr Power said he was at a loss to understand why the CER is putting 'block after block' in the way of a ddevelopment that will offer a capital investment of €1bn and secure 600 jobs over the next four or five years.
He explained that initial tariff arrangements were put in place back in 2011 to encourage other suppliers to come and invest in the country, whereby each supplier paid their own costs. Now he says, the CER is asking companies such as Shannon LNG to pay tariffs to subsidise their competition, which he said, have 'absolutely flummoxed' the company.
"We were all set to start in 2014, after years and years of delays, and now we are being told that we have to pay €75 million per year to subsidise competitors," he said. "We have ticked all the boxes and have already invested €62 million in the project, and we find it frustrating, to say the least, that the rules are now being changed at the 11th hour.
We trusted the ministers and that is why we made the investment. This is no way to do business. As far we are concerned Ireland is closed to business for the energy sector."
Mr Power said that the company is extremely bewildered that so many ' bureaucratic challenges' are being put in the way of the project by the CER, which he said is supposed to encourage fairness and competition.
He said the company took gave exception to the new regulations that were introduced only last year, when Shannon LNG was ready to go ahead, saying it did not bode well for future investment in Ireland.