National reserves agency in bid to reduce €444m debt
Ireland's oil reserves agency, which is among the semi-states being reviewed by economist Colm McCarthy, has started cutting back on its €444m debt after the global financial crisis raised its funding costs.
The National Oil Reserves Agency has embarked on a "debt-repayment programme to reduce funding costs within a reasonable timeframe".
The company, which buys and stores oil stocks in case of national emergencies, has seen its debts grow from €157.9m at the end of 2007 to €444m at the end of last year.
The company funds itself from a levy on the sale of petrol and oil products and also by borrowing. Communications Minister Eamon Ryan has increased the levy to €0.02 per litre, helping the company to raise its revenues, but debt levels will also be coming down.
"The agency commenced a debt-repayment programme early in 2010. The amount and timing of the repayment of debt is being planned, taking account of the need for the ongoing retention of liquid reserves and the renewal of essential borrowing facilities," said the agency.
The agency's annual results, showing a surplus for the year of €43m, also refer to the lack of storage facilities for oil in Ireland, which is believed to hold one of the lowest proportions of oil stocks within its own borders of all EU member states.
The agency has been buying up oil options, known as 'stock tickets', for the last few years to boost Ireland's reserves and has been using borrowings for these purchases. But the credit crunch has made these borrowings more expensive.
"The impact of the worldwide financial crisis is reflected in the form of increased interest charges. Arising from this, the agency committed, subject to affordability, to embark upon a debt-repayment programme to reduce funding costs,'' said the agency.
Oil storage in Ireland is "coming under pressure", said the company. The increased need to store biofuels has also reduced the storage capacity.