Tuesday 21 May 2019

'No better option,' says Varadkar on broadband plan

Frances Fitzgerald pictured with Communications Minister Richard Bruton as they canvassed at St. Stephen’s Green today.
Frances Fitzgerald pictured with Communications Minister Richard Bruton as they canvassed at St. Stephen’s Green today.

Kevin Doyle, Cormac McQuinn and Adrian Weckler

The Taoiseach and Communications Minister have rejected criticism that the upfront sum of €220m to be invested by the bidder for the €5bn National Broadband Plan (NBP) rural network is too low.

Mr Varadkar clashed with Fianna Fáil and Sinn Féin in the Dáil, telling them "there isn't a better option".

The Taoiseach described it as "the biggest investment in rural Ireland ever".

His remarks came after the bidder for the State-subsidised NBP confirmed its initial outlay in the 540,000-home network would be €220m, rising to €2.4bn over the lifetime of the 25-year contract.

The Government is to spend up to €2.6bn in subsidies to build the 146,000km network.

Meanwhile, Communications Minister Richard Bruton defended the NBP's structure of handing over the network at the end of the 25-year project.

"If this came back to the State in 25 years, the company's incentive would be there to run it down," he told a joint Oireachtas committee.

"By not having it revert to the State, you create an incentive for the company to invest in the network for the long term."

Mr Bruton also said if the company "fails" to meet its quality or roll-out targets, the network can be seized by the State under the contract.

He said if the network turns out to be "more profitable" than current projections, the contract allows for the State to reclaim some of that profit.

However, he declined to reveal more detail about the contract, saying most of the financial terms will remain confidential until after it is signed "and then we will publish it".

Balance

The project has come in for criticism over the lack of information around the balance between what the State and National Broadband Ireland (NBI) - the preferred bidder controlled by businessman David McCourt's Granahan McCourt - will spend.

Critics, including the Department of Public Expenditure's senior civil servant Robert Watt, have asked whether the State is paying too much for the rural roll-out, and questioning whether NBI is taking enough risk under the terms of the deal.

However, the company says its long-term financial obligations are sizeable.

"NBI shareholders, as part of its initial funding of the project, will invest €220m in equity and working capital," said a spokeswoman for the company.

"This investment is the initial capital required to commence design and build activities of the NBP network and is invested ahead of the Government subsidies, thereby placing this investment at risk first.

"NBI will use these funds to get the project up and running, and this a first, minimum spend."

The company declined to reveal any other figures around its contract details.

"NBI is finalising negotiations on contracts with over 40 specialist subcontractors to assist in delivery of this major project and it is not appropriate that commercially sensitive information be disclosed which could prejudice these negotiations," said the spokeswoman.

"Such negotiating parameters are normal for large infrastructure projects and it is for this reason that, prior to contract signing, commercial investments are not disclosed."

Irish Independent

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