Committee Reports > List of Committees > Dáil > 1988 > Committee of Public Accounts > Report - Appropriation Accounts 1984

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of public Accounts)

Dé Céadaoin, 2 Méan Fómhair 1987.

Wednesday, 2 September 1987.

The Committee met at 11.30 a.m.

Members Present:

DEPUTY G. MITCHELL in the chair

Mr. P. L. McDonnell (An t-Árd-Reachtaire Cuntas agus Ciste) called and examined.

VOTE 48—ENERGY

Mr. J. C. Holloway called and examined.

1070. Chairman.—This is the first meeting of the Dáil Committee of Public Accounts after the summer and I welcome the committee back. I welcome also Mr. Joseph Holloway, Secretary to the Department for Energy who is the Accounting Officer for that Department.

Paragraph 70 of the Report of the Comptroller and Auditor General reads:

Subhead L.—State Support for Mining Operations

I referred in paragraph 75 of my previous Report to payments totalling £665,217 made from this Vote to a number of banks in respect of interest due to them by Bula Limited.

These payments were made under Government approved arrangements whereby the banks which had a mortgage on the Bula orebody and guarantees from the main private shareholders undertook not to proceed against the company or its guarantors for any further interest becoming due in the period up to 30 September 1983. These arrangements were made with a view to facilitating the continuance of discussions with third parties regarding the development of the orebody. In December 1984 a further sum of £234,318 was paid to meet interest due to one of the banks in the period 1 September 1984 to 30 November 1984.

The total amount issued from the Vote to 31 December 1984 viz. £899,535 has the status of a loan to the company ranking pari passu with funds advanced to the company by the private shareholders.

Have you anything to add, Mr. McDonnell?

Mr. P. L. McDonnell.—There is only one paragraph in my 1984 report with which the committee have to deal this morning and that is paragraph 70. It is really for information. It outlines the circumstances in which payments were made from voted moneys to a number of banks to meet some of the interest due to them by Bula Limited. This was done in order to facilitate negotiations which it was hoped would lead to the development of the Bula ore body. In addition to the amounts mentioned in the paragraph a further sum of approximately £57,000 was issued in February 1986 for more interest which was due to the banks in December 1984. I am sure the committee are aware that the negotiations were not successful and that a receiver was appointed to the company and subsequently an order to wind up the company was obtained by the banks. I understand that further legal steps have been taken in connection with this. However in that regard the Accounting Officer would be more competent to fill the committee in on the details.

1071. Chairman.—Is there anything Mr. Holloway would like to add to that?

Mr. Holloway.—Not really. In the first sentence of paragraph 70 the Comptroller and Auditor General refers to an earlier report of his which related to payments of £665,000 made to meet interest obligations to the banks in earlier years. What happened towards the end of 1984 was a continuation of principles established in earlier years under a number of Governments. There are, to my knowledge, at least three sets of legal proceedings involved in this commercial entity. What the outcome of those proceedings will be I do not know, but obviously one has to be careful about saying anything which would affect, adversely or otherwise, the rights of the State or other parties involved in those legal proceedings. The transaction was a reasonably straightforward one. Negotiations being conducted with three foreign enterprises held out hope for the development of the ore body. In keeping with a principle established in earlier years when similar situations arose, the Government thought it would not be good business to allow the enterprise to fail for want of funds to meet interest obligations to the banks while these negotiations were going on. The negotiations turned out to be successful but for reasons that I do not want to go into now, because of the legal aspects, the agreement that was drawn up and which would have been a satisfactory conclusion to this rather painful and tedious business was not accepted by the parties concerned. The Comptroller and Auditor General has referred to receivership and to winding up proceedings. The winding up has been contested by the private shareholders and that is a matter which is still subject to litigation. There are other proceedings relating to the rights and obligations of the different parties which incorporate very serious allegations about the attribution of blame for the things that happened to the enterprise. I would be in considerable difficulty in making any further comment.

Chairman.—We agreed at the last meeting that certain persons from the public could be allowed attend if they were introduced at the beginning of the meeting. A man by the name of Michael Grange who is a student of public affairs has two students, one from West German and one from Belgium, on an exchange visit and he has been in touch with the Clerk of the Committee. Is it be agreed to admit him to the meeting?

Agreed.

1072. Deputy Foley.—When did Avoca Mines go into receivership? What fees have been paid to date to the receiver and when is it anticipated that the receivership will be wound up?

Chairman.—Are you speaking of Avoca? We are still only dealing with Bula.

Deputy Foley.—Yes. I am sorry.

Chairman.—We will come back to that when we come on to the Avoca mines.

Deputy Foley.—All right.

1073. Deputy Naughten.—Could Mr. Holloway inform the committee the total cost to date to the taxpayer of the State’s involvement in Bula?

Mr. Holloway.—The initial investment was £9.54 million. With the interest payments which were spread over a number of years, the £665,000 referred to in paragraph, 70, plus the £280,000 arising out of the decisions of 1984 it adds up to £10.5 million. We have to await the outcome of the legal proceedings to see whether that investment has been nugatory or not. There are very serious issues to be decided by the courts.

1074. Deputy Foley.—What is the estimated value of that particular investment to date?

Mr. Holloway.—I would find that extremely difficult to comment on because one of the matters the court will have to settle is whether the ore body should be developed in a particular way. A decision of the court has been sought on that question and depending on the court’s decision, there will be financial consequences ensuing. We have to await that.

1075. Deputy Foley.—Were the interest payments which were paid the total liability of Bula Limited or were they the State’s share of that liability?

Mr. Holloway.—No, in fact it was a very small part of the total interest accruing for a long period of time. The private shareholders had been meeting all the outgoings and supporting all the expenditures of the company by giving personal guarantees to the banks and paying cash. There were occasions when they ran out of money and different Governments took decisions that some contribution should be made by the State to prevent foreclosure by the banks at crucial stages when negotiations were being conducted with various parties.

1076. Chairman.—The £9.54 million was paid in three instalments, in 1977, 1978 and 1979 and for that the Government acquired a 49 per cent share in Bula?

Mr. Holloway.—That is right.

Chairman.—A share of what? Did they get any return on that investment?

Mr. Holloway.—No, not yet, because the mine has not gone into production.

Chairman.—Is it likely to? Has the State done an assessment of what it is likely to get as a return on that investment?

Mr. Holloway.—We will have to await the outcome of the court proceedings.

Chairman.—Leaving aside the legalities, is there an asset there?

Mr. Holloway.—There is an enormous asset there.

Chairman.—Which the State will get a return on?

Mr. Holloway.—I believe that that is the case, one way or the other.

1077. Deputy Desmond.—I have two questions. On the decisions to pay the interest of £665,000 were those decisions the composite decisions of successive Governments?

Mr. Holloway.—It would be embarrassing for me, Deputy, to identify any particular Government. Those decisions, involving the payments that aggregated £665,000 were taken I think, 1981 and 1982.

Deputy Desmond.—And, if I recall, 1983?

Mr. Holloway.—No, I think there was a payment made in 1983 arising out of a decision taken in 1982 but I could be wrong.

Deputy Desmond.—But they involved different Governmental periods?

Mr. Holloway.—There is no doubt about that, yes.

1078. Deputy Desmond.—The second question is, appreciating your exceptional constraints regarding the litigation, is it not unreasonable to assume from the draft agreement of September 1985 — if I recall in another setting — that the net Exchequer benefit from that agreement would have been very substantial?

Mr. Holloway.—Yes, I think that is pretty well publicly known although the agreement in detail was not published. It was a solution that would have treated all parties very fairly, including the State, and would have solved this in a most satisfactory way. It is quite right to say that the State would have benefited from it very significantly but not, in my view, in a way that was unfair to the other parties. I think the agreement was fair all round but because of our very favourable position in relation to the Tara Mine we would have certainly got very considerable benefits from the way in which the Bula ore body was to be developed by Tara.

1079. Deputy Desmond.—And it is not unreasonable to say that the State would have recovered its initial investment of close on £10 million, plus interest, from 1977?

Mr. Holloway.—I have no hesitation in answering that in the affirmative.

1080. Deputy Foley.—Will Mr. Holloway explain the subhead — consultancy services, £530,000? Was this paid to one firm or were there a number of firms involved? Under subhead A1, Salaries, Wages and Allowances, how many staff were involved?

Mr. Holloway.—May I take the staff first? We pride ourselves on running a fairly tight ship in the Department and the numbers employed have decreased from 232 in 1985 to 207 today. Overtime payments have been reduced by about a quarter. That, perhaps, answers the question on staff. On consultancies, I could give the general breakdown of the sum of money. The main heading was under “Petroleum Exploration and Development”. That has to do with the employment of petroleum experts to carry out a variety of tasks such as the analysis of cores, supervising drilling operations, analysing, seismic and so on. We have reduced that expenditure very considerably since 1984 by relying on our own resources. Having recruited and trained our own experts, we now find that we can manage with less reliance on outside consultants. The next major item was under the heading of the gas development programme. This had to do with the change-over in Dublin from town gas to natural gas and the proposals for the involvement of BGE. Quite a lot of financial and technical analyses had to be done in connection with that project. The amounts were considerable but in relation to the investments which were taking place and for which the State was directly or indirectly becoming responsible I do not think they were excessive. The next big item was the ESB price inquiry, known colloquially as the Jakobsen Report which cost £55,000. That was a very considerable exercise and we hope that over the years significant benefits will accrue from it. Then there is a string of other things, mining, minerals, miscellaneous etc. but those are the major heading coming to £530,000.

1081. Deputy Foley.—Travelling expenses are £437,000. How many staff would get travelling expenses and what was the highest figure paid to any individual?

Mr. Holloway.—We do not have the expenditure per head.

1082. Deputy Foley.—How many staff would get travelling expenses?

Mr. Holloway.—I cannot answer, except to say that a fair amount of the Department’s business has a Brussels content and there is a fair amount of travelling to be done. Probably one-third of the Department’s officers find it necessary at some stage during the year to go to either Brussels, Luxembourg or Paris. There is also local travel, within the country, mainly by the GSO. In my capacity as Accounting Officer, I try to keep a close personal control of this business. Every week I get a return presented to me, not of foreign journeys that have taken place but of journeys which are proposed and I frequently disapprove of them or, if there is a proposal to send two people, I decide to send one only. I adopt quite a spartan attitude towards this business. Unfortunately, however, when you are a member of international organisations, if you do not occupy the seat on certain crucial occasions, you can lose out financially or there could be very significant embarrassment, so there is a thin line there and we do our best to find it.

1083.—Deputy Foley.—What is the table of rates for local travelling expenses?

Mr. Holloway.—I do not know what the per diem overnight allowance is. All I know is that people say it is not enough to meet their outgoings. The last time I looked at the figures, I was inclined to agree with that conclusion, unless one stays in some “three and fourpenny” place. The mileage allowance is generally regarded as being reasonably generous, if one adopts a certain attitude towards the accountancy of it. It is scientifically worked out to take into account all the costs of an officer’s car and umpteen exercises have been done on that subject by the AA and other organisations. The mileage figure may look generous. It can go up as far as about 52 pence per mile, but clearly the wear and tear on the vehicles in undertaking these journeys has its own effect on the investment that was undertaken by the officer concerned in buying the car.

1084. Deputy Crotty.—I was pleased to note that the Accounting Officer monitors travelling expenses. I was rather disturbed to note the percentage of travelling expenses as related to salaries and wages. Taking the Department of Energy as against other Departments, it is very high. The committee would require more details on this aspect of spending and a note from the Accounting Officer is necessary. The cost of travelling is up to near the 20 per cent mark in relation to salaries and that certainly requires more detailed research.

Mr. Holloway.—I will certainly supply that note. So far as the foreign travel is concerned, we recoup the cost from the EC and the committee will find the figure for that in the Appropriations-in-Aid.

1085. Deputy Crotty.—It is very small. It is only £37,000 as against an outlay of nearly half a million pounds.

Mr. Holloway.—I will cover the lot of it in detail in my note and justify it to the committee.

1086. Chairman.—Do the committee agree to the suggestions that we seek a note? Agreed.

1087. Deputy Desmond.—I notice in the accounts under Subhead H — Rural Electrification — that there is the contra entry of the £2.45 million and the £2.45 million again. Is there any prospect, in terms of the rationalisation of departmental accounts, that that contra entry would ultimately disappear?

Mr. Holloway.—It is a rather peculiar item which distorts the Department’s accounts. Our total estimate is roughly about £10 million and we try to generate as much income as we can. Our Appropriations-in-Aid have varied around £2 million. Here we have a major item of £2.5 million expenditure and it is, to say the least, a bit of an anachronism. It is a bit unreal. It is purely book keeping. All of this money was spent donkeys years ago. The explanation for it, as far as I can recall, is that the State, in its anxiety to promote rural electrification, had entered into a commitment to subsidise certain expenditures by the ESB. The ESB estimated the amounts required each year and the subsidy being provided by the State was provided out of the Central Fund but on the usual condition relating to Central Fund expenditures that annually there would be repayments from voted moneys to the Central Fund. The rationale of that is to enable the Legislature to have the opportunity to debate on an annual basis what this is all about. Every year the amounts of money that were paid out of the Central Fund were converted into annuities and those annuities were more or less consolidated into this sum which is now £2.45 million. What that money represents is the annual amounts required in reflection of the annuities to reimburse to the Central Fund the expenditures that took place over a long period of years many years ago. We felt that there was some rather useless book-keeping in this and we asked the Department of Finance if we could not put a pen through what seemed to us to be useless book-keeping. There are some fundamental principles which would be of concern to the Department of Finance, but I would much prefer to see them explaining their position on it if the committee want it.

1088. Chairman.—Since we have a matter on the question of the reformation of the Estimates coming up later on, perhaps the official from the Department of Finance would like to comment on that point?

Mr. Carey (Department of Finance).—Do you want me to do that now?

1089. Chairman.—Perhaps Mr. Carey will give us his observations on what Mr. Holloway has just said. We have a letter from your Department which we will be considering later on the change in the format of certain Estimates.

Mr. Carey.—In relation to rural electrification there were a number of reasons why the Department of Finance wished to continue with this particular system. The main reason was in relation to transparency. As Mr. Holloway said, it gives the Oireachtas the opportunity of debating this item. The initial money was advanced from the Central Fund by way of repayable advances. This mechanism puts the money into the limelight, as it were, of the Estimate and enables a continuing watch to be kept on the matter by the Oireachtas. As I only returned from leave yesterday I have not had a chance to check up on everything on this. The legal position may be such that, if this particular arrangement were to be terminated, all of the outstanding moneys would have to be advanced through the Vote at the one time. This could, obviously, cause difficulties. I cannot be 100 per cent sure of that but my belief is that it is so. The main purpose of the arrangement is, however, to maximise transparency.

1090. Chairman.—Fine, may we have a note from you on that when you have had time to look at it and we might consider it further?

Mr. Carey.—Yes.

1091. Deputy Desmond.—I should like to put it to the Accounting Officer the note on page 179 that due to difficulties of Dublin Gas no contributions were made by them to the Gas fund in 1984. Is this the beginning of the non-contribution situation of Dublin Gas?

Mr. Holloway.—Not really. This item, by the way, is somewhat archaic also. It is a very small amount of money, as you will see, and has to do with some strange provision in the Gas Regulation Act of 1920. It is conceivable that we may abandon this in view of the very significant changes that are now taking place in so far as the State’s involvement in gas is concerned. To answer specifically your question, the words that are used are somewhat misleading. It was not a question of dispensing them from their obligation to pay. They just did not manage to pay it within the year in question but it was paid subsequently. In the normal course we would expect to get that contribution. At the moment I am not too sure that this kind of thing has very much meaning and the amount of money involved may not be commensurate with all the toing and froing which has its own cost in relation to it.

1092. Chairman.—Before we go off Dublin Gas, I want to ask some questions. The expenditure in the year was £260,954 for town gas, presumably largely paid to Dublin Gas. I should like to ask the Accounting Officer if he is satisfied that the distribution of gas in the city in the past and the subsidy given by his Department in the past were properly managed? Is he satisfied that the gas system in Dublin was sufficiently safe in the past?

Mr. Holloway.—I would have to draw a clear distinction between a number of things which the chairman has coupled together in his question. First of all, in so far as the subsidy for town gas is concerned, that has come to an end now. We are talking about historical matters here in the 1984 accounts. There is no longer any subsidy. The origin of the subsidy for town gas had to do with a particular moment in time following the first oil crisis when the price of naptha went through the roof. It was a political decision because it had a very significant domestic and consumer content in it. It was quite common at that time to try to insulate the consumer from some of the harsher economic realities. This was a very harsh economic reality and the Government decided — indeed, it involved a series of Governments — that the gas should be subsidised. As regards the management of it, I am quite certain at least during the years I was Accounting Officer that this thing was administered with considerable care. It is not too difficult to establish the sales of gas and how many units were sold and, therefore, what amount of subsidy was due from the State. To come to the broader question as to whether we were paying subsidy to a corporate entity that was properly managed to make the maximum use and to derive the maximum benefit from that subsidy, I would have to say that the answer to that question was “no”. I have no doubt in saying, and it has been said publicly by several Ministers, that there was something very seriously wrong with the management of that enterprise at almost every conceivable level.

1093. Chairman.—You used the word “archaic” in relation to accounting procedures for Dublin Gas. Would you think the word “archaic” in relation to the way the company was managed in the past would be too strong?

Mr. Holloway.—I would use stronger language.

1094. Chairman.—May I ask how many employees in your Department are concerned with the safe distribution of gas? How many people are paid to look after the safe distribution of gas?

Mr. Holloway.—We have a number of people in the administrative category. We have our best people in there. Then we have people who have both administrative and technical competence and they are doing a first-class job. On top of that, the Department’s technical adviser, and his assistant, two extremely good officers, are devoting practically the whole of their time to this business of ensuring that everything possible is done to bring about radical changes in relation to the safety of gas operations in Dublin, Cork, Limerick and elsewhere. There is a fair amount of work to be done. We have got the legislation passed and now we have to make the orders giving effect to the principles set out in that legislation. We have a timetable set out, a sequence of events which is very closely monitored and which we are adhering to. I am quite satisfied that so far as the Department are concerned there will be no deficiency on our part in looking after this business.

1095. Chairman.—How many people concerned with safety are employed in the Department?

Mr. Holloway.—Exclusively on safety?

Chairman.—Yes.

Mr. Holloway.—I do not think that you could apportion it in that way.

Chairman.—Could you say how many man hours?

Mr. Holloway.—Yes, I would say, and I am speaking roughly in apportioning it, that it comes to about two and a half senior people full-time.

Chairman.—How many senior people?

Mr. Holloway.—On the total gas side, about eight.

Chairman.—We can take it that they are continuing to monitor and to do everything possible to ensure that the system is made safe?

Mr. Holloway.—Our main involvement in this will intensify rather than tail off. It will have to tail off at some stage, but I expect that in order to bring about these changes we are going to become more deeply involved, before we become less involved in it.

Chairman.—Along with the people employed in the Department, there are additional people employed in Bord Gáis?

Mr. Holloway.—Absolutely.

Chairman.—They are also involved in safety. How many are there?

Mr. Holloway.—I could not say. The purpose of our people is to see that the other people are doing their jobs. In the past it was proved conclusively that people were not doing their jobs.

1096. Chairman.—The Accounting Officer said that the ministerial order is being prepared. Can he give a date for the takeover?

Mr. Holloway.—The order I am speaking of now was not specifically related to the takeover. It was to give effect to the various powers that the Minister wanted to take unto himself under the legislation recently passed by the Oireachtas. So far as the actual takeover is concerned, the documentation involved in that has not got to do with statutory instruments or anything like that, but rather legal contracts and what have you.

Chairman.—Are we two weeks away?

Mr. Holloway.—Something like that.

1097. Deputy Desmond.—In relation to gas, what would have happened if the State had decided in 1983-1984 to disengage completely from any involvement in Dublin Gas?

Mr. Holloway.—The enterprise would have failed. Gas supply would have come to an end and the cost to the economy, because people would obviously have to have some alternative energy source which presumably would be electrical appliances for the main part, would have been something in the region of about £190 million. The experience in the North of Ireland bears out those prognostications because the original estimate for the North was £114 million and that has gone up to about £140 million now. The cost of closing these things down or allowing them to collapse is very considerable and there is no doubt that the decision not to allow Dublin Gas to fail was founded upon what I would call good financial management or good economic management.

1098. Deputy Desmond.—What is the cost now of Exchequer natural gas subsidy to Dublin Gas?

Mr. Holloway.—I would like to be able to rattle off figures in detail but my difficulty is that I have come here to be examined on the accounts for 1984. I did not know I was going to be examined on the affairs of Dublin Gas.

Deputy Desmond.—I appreciate that.

Mr. Holloway.—I would like to answer it in this way. Quite clearly the initial idea was that public funds would be provided to Dublin Gas as it was then constituted as a private company, to enable this conversion to take place. For a variety of reasons that experiment failed. The next question that had to be asked was: “Are we going to allow Dublin Gas to go into liquidation; are we going to cut off 160,000 consumers from their chosen energy source?” The Government took a certain decision on that and the financial and economic numbers support that decision. That decision was that the enterprise would be taken over by BGE. In the process of straightening out the affairs of Dublin Gas clearly significant investments were required by BGE which were authorised by the Government under section 11 of the Gas Act of 1976. Just to give one example, it was quite clear that one of the things that had been plagueing Dublin Gas for decades was overmanning and bad work practices. Something had to be done to straighten that out. A very satisfactory job was done in that respect by the receiver and by the staff manager of Dublin Gas who was helping him in that task and who has now gone to the bus company. It was an extremely good job. The cost was something like £10 million and there were other tens of millions. The rectification of the pipelines will obviously cost a fair amount of money. We have done very detailed analyses of the affairs of Dublin Gas and we are quite satisfied that with the proper management of the affairs of Dublin Gas it will be a viable proposition and not just in the long term. We see it as being in a satisfactory position within a short period of time. A crucial thing in that connection is that the increase in the sales of gas in the Dublin area which had been increasing quite satisfactorily will be resumed. Obviously, the events that took place since last January shook public confidence in gas and that affected sales. As soon as the affairs of Dublin Gas are put in order and we demonstrate to the public conclusively that the Minister is serious about the safety question, as he most emphatically is, then we will be able to put those worries to bed and we will get a resumption of growth in sales. That will transform the affairs of Dublin Gas. It is only fair to mention, so far as public attitudes are concerned, and looking at fatalities, accidents and things of that kind, that if one looks at the statistics, the average number of people who died in Dublin in the days when town gas was used in the system was something in the region of 10 or 12 per year and we have not been within an ass’s roar of anything like that figure since the conversion to natural gas. Obviously, even a couple of fatalities is something to worry about but from the point of view of public safety — and we are not trying to discount the kind of horrors we have gone through — we are into a better regime where human life and safety are concerned then we had before.

1099. Chairman.—May I come in on that point, would it not be true to say that when using the old gas system people died more from poisoning or asphyxiation?

Mr. Holloway.—Yes indeed and some of them may have been suicides.

Chairman.—And, under the new gas the dangers are more of explosions than of poisoning?

Mr. Holloway.—That is true.

Chairman.—So that the dangers to masses, to big numbers, is higher under the new gas?

Mr. Holloway.—Yes, but I suppose death in any form is very tragic.

Chairman.—But the danger of the old gas say bringing down a high rise building was not as much as it is under the new gas?

Mr. Holloway.—Yes, but we are quite emphatic in saying that that is not a gas problem, that is a buildings problem. I think that is the view of Cremer and Warner. Cremer and Warner were asking the question whether buildings with this inherent collaspability in them should be built. They are no longer permitted elsewhere.

1100. Chairman.—Would you agree that the gas grid itself, if you could locate all of it, would also not be as efficient as one would like?

Mr. Holloway.—That is true and certain significant parts of it will have to be replaced. The experts will tell you that there is no such thing as a perfect gas system; there are always leakages and there are always terrible things that can happen if people do not behave properly. That will be one of the umpteen things we will be doing under this new safety programme.

1101. Chairman.—Could you say when the decision was made by An Bord Gáis to take over New Dublin Gas?

Mr. Holloway.—It was taken at various times. Their interest in this goes back a long time.

Chairman.—But I understand the Minister has had difficulty in persuading them to take it over over a long time. When did they decide to take it over?

Mr. Holloway.—I would say it was last April.

1102. Deputy Desmond.—Are you concerned that where the State has paid very substantial moneys, the extent of which are as yet unknown and where it appears that there will be a very substantial ongoing subsidy required for Dublin Gas there was available a parallel energy source, namely, the ESB, which has a surplus of generating power to the extent of 35 per cent, a surplus capacity that is still there and has been there since 1984, and long before, to the extent that power stations are in some respects half closed? In that framework, bearing in mind that the energy needs of consumers must be provided, to what extent are you concerned that there should be in a country of this size, in a major urban of this size, two very expensive parallel energy sources available with little effort to rationalise the situation?

Mr. Holloway.—First of all as regards the history, I am not too sure that I would agree with you that there is going to be a continuing subsidy. There were certainly costs involved in this but I do not think there are going to be continuing subsidies especially if we can get the sales right. Any of the experts who look at this see no reason why this should not be achieved. As to why we did not just abandon the gas business and allow the ESB to supply the needs of these consumers using up as the Deputy rightly says, some of the surplus generating capacity, I would have to point out first of all that when you look at the cost of this it is not just the question of the costs to the ESB one has to look at the cost to the consumer. Even if the State is not going to pay the bill one still has to regard it, because it is inescapable, as being a cost to the economy. The cost to the economy, even if all these poor unfortunates had to pay out of their own pockets the cost of getting rid of their gas installations and replacing them with electrical ones, would have been very considerable. In terms of national economics, whatever about the affairs of the individuals concerned, our belief was that it would not be justifiable.

I would like to add that the prevailing view, and I am inclined to agree with it, is although it is nice to think about a single entity being responsible for all the energy needs of a particular area — one can make rather nice assumptions about the inherent efficiencies of such an arrangement — it is not necessarily a good thing. We know that monopolies are not very attractive and to have people totally dependent on the ESB for all their forms of energy would certainly not be satisfactory. It is well accepted now by energy experts that while it is all very well to talk about energy suppliers tripping over each other, the benefits of competition between them — there certainly is competition now and I think it will hot up — are very considerable and that the overall advantage to the economy is something that outweighs other disadvantages. As regards the ESB over-capacity, there is no doubt that it has been very substantial and that had to do with the fact that the ESB planning, obviously, has to have a very long time lag. They have to decide this year to build a power station to meet demands that will be arising, let us say eight years from now. If the calculations about the state of demand eight years from now turn out to be overoptimistic, then clearly you are going to have a surplus capacity on hand. The economic downturn that has taken place has, inevitably, left the ESB with significant amounts of excess capacity. Electricity consumption is taking off again. I do not know exactly what the current rate of increase is but it was proceeding at a rate of around 4 per cent some time ago. I do not think we will ever get back to the old days of an annual increase of 12 per cent. With each increase in electricity consumption the more you are diminishing the surplus capacity and I do not think it is going to be a serious problem in the future.

Chairman.—I think we have dealt with that fairly well.

Mr. Holloway.—Obviously, it is something that we take an interest in and we are very concerned about it. I would like to tell the committee that one of the outcomes of this invigilation is that in the ESB strategic plan which we have recently received and which is under discussion, there is no provision for capital expenditure on generating capacity until well into the next century.

1103. Deputy Naughten.—On that last point, I was under the impression that the ESB submitted proposals to your Department over the last 12 months for a number of new hydro-electrification stations throughout the country and that those proposals were approved?

Mr. Holloway.—This is commonly called the Valoren programme. We had, for many years, been interested in the development of the smaller rivers and we had surveys carried out by the ESB and An Foras Forbartha. We had them published because we wanted to encourage people, especially in rural areas, to make the most of whatever capacity there was in streams running through small towns and through farmers’ lands. It had a beneficial effect and there had been a certain take up of these ideas. What it means is that energy which would otherwise be going to waste is now being used. The most recent development on that was that the Valoren programme emerged out of Brussels and we had to consider the best ways of utilising those funds and a certain proportion of them was allocated for the harnessing of a number of small rivers mainly in the south and south west. That ought to take place and we are very interested in it. It is sound economically and we are using Brussels money. The addition of this to the total generating capacity will be minimal. It is a minute fraction of the total generating capacity.

1104. Deputy Naughten.—Earlier on the Accounting Officer stated that there would be no further capital investment by the ESB until the next century. There is a capital commitment from the ESB in these projects?

Mr. Holloway.—It is minute.

1105. Deputy Naughten.—At the same time we have 35 per cent of surplus generating capacity in the country. It is not stupid spending capital money on these projects, small though it may be, at a time when we have massive additional capacity?

Mr. Holloway.—You have got to distinguish between capacity and actual energy that is generated. In the case of the small rivers what is happening is that the energy is not harnessed. It goes to waste. We are going to rectify that and it will mean that we will have less imports of oil and coal. It is eminently justifiable. There is another dimension to it in that, apart from its energy context, at least in some cases it can be regarded as a form of business enterprise because there are satisfactory arrangements for the purchase of electricity by the ESB from people who find that what they are generating is surplus to their needs. It is a very small part of total generating capacity minute. What we are doing now is eliminating waste and we are doing it with Brussels money.

1106. Deputy Naughten.—Would the Accounting Officer not accept that if it is justifiable now, it was irresponsible of the Department ten years ago not to harness these rivers then?

Mr. Holloway.—It is a question of scale. For many years the ESB were preoccupied with larger resources. They started with Shannon, then the Liffey, then the Erne and the next one was the Clady, going further and further down the scale until they reached things that they felt were not of great economic significance. I have been dealing with the ESB for more than 30 years and it was always departmental policy to get them to keep looking at the development potential of our own resources. Obviously, the change in the price of energy has a distinct bearing on this. When you can get oil for half nothing from abroad, which was the case for many years, there is no point in spending money on small hydro. When the price of energy went up small hydro became more economic. It was because of the change in the overall energy scene and exposure on the oil front that the EC decided to provide money to promote this business.

1107. Deputy Naughten.—I would like the committee to get a note on the number of stations, the capital cost involved and the output as a result.*

Chairman.—Would you arrange for that, Mr. Holloway?

Mr. Holloway.—Yes I will, but may I suggest that the other committee dealing with State-sponsored bodies have already had their examination of ESB affairs. It might be more appropriate for the ESB to get into the box and explain this but I will comply with the wishes of the committee.

Chairman.—We will send your recommendation to the Committee on State Sponsored Bodies.

1108. Deputy Naughten.—I understand that Bord na Móna have a submission before the Department which would involve a major development in the west of Ireland, providing 2,000 new jobs and the full development of the Derrafadda bogs into which a lot of taxpayers’ money has been ploughed to date. When will the Department reply or have they replied to that report?

Mr. Holloway.—I have some difficulty because this is largely a political matter of major policy, but it is true to say that the proposal the Deputy is speaking of was never on. It does not exist today because it has been withdrawn.

Chairman.—In other words, it got the thumbs down?

Mr. Holloway.—It is not under consideration.

1109. Chairman.—With regard to subhead P, £600,000 less was spent than was envisaged. Why was that?

Mr. Holloway.—This relates to the western electricity scheme. It is a question of accountancy.

1110. Chairman.—It says in the note that the grant applications were fewer than had been anticipated.

Mr. Holloway.—That is true but there is another element in it. As a matter of good financial management we tried to create a situation in which we got advance payment from Brussels, as an alternative to a situation where we did not get paid until the money was spent. The system we have is that each year we estimate in consultation with the ESB the likely number of connections there are going to be and the cost. Then we present that in Brussels and we get a payment in advance. At a later stage in the year there has to be a reconciliation on that because it happens — and I do not think we should be apologetic for it — that the number of connections are less than we budgeted for. We concentrate on getting as much money from Brussels as we can, as early as possible. There is no question by the way — in case this is what is worrying Deputy Naughten — of these entitlements going unused. The scheme will last for a number of years. It is for a specific sum of money, around £13 million, and it is our intention that all the entitlement will be availed of before the end date comes.

1111. Deputy Naughten.—Is it not the situation that the regulations governing the scheme have considerably tightened up? Is that not the real reason why you have moneys unspent in that particular section and were tightened up at about that time?

Mr. Holloway.—No, I do not think that the rules were tightened up.

1112. Deputy Naughten.—There was a change in the way they were being applied?

Mr. Holloway.—The people in Brussels adopted a rather severe interpretation of one of the rules. One of the basic rules — and all this programme has to do with the impoverished state of agriculture in the west of Ireland — in the electricity part of the scheme says that this subsidy will be available to a person whose principal income is derived from agriculture. It so happened that in the west of Ireland there were quite a number of people who were on farmers’ dole, or whatever the appropriate expression is, or were in receipt of some other social welfare payments and those payments exceeded what they were generating as farmers. The people in Brussels said, “these people do not meet the requirement and the subsidy will not be paid”. We are trying to get that rule changed and I think we will be successful. There were also problems about new houses being built, old houses being abandoned and which house was entitled to the subsidy. We have put proposals to Brussels to get a more liberal interpretation of those things and perhaps we can be confident about them. One way or another, I think you can take it that the total entitlement which is due to the State will be spent by the due date.

1113. Deputy Naughten.—Is it not a fact that if an applicant in the west of Ireland was receiving £20 unemployment assistance and deemed to be earning £15 from his farm that he was disqualified?

Mr. Holloway.—That is right.

1114. Deputy Naughten.—And that situation has existed since about 1984? It is a long time for negotiations to be ongoing. When will they be concluded?

Mr. Holloway.—This has been a matter of great interest and concern to successive Ministers. I would not like to chance my arm and put a date on it but what I can do is convey the interest of the committee in this thing again and see if we can apply additional blowtorches with a view to getting the right decision.

Deputy Crotty.—I am going outside the rules of the committee but it seems to be the name of the game this morning.

Chairman.—If anyone goes outside the rules in the opinion of the Chair they will be called to order.

1115. Deputy Crotty.—Thank you. I am just making an excuse for myself; I am not criticising the Chair. Can the Accounting Officer tell me when Kinsale gas will be made available in Clonmel, Waterford, Limerick and Kilkenny?

Mr. Holloway.—I find myself in great difficulty because I had prepared myself for examination on the accounts for 1984.

Chairman.—We will be calling you in regard to 1985 and 1986 very shortly and you might prepare yourself.

Deputy Crotty.—I am waiting for a reply.

Mr. Holloway.—All I can say is that Kilkenny is a definite decision. A number of other places that you mentioned are to some extent still in the melting pot. Could you mention the list to me again?

1116. Deputy Crotty.—Clonmel, Waterford, Limerick and Kilkenny which is the important one, of course.

Mr. Holloway.—Limerick has been switched on. Waterford is met to a certain extent. In other words, there are commitments to meet the requirements of certain industrial enterprises there but so far as the town gas undertaking in Waterford is concerned I think we have to wait for a little while to see what is going to happen there. We have done our business in Clonmel and that is going to be flowing this year. The next one on the list that will arise, and has arisen, is Dundalk. There is a Government decision to bring gas to the Dundalk area but what will happen to the Dundalk gas enterprise is another matter and that is something we will have to await results on.

Deputy Crotty.—When will gas flow in Kilkenny? The head has been brought to Kilkenny city.

Mr. Holloway.—I really do not know.

Deputy Crotty.—One year, two years or three years?

Mr. Holloway.—I would think it would be much shorter.

Deputy Crotty.—Much shorter than a year?

Mr. Holloway.—I would say so.

1117. Deputy Crotty.—Returning to the accounts, the Accounting Officer did mention that people from his Department were supervising the safety regulations, and the safety personnel who were not doing their job in Dublin Gas. Is it acceptable under this Vote that people from the Department of Energy should have time to supervise people in Dublin Gas?

Mr. Holloway.—I think the issues involved are so serious from the point of view of public health and safety that in realistic political terms one cannot be too fastidious about this. If there was something lacking somebody had to do something about it and the obvious person to assume that responsibility was the Minister for Energy. Successive Ministers for Energy have assumed that burden and have sought to discharge it in the most emphatic way and with the utmost vigour. They have had no inclination to pass the buck to anybody else or to ask questions about the propriety of it residing in the Department of Energy. I do not think that you would survive too long in the Department of Energy if you started asking questions of that kind.

1118. Chairman.—It is our job to supervise expenditure of funds, that is why this committee is here to see that funds allocated were expended for the purpose for which they were voted. Could I ask the Comptroller and Auditor General if it is permissible that funds from this Department should be expended in this way?

Mr. McDonnell.—In considering whether funds should be spent on any particular service one has to consider the ambit of the Vote which is expressed in part I of the Estimate and that is repeated in the heading to the Appropriation Account — in this case the amount to be expended for the salaries and expenses of the Office of the Minister for Energy. I would find it difficult to say with conviction that the Minister for Energy should not have regulatory a function such as Mr. Holloway described if that is something which in his capacity as Minister he sees as essential. I accept, and I think the committee will agree that sometime the ambit of Votes is widely drawn but to give a categorical statement that an item of the nature which Deputy Crotty described is or is not in precise terms an expense of the Office of the Minister for Energy would be extremely difficult. The ambit is drawn widely enough to comprehend things of that nature. That is my reaction to it.

1119. Deputy Crotty.—To what extent were people doing their job in Dublin Gas and what action has been taken against them by the officers in the Department of Energy who are monitoring or supervising them?

Mr. Holloway.—Just in case there is any misunderstanding, we were not monitoring the activities of these people at the time that these events took place. It was only subsequently, the inadequacies having been revealed, that Ministers came to the conclusion that some action by the Government was required. This was a private sector enterprise and the enterprise itself is clearly responsible under the law for the safety of its own operations. A view had to be taken when these events took place and, as I have indicated already, it involves a much more significant presence so far as the Minister and his staff are concerned. There is an aspect to your question that I do not quite understand. Perhaps Deputy Crotty could repeat it for me because I may not have given him a full answer.

1120. Deputy Crotty.—You stated earlier that there were people in Dublin Gas not doing their job.

Mr. Holloway.—The only thing I would like to add to my reply is that when Minister Burke was introducing the Cremer and Warner report at a press conference he had to start off by saying to the people present that there were sensitivities of a particular kind in relation to this report and any discussion of it and that he did not wish to do or say anything which could adversely affect the legal rights of different parties concerned. I do not want to give a full list of the parties whose legal rights might be affected by the events that took place or by the content of the Cremer and Warner report. But I think you can take for granted that the people referred by Deputy Crotty would appear on this list. We, would have to be careful, and especially I would have to be careful since I do not enjoy privilege before this committee—

Chairman.—You may or may not. It is not clear whether or not you do.

Mr. Holloway.—There are certain risks so far as I am concerned in doing anything which might be regarded as infringing on the legal rights of other parties. But clearly the performance of their duties by all and sundry is a matter that will be examined in a variety of different places.

Deputy Crotty.—I know the difficulties under which the Accounting Officer is working. Is there any intent in the Department to take action against the people who obviously have been named?

Mr. Holloway.—It would not be legally possible for us to do so because they do not have any contractual position vis-a -vis the Department. One has to think about staff at all levels. There is a tendency to think about people only of a certain category. Thinking about staff in general and the way in which they did their work — we are confining ourselves in what we are speaking about at the moment to staff performance rather than to anything relating to the buildings etc. — their relationship is with their employer and it is in that context that the matter would have to be considered. It would not be open to the Minister for Energy to assume any specific function in relation to the performance of their duties by particular individuals. He has taken unto himself the task of indicating to Dublin Gas and to BGE that certain things will most definitively have to be put right and that he and his staff will ride herd on them until all that has been done.

1122. Deputy Crotty.—I would like to go on to another item. Under subhead F in the Vote — Energy Conservation — there was less than granted spent on that Vote. Could the Accounting Officer give us some explanation for this?

Mr. Holloway.—The best explanation I could give you on that is that we are talking about 1984.

Deputy Crotty.—Yes, unfortunately.

Mr. Holloway.—And an awful lot of this is historical now. About the time that I became Accounting Officer we commenced a re-examination of a variety of expenditures of this kind. You will find them mentioned under “new and renewables” and also under contributions to international organisations, demonstration projects and so on and so forth. I found that there was quite a string of things there that had been embarked upon at a particular time. It can be pinpointed as following the 1979 Iranian crisis when there was a great deal of enthusiasm throughout the world for energy conservation activities of every conceivable kind and a lot of people were carried away by it, perhaps with justification at the time. On re-examination, the conclusion that we came to was that there was not likely to be any great joy for this country in continuing with expenditures at these levels for these particular activities. We had to finish the things that were started. Some of these things started in 1981 and were rather long drawn out, but they have all tapered off into nothing. We are not spending any more money on these things because we came to the conclusion that we were not getting value for money.

Chairman.—The real point is that in the year concerned there were less applications than had been anticipated.

Mr. Holloway.—Yes, maybe we were not encouraging as many applications.

1123. Deputy Crotty.—May I just go to Subhead F2 where we had in that year £250,000 granted to the Institute of Industrial Research and Standards on an energy conservation programme. One would contradict the other.

Mr. Holloway.—No, I am quite satisfied that the contribution to the IIRS is more defensible than other expenditures in relation to energy conservation. It is one thing to be spending money on new ideas of a technical kind, supporting experimentation and so on. The possibility of pay-back on that thing is pretty remote. What really are involved in the case of the IIRS are specific things. For instance, at that time it had to do primarily with maximising the efficiency of steam plant installed in the country. Any person with a significant steam plant had a right to ask to have an audit carried out by the IIRS. They sent in their people, found what was wrong and showed what was necessary in order to run the plant at maximum efficiency. That was something that was down to earth and the benefits of it could be easily assertained.

Chairman.—I do not think we need to go at any great length of this particular heading. Is the Deputy satisfied with that?

1124. Deputy Kitt.—On subhead P — FEOGA — Western Aid Electrification — I would like to know the number of grant applications refused in 1984 under the western aid electrification scheme. The regulations were changed about that time.

Mr. Holloway.—We will give the Deputy all the figures.

Chairman.—If you send the information to the clerk of the committee he will look after it.

Mr. Holloway.—A sufficient number of copies to be circulated.

Chairman.—A copy for Deputy Kitt and Deputy Naughten would be sufficient.

1125. Deputy Crotty.—On energy conservation, there are conflicting interests here in that we have An Bord Gáis and the ESB wishing to expand consumption while for small industries it is very important, particularly with the very high price of our energy, that conservation should be a prime target. I have reservations that the small business that uses energy is not getting the advice necessary to keep the energy bill to a minimum. I am disturbed to learn here this morning that energy conservation has been thrown out the window.

Mr. Holloway.—It certainly does not occupy a high place in our thoughts. It is only fair to say that other countries do not adopt quite the same attitude but we have had to cut our cloth according to our measure. To deal with the specific point raised by the Deputy about small enterprises, when I was speaking earlier about the IIRS expenditures, leaving aside the steam audit and the other audits, a significant expenditure for them is the fact that they have regional people who are available to give advice. These regional energy officers work in association with the regional energy management associations which is a kind of forum for disseminating all the latest tricks of the trade that have been learned in relation to the maximisation of energy efficiency. These people are available to all industrial and commercial enterprises and to local authorities. They are doing a significant amount of work for local authorities and have done a great deal of good in pointing out where waste was taking place. I would be quite happy to take up the point made by Deputy Crotty to find out whether there is any weakness in communicating to all and sundry the availability of the IIRS officers to help out people who have problems. There is another scheme, called the fuel efficiency scheme, under which people who want to employ a firm of consultants, who do not want to bother with the IIRS and want to get somebody else to carry out a survey to show what is wrong with their energy utilisation are given a grant. It may be that people are not aware of these things.

Deputy Crotty.—I accept your offer to examine the information that is disseminated to small industries in particular. We are all conscious of the very high price of energy and the significant costs in production. From that point of view, I was a bit taken aback but I would be happy if you take this on board and circularise small industries in what ever way is necessary.

Mr. Holloway.—We will do that.

1126. Chairman.—I want to raise another question. There is mention in the accounts about advances made by the Department which are repayable under agreements. In particular there is an amount which is under the heading, Avoca Mines Limited, of £9.9 million in 1984. I would like to ask if that is the total figure and what are the chances of it being repaid?

Mr. Holloway.—The chances of it being repaid are nil and were nil from the moment the receivership commenced. In fact, the amounts advanced, and any interest accrued, have now been written off with the approval of the Department of Finance because it was quite unrealistic carrying this thing in the books.

As you know, far from recovering any money in relation to Avoca Mines the State has had to place considerable funds in the hands of the Receiver in order to ensure that the obligations of Avoca Mines were properly discharged.

127. Chairman.—In terms of loans which are written off, receivership costs and interest which was foregone by the State which was due by Avoca Mines, would the fall of Avoca Mines have cost the State something in the region of £25 million? Is that the figure?

Mr. Holloway.—That would be much too high. Attributing interest to the amounts that were advanced is rather academic. That certainly does transform the amounts. The figures in the Comptroller and Auditor General’s note, practically £10 million and then £7 million for interest accrued——

1128. Chairman.—Let me cut across you there. At the end of 1982, according to previous evidence given to the committee, the total cost to the State of Avoca Mines Limited in receivership was approximately £12.7 million.

Mr. Holloway.—Yes.

1129. Chairman.—At the same time we were told that that did not include about £11 million which was due to the State from Avoca Mines by way of interest which was not collectable.

Mr. Holloway.—Yes.

1130. Chairman.—So the figure of £25 million in any commercial enterprise would be the figure which was written off?

Mr. Holloway.—I would regard the gross figure mentioned as being rather unrealistic because it includes the interest. It is the case that if we went on allowing this entry to be made in the accounts, in ten years time you could say that Avoca has cost us £50 million. It is unrealistic to do that. I assume that that is why the Department of Finance have agreed to knock this thing out.

1131. Chairman.—I was quoting from previous evidence given to the committee. What was the total figure in your view?

Mr. Holloway.—Taking everything into account except interest, the advances were £10 million and the amount that was provided to the Receiver by the Government decision was £2.854 million. I would add the two together and say that is how the figure of £12 million was arrived at.

1132. Chairman.—Can you tell the committee how much the Receiver received by way of fees?

Mr. Holloway.—£228,975.

Chairman.—How long was he involved in the receivership?

Mr. Holloway.—Since 1982. I would have to say in all fairness to the Receiver that we have given you a very detailed report prepared by him and some supplementary material which was prepared by him following the request of the committee. Reading that report and seeing the work that he had to do and the complexity of the problems that he had to solve, I would have to conclude — and I say this in fairness to the Receiver — that he has done an extremely good job and that we have got very good value for the money involved.

Chairman.—I have read the report. How long did it take the Receiver to do the job?

Mr. Holloway.—It is not quite finished yet. We expect that it will be finished by the end of the year.

Chairman.—Are there more fees to come in?

Mr. Holloway.—We expect that there will be about £50,000 more before it is finished. The delays that are taking place all have to do with maximising the income and getting the most for whatever assets are available.

1133. Deputy Foley.—With £228,000 plus £50,000 that you anticipate as additional fees, totalling £278,000, and given that the receivership came in on 6 August 1982, are you satisfied with the time span of nearly six years it took to tie up that receivership?

Mr. Holloway.—The time span does not really matter. The important thing is whether the activities of the Receiver have to do with minimising the outgoings and maximising the receipts, and there is no doubt but that all of the activities of the Receiver were concentrated on those two things. He has done an excellent job. We have examined his performance in considerable detail and that is the conclusion that we came to. Also, there are other receiverships and winding-up proceedings relating to other mining enterprises that have been going on for donkey’s years and have not yet been concluded. Mercifully, they are receiverships that do not involve any cost to the State, but the prolongation of receiverships or winding-up operations is something that seems to be almost inevitable in the case of mining operations, especially because of the obligations which are imposed upon mining companies by local authorities about rectification of site and other things of that kind. In the case of Avoca, as you will see from the report, there were very serious questions about tailings ponds, poisonous materials, etc. and all that work had to be done properly.

1134. Deputy Foley.—The bank account when the Receiver went in was approximately £40,000. What was the overall expenditure for the last five years with regard to the mines?

Mr. Holloway.—Several million. You can take it that the £2.84 million that was provided by the Government has been spent and that the Receiver is now practically out of funds. There are a couple of residual business possibilities that he is working on which could turn in, maybe, sums of £50,000 or £100,000, so what the final outcome will be is difficult to say. But there is going to be nothing left. It is as simple as that.

1135. Deputy Foley.—A security firm was employed following the appointment of the Receiver on a part-time basis only due to lack of funds. At the time the Receiver went in the shafts were open at both sides of the river. How was that allowed to continue, even before the Receiver went in, without protection being provided?

Mr. Holloway.—When the mine was a going concern they would have had their own security arrangements in relation to the shafts, etc. to keep people away from them. The time that you anticipate problems is when the mining venture comes to an end. What happens in those circumstances is that, whether arising from some conditions of the lease if it is State minerals and/or planning conditions imposed by the local authority, something has to be done about the shafts. Normally, the first thing a liquidator or Receiver does — if he is going to retain some of the existing staff of the mining operation — is to see if they can look after all the danger areas, etc. or he may decide to get rid of the staff and employ a security firm. It is a question of doing it in the cheapest possible way. After that he fences them off because that is the minimal expenditure.

Chairman.—We have some matters to deal with in private session and we still have one or two things to discuss with Mr. Holloway.

1136. Deputy Desmond.—On a general question in relation to the 1984 accounts, your Department, Mr. Holloway, has been quite unique in generating exceptional State revenues over the years back to the seventies and in the year in question the overall State benefit was close on £80 million. This year’s Book of Estimates the net Exchequer revenue on the BGE side is zero. Last year it was £15.5 million and in the year in question, 1984, it was close on £54 million or £55 million. As a result of successive erosion arising out of policy decisions, particularly in relation to Dublin Gas, where I would estimate we spent £60 million, for the first time since all of these developments — excluding the Marathon income and excluding your appropriations-in-aid generally — the BGE income net Exchequer benefit in 1987 is zero. Accepting that you were not responsible for political policy decisions — as Accounting Officer you have accounted rigorously to us — nevertheless, it must be a matter of grave concern to you at the end of the day.

1137. Chairman.—I want to make a brief reply to that. The committee has an audit control function, not a policy function, so perhaps you would make a brief observation on that because we have got other matters to discuss.

Mr. Holloway.—For a while I thought that you were asking a kind of complimentary question but—

Deputy Desmond.—It is not derogatory to yourself.

Mr. Holloway.—I do not believe that the accounts as represented to the PAC properly reflect the activities of the Department. Since 1984 and before there certainly have been major incomes that we have generated from our activities but for which we do not get any credit. I will leave that aside and will deal with the question of what is now going to happen in relation to gas. The surplus that we have generated from a variety of things per annum over the last number of years has been about £60 million or £70 million. A lot of that was due to gas and that arose significantly from the deal which we concluded with Marathon quite a number of years ago. There is no doubt but that a very large bite will be taken out of that because of the rescue — and we have to be quite frank and use that language — of Dublin Gas. If I had been aware that the committee were going to examine me on this I would have brought with me much more facts and figures to tell you what precisely the BGE surplus will be for this year and for the year after but I do not think that the surplus is going to disappear.

Chairman.—What you might do is prepare yourself for a future meeting with the committee which will be held very shortly on the 1985 and 1986 accounts. Are there any other matters any member wishes to raise? Thank you, Mr. Holloway. We note your earlier paragraph and that you will let us have the information which you said you would forward.

The witness withdrew.

The Committee adjourned.