Committee Reports > List of Committees > Joint > 1991 > Committee on Commercial State-Sponsored Bodies (6th Committee) > Report No. 04 - Bord Na Mona

APPENDIX II

Mr. R. Roche T.D.

Chairman

Joint Oireachtas Committee on

State-Sponsored Bodies

Leinster House

Dublin 2

30 January 1991

Dear Deputy Roche,

1. Since we last had the pleasure of meeting with your Committee, there have been two developments which I think it would be apropriate to bring to the Committee’s attention in the context of the Report which it is preparing. These are a new and clear policy on debt reduction, and the development of the second edition of our Five year Plan. There is, in addition, the matter of our contract with the ESB which we did not, I think, adequately clartify at our meeting with you.

Contract with the ESB

2. In March 1990 Bord na Mona and the ESB signed a Milled Peat Supply Contract. The Contract has two parts. The first gives agreed indicative target consumption levels to the year 2004/05. The second is a detailed contract for supply up to 1994/95. The security given to Bord na Mona by this Contract is clearly of major importance in considering future prospects for servicing the Board’s debt. In December 1991 Bord na Mona and the ESB concluded a second contract for the supply of additional peat from 1/1/91 to 31/12/95. This peat is additional to, and separate from, the peat contracted under the main agreement. The total sum payable under this second contract is IR£6 million, and this sum has already been paid to Bord na Mona.

Policy on Debt

3. The first of the two developments I mentioned in the first paragraph was the adoption by the Board on 14 December 1990 of a decision on debt policy. It is that borrowings will henceforth be reduced. As a first stage the Board decided on a minimum token reduction of IR£1 million between the beginning and end of the 1991/92 financial year. The authorised borrowing profile adopted by the Board for the first year of the policy is contained in the attached table. This minimum debt reduction is to be tightened up in the budgeting process. The decision specifies that if the measures proposed “realise more cash than is estimated in this conservative proposal, it is intended to reduce the debt further.It is not the intention that if the cash flow is better than in the present Plan more money will be spent. On the other side, should the income figures be lower than planned there will be a consequent reduction in all forms of expenditure.” Not only is this a firm policy of the Board, it was given as a written commitment to the Department of Energy on 18 December 1990.

The company will continue to invest and develop, but in the context of a steady reduction in the level of debt. New developments will not be financed by additional borrowings.

Revision of Five Year Plan

4. The second development to which I referred in the first paragraph is the preparation of our second Five Year Plan. It is now our policy to redevelop the Five-Year Plan on a rolling basis each year, and this year’s process is scheduled to be complete by 22 March 1991, with the Plan lodged in the Department of Energy before 31 March. The new edition of the Plan is based on much the same premises as the first, but will change to take account of (a) the Government’s decision not to inject equity, (b) the policy of reducing the debt, and (c) experience gained in the intervening year. It will also deal thoroughly with the new business area which was not tackled in the first edition. We will forward a copy of the revised Plan to the Committee before the end of March.

As I understand your Committee has not yet concluded its deliberations on Bord na Mona, I felt I should bring these matters formally to its attention.

I wish you and the Committee every success in its important work.

Yours sincerely

Brendan Halligan

Chairman

CASH PLAN 1991/92.