Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank the Senator for his amendment and for our exchange this afternoon. The section amends the State Authorities (Public Private Partnerships Arrangements) Act 2002 by adding a section that will allow Ministers to issue guarantees or indemnities in respect of PPP projects, with the consent of the Ministers for Finance and Public Expenditure and Reform. Such indemnities or guarantees have been essential in recent years in order to secure funding for projects from international financial institutions, such as the European Investment Bank, where a sub-sovereign entity, such as the National Roads Authority, NRA, is procuring the project. A ministerial guarantee may also be required to ensure an appropriate credit rating for a PPP undertaking in such cases. Such borrowing has been available to us at preferential rates and has enabled us to fund schools and roads projects that might otherwise have had to be put on the long finger.

The purpose of the proposed amendment is to provide a statutory basis for Ministers to issue letters of indemnity or guarantees to funders to PPP companies or in respect of PPP projects. The advice of the Attorney General has indicated that such a provision is appropriate if the practice of Ministers issuing such letters is to continue. The provision formalises an implicit State liability because a Minister providing the guarantee or indemnity will generally be funding the State authority through the departmental Vote. For roads, for example, the Minister for Transport, Tourism and Sport would vouch that he or she would be liable for the payment obligations of the NRA should the NRA fail to pay, as per the terms of the PPP. The Minister would vouch that he or she would make the payments to the NRA that he or she would have made anyway. I trust this explains why we included the provision in the Bill. It is to ensure we can access cheaper funding from international financial institutions for PPPs in particular. All Senators will be aware, as I am, of the importance of delivering critical infrastructure such as schools and roads, and this mechanism allows us to do so. I cannot, therefore, accept the amendment.