Mr. Gerard Cahillane:

I am pleased to be here to assist the joint committee in its consideration of the role and operation of the National Development Finance Agency, NDFA, with particular reference to the impact on Irish infrastructural projects of the liquidation of the UK Carillion group and the role of the Dutch Infrastructure Fund in that regard. I am joined by my colleagues, Mr. Paul O'Neill and Ms Louise Mulcahy.

The NDFA's mandate is set out in the National Treasury Management Agency (Amendment) Act 2014. It has two main roles. The NDFA is the statutory financial adviser to certain State bodies as listed in the Act on all public investment projects of scale. At present, we are providing financial advice on projects with a value in excess of €5.5 billion, including public private partnership projects with a value in excess of €1.5 billion.

The NDFA's mandate includes responsibility for the procurement and delivery of public private partnership projects in sectors other than transport and the local authorities.

Within this mandate, the NDFA’s exposure to Carillion is confined to the schools PPP bundle 5 project, SB5. Carillion was new to the Irish market, in contrast to its presence in the British market where Carillion was engaged in up to 450 projects at the time of its collapse. We are not aware of Carillion having been involved in any other Irish Government infrastructure project.

The SB5 PPP project was announced as part of the Government’s 2012 PPP stimulus package. The NDFA managed and provided financial advice on the procurement of the SB5 project on behalf of the Department of Education and Skills. The project comprises six facilities: five replacement schools and one replacement institute of further education. Following a competitive tendering process and financial, technical and legal due diligence, a contract was awarded to the Inspired Spaces consortium PPP Company in July 2016. PPP Company comprises two shareholders: Carillion Private Finance and the Dutch Infrastructure Fund, DIF. Under the contract, the construction works were subcontracted by PPP Company to Carillion Construction and the post-construction services to Carillion AMBS. The contractual structure is set out in appendix 1 to our submitted paper.

Funding for the project was secured by PPP Company in the form of a 90:10 debt-equity ratio. The bank debt financing was provided by MUFG, at 50%, and Helaba Landesbank, at 50%.

The PPP Company, under the direction of its shareholders, is responsible for managing the overall process, including the making of payments to the main works contractor. Since the collapse of Carillion, DIF has taken responsibility for the management of Carillion’s stake in the project with the oversight of the funders. The NDFA, the Department of Finance, and the Department of Public Expenditure and Reform are in close contact with all parties.

Following intensive efforts by all parties in the intervening months, an announcement was made on 28 June 2018 that DIF and the project lenders were putting in place arrangements for the appointment of a replacement contractor, Woodvale, to facilitate the completion of the three most advanced schools: Loreto College, Wexford, Coláiste Raithín, Bray, and Ravenswell primary school, Bray, by the end of August, and undertake survey and preliminary work at the other three buildings in the bundle: Tyndall College, Carlow, Carlow Institute of Further Education, and Eureka school, Kells. This survey and preliminary work will be undertaken during the summer and will provide a detailed scope of works to enable the contract management arrangements to be finalised for the completion of these schools by the end of December. The arrangements, which follow a retendering process, provide for a contractor to be mobilised in the coming days and for work to commence on site in the coming weeks.

By way of an update since I submitted this statement, I can confirm that, as of yesterday morning, in Bray there were a team of construction workers and a landscape contractor on site. As of this morning, in respect of the Wexford school, I can confirm there are a team of contract workers there. Both sites are now active.

As of today, in accordance with the PPP contract, the State has not made payments in respect of the schools’ construction other than an amount in respect of preparatory site advance works. Payments from the State under the PPP contract are made monthly and will commence upon completion of the schools, which were at various stages of completion on the date of liquidation.

My colleagues and I will be happy to address questions relating to the Carillion liquidation to the extent that it has impacted NDFA-procured projects. I am, however, limited in two respects. I am not in a position to discuss third parties that are not counterparties of the NDFA nor am I free to discuss details of the procurement of the replacement contractor which has progressed but has yet to conclude fully. I ask for the members’ understanding in this regard.