Mr. Fergal Mulligan:

I thank the Senator for his questions. Every day, Mr. Ó hÓbáin and I ask Mr. Neary why the period is seven years. Since we will continue to do so, we will let him answer that question.

As to whether the contingency is adequate, it has been assessed over the 2016-18 period with all the bidders, including the most recent one. We considered everything they told us that would be a risk to the project, including risks that they could not quantify. Through that dialogue and 800 odd hours, we came up with everything in respect of which we as the State viewed it as being reasonable for us to share the risk with the bidders. For example, if there is a construction risk and it is not one of the 14 activities, it is for the bidder to share. With the best will in the world, we have assessed and quantified them, be they tree trimming, fibre cables or subcontractor labour rates, and a risk assessment has been carried out on where they might go in the worst case scenario. That is what we have addressed in the €480 million. It is what we believe is the maximum cost that could be incurred in the worst case scenario without there being a need to revert to the State for another penny. From the experts and our assessments, that is our current informed opinion. We went to the Government with this.

Clawback is in three areas. There is clawback on the costs. If it does not spend money we claw it back, if it has excess profits we claw it back and if there is a significant value on the business at year 25, we claw a percentage of that back as well. I will not speculate on what clawback amounts might be as it is difficult to say. As we said previously, how well this business does over the next 25 years is a big question. Some people say it is doomed to fail, some say there will be no take-up and others says it will be a huge success. Hopefully, it will be somewhere in the middle and clawback will be based on that. It is based on very thorough spreadsheets, which are calculated based on the bid model submitted versus actual outturns. The ring-fenced nature of the numbers will be done by accountants and locked in so it will be whatever percentage it is.

We touched on the capacity of NBI. It is not a matter of opinion. It has passed a strict bar of evaluation tests. It had to prove to us that it will have the capacity and the teams to do it. It passed that test, not just barely but quite well. On the basis of the evaluation, we are satisfied on that front.

On the ownership of what will be there at the end, we hope that at year 35, there is a successful wholesale open access business that is creating plenty of retail competition and consumers are getting a good set of services at prices akin to those in urban areas. That company will be in a competitive market with companies such as Open Eir, BT and others which will buy services from it and possibly even sell services against it. That is what we hope will be there if it is a successful outfit.

As regards year 25 and year 35, as part of the outcome of the dialogue process the Department wanted to avoid a cliff edge at year 25 so we insisted on a ten-year commitment beyond year 25 where the current owners of NBI will continue running the business at no cost to the State beyond year 25. There will invariably be customers who remain uneconomic or at a cost that may not be profitable, but NBI is committing to honour the contracts on all services in the area for a further ten years at no cost to the State. That commitment is in the contract with us this year.

Mr. Neary can discuss 5G, the ESB and the seven years.