Pat Rabbitte (Dublin South West, Labour) | Oireachtas source

Of course, as always.

The Bill will implement the Government's decision of February 2012 on the sale of State assets. It will ensure the retention of the strategic gas networks in State ownership, while also facilitating the sale of Bord Gais Energy's competitive energy business.

Before I turn to the detail of the proposals of the Bill, I would like to speak about energy policy issues generally. The overriding objectives of Irish energy policy remain security of supply, competitiveness and sustainability. Our island status on the periphery of Europe and at the end of a gas pipeline makes us all acutely aware of the importance of a secure gas supply. Ireland imports 95% of its natural gas needs, leaving us vulnerable to supply disruptions and volatility in prices, which are determined by global markets.

I am on record on many occasions as stating the proposal by Shannon LNG to develop a liquefied natural gas, LNG, terminal in Tarbert is welcomed by the Government. Such a facility, together with the bringing onshore of Corrib gas, would provide important security of supply for Ireland. The employment boost from the construction of the LNG plant would also be very welcome locally. However, we remain heavily reliant on gas supply from Great Britain and are also heavily reliant on gas for the generation of electricity. This reliance is set to remain for some time. In this context, the Government fully recognises the strategic importance of retaining the gas network in State ownership.

The Government endorses the importance of investing in Ireland's gas transmission infrastructure. Our reliable, modern gas system is the result of significant investment by BGE, a well run and profitable State-owned company that has been instrumental in the economic development of the country.

I will turn now to the decision to sell the Bord Gais Energy business. In November 2010 the memorandum of understanding agreed between the then Government and the EU, the IMF and the ECB, known as the bailout programme, committed "to setting appropriate targets for the possible privatisation of State-owned assets". The details were to be informed by the recommendations of the special group on public service numbers and expenditure programmes, a review then ongoing. When the new Government probed this privatisation target at its first meeting with the troika, the EU, IMF and ECB representatives mooted a figure of €5 billion for the sale of State assets, the proceeds of which were intended to pay down debt. The figure committed to in the programme for Government between the two parties comprising the new Government was an assets disposal programme of up to €2 billion. Initially the EU, the IMF and the ECB were not disposed to allow us to retain any of the proceeds from State asset disposal, insisting that all of the proceeds be used for debt reduction. The negotiators ultimately settled on a figure of €3 billion, after the troika had agreed that a proportion of the proceeds could go towards reinvestment for job creation.

Eventually, after more than six months of negotiations, it was agreed that 50% of the proceeds could be invested in job creation measures and that the remaining 50% could be used as a backstop for securing funding for job creation, before eventually being used to retire debt. It was also acknowledged that any programme of State asset disposals should be undertaken only when market conditions were right and when the necessary regulatory structures had been put in place to protect consumer interests. The outcome, therefore, of the renegotiation of this aspect of the bailout programme is enormously significant because the quantum of State asset disposals is less, the use of the proceeds will assist economic recovery and key strategic assets such as the gas transmission and distribution systems will be retained in State ownership. In the light of this and following detailed consideration of the financial and policy issues, in February 2012 the Government agreed, inter alia, to retain the strategic gas networks in State ownership and sell the competitive energy business of Bord Gais Energy.

Bord Gais Energy comprises the following businesses: a leading energy supply business in Ireland, servicing over 700,000 customers in the gas and electricity markets; a 445 MW gas-fired power station at Whitegate, County Cork; a large-scale portfolio of onshore wind assets and firmus energy; and a growing energy supply and distribution business in Northern Ireland. All of the businesses making up Bord Gais Energy operate within a competitive market structure, competing against other market participants. Bord Gais Energy's entry into the domestic electricity market, with its highly successful Big Switch campaign, had a galvanising effect on competition in the all-island energy market. The sale of Bord Gais Energy can deliver positive outcomes for Ireland's energy markets, for Bord Gais Energy and its employees.

The sale process was formally launched in May and is now well under way and expected to be concluded by the end of the year. It is important to maintain the momentum in the sale process in order that the proceeds can be reinvested promptly, once available, to ensure an immediate impact on the economy and job creation. The enactment of the Gas Regulation Bill will ensure there is no unnecessary delay in the transaction process.

I now propose to outline the provisions of the Bill. For the convenience of the House, a detailed explanatory memorandum has been published which provides a synopsis of the provisions contained in the Bill which comprises five parts. Before continuing, I wish to inform the House that I wish to share my time, although no Deputy has offered to share with me as yet. I do not know if Deputies are trying to tell me something. If someone on this side of the House should offer, I am willing to give him or her a few minutes when I finish.

Part 1 of the Bill deals with general matters. Part 2 provides for the establishment of a network subsidiary company of BGE which will be responsible for the ownership and operation of the gas network. Part 3 deals with matters relating to the sale of the Bord Gais Energy business. Parts 4 and 5 deal with amendments to various Acts in order to provide for changes in BGE functions and for new shareholding and governance arrangements for BGE. The amendments in Parts 4 and 5 are primarily based on the need to ensure compliance with EU requirements for State-owned gas network companies.

I will now turn to the detailed provisions of the Bill. Sections 1 to 3, inclusive, contain standard provisions concerning commencement, definitions and ministerial costs.

Sections 4 to 19, inclusive, provide for the establishment of a new subsidiary of BGE which will assume responsibility for the ownership and operation of the gas network business. This subsidiary will be compliant with EU requirements and ring-fence and protect the strategic gas network assets. Section 4 also provides, importantly, that BGE cannot sell this strategic network subsidiary.

Section 5 provides for the memorandum and articles of association of the networks subsidiary, which are subject to ministerial approval. Section 6 provides for the appointment of the directors, subject to ministerial approval.

Sections 7 to 11, inclusive, set out standard provisions concerning the requirements for directors of the network subsidiary, including provisions regarding disqualifications and disclosure of interests by directors, a prohibition on Members of the Oireachtas or Members of the European Parliament acting as directors and a provision concerning the disclosure of confidential information by directors or employees of the networks subsidiary.

Section 12 provides for BGE and Gaslink to prepare a network transfer plan or plans in respect of the network subsidiary. Gaslink is the BGE subsidiary currently responsible for transmission operation. The transfer plan will set out those assets, licences, rights and liabilities and staff to be transferred by BGE to the network subsidiary.

Section 13 provides for the Minister for Communications, Energy and Natural Resources, with the consent of the Minister for Public Expenditure and Reform, to approve the network transfer plans. Section 14 provides for a network transfer date to be set by the Minister and notice to be published in Iris Oifigiuil. The network transfer plan will have effect from this date. Section 15 provides that, with effect from the transfer date, the provisions of Schedules 1 and 2 apply and the network subsidiary becomes responsible for the ownership and operation of the networks system.

Section 16 provides some flexibility for the parties involved in the transfer if it is found that additional assets and so forth require to be transferred to the network subsidiary. The section provides that BGE and-or Gaslink may, up to one year after the transfer date, enter into a further agreement with the networks subsidiary for the transfer of additional assets, licences, rights and liabilities and staff to the network subsidiary.

The section provides that BGE or Gaslink may, up to one year after the transfer date, enter into a further agreement with the network subsidiary for the transfer of additional assets, licences, rights and liabilities and staff to the network subsidiary. Such an agreement would require ministerial approval.

Section 17 provides legal certainty to BGE and the network subsidiary that title to an asset can be proved by the issuing of a jointly agreed certificate. Section 18 relates to the production of documents of title. It follows the provisions of section 84 of the Land and Conveyancing Reform Act 2009 but is tailored to the specific circumstances of the transfer plan between BGE and its subsidiary. Section 19 provides for an annual report and accounts in which the activities of the network subsidiary must be separately identified.

Turning to the sale of Bord Gáis Energy, Part 3 provides for the transfer of the energy business to a subsidiary, referred to in the Bill as the energy company, to facilitate the transaction. These provisions provide legal certainty with regard to the assets, licences, rights, liabilities and staff to be transferred to the energy company, which is then sold. Section 20 provides for the preparation by BGE of a transfer plan or plans, which will set out the assets, contracts, rights and liabilities and staff to be transferred to the energy company. The plan must be approved by the Minister. Section 21 provides for the memorandum and articles of association of the energy company. It allows for ministerial oversight of the content of the memorandum and articles, which must be consistent with this Act and with the EU gas directive. This provision will cease to apply from the date of disposal of the energy company. Section 22 provides for the appointment of directors to the energy company, subject to ministerial approval. Only employees of BGE shall be eligible for consideration and no remuneration will be paid to directors. After the disposal date, board appointments to the energy company will of course be a matter for the new owner.

Section 23 provides for the approval of a transfer plan regarding the energy company. The plan must be approved by the Minister for Communications, Energy and Natural Resources with the consent of the Minister for Public Expenditure and Reform. It ensures that I, as Minister, must be satisfied that the plan provides only for the transfer of those assets, staff and so forth that are relevant to the energy business. Section 24 provides for an energy company transfer date. This date will be set by me following the approval of the transfer plan. Notification of the transfer date is required to be placed in Iris Oifigiúil. Section 25 provides that, with effect from the transfer date, the provisions of Schedules 3 and 4 apply and the energy company becomes responsible for the assets, contracts, rights and liabilities transferred to it. Section 26 provides that BGE may, up to the date of disposal, enter into further agreements with the energy company for the transfer of additional assets, licences, rights and liabilities and staff to the energy company. This section is intended to provide for flexibility in the event that, following the transfer date, it is found that additional assets and so forth need to be transferred. Such an agreement is subject to ministerial approval.

Section 27 provides legal certainty to BGE and the energy company that title to an asset can be proved by the issuing of a jointly issued certificate. Section 28 relates to the production of documents of title following the provisions of section 84 of the Land and Conveyancing Reform Act 2009 but tailored to the specific circumstances of the transfer plan between BGE and the energy company. Section 29 provides that BGE may dispose of an energy company, subject to the approval of the Minister given with the consent of the Minister for Public Expenditure and Reform.

The amendments in Part 4, sections 30 to 38 inclusive, provide for a range of amendments to the Gas Act 1976. As I have already stated, this Bill underpins the State's continued ownership of BGE's strategic gas transmission, distribution and interconnector assets by implementing certain EU requirements for a State-owned gas networks company. The majority of the amendments in this Part arise as a consequence of the requirement to provide for the designation of a majority-shareholding Minister to whom will be transferred the majority of capital stock in BGE. It is proposed in section 30 that the Government may, by order, designate such a Minister. A minority stockholding will be retained by the Minister for Communications, Energy and Natural Resources and by the Minister for Public Expenditure and Reform.

It may be useful to provide some background as to the rationale for this new shareholding structure and the powers that may be exercised by the majority-shareholding Minister. The designation of a new Minister as majority shareholder is proposed because the current shareholding arrangements are not compliant with EU Directive 2009/73/EC on the gas market, which requires significant restructuring of gas transmission operators throughout Europe in line with one of three unbundling options. Unbundling is intended to create a level playing field for gas suppliers and to enhance competition and transparency in the gas market by removing the ability or incentive for monopoly gas transmission companies to discriminate in favour of related gas suppliers. Under the directive, the unbundling option which allows for the sale by BGE of its energy business and for the retention of the network business in State ownership is the full ownership unbundling option, which Ireland is accordingly obliged to transpose and implement. Essentially, the full ownership unbundling rules require a separation of ownership and control as between energy producers on the one hand and network transmission businesses on the other. I, as Minister for Communications, Energy and Natural Resources, and my colleague the Minister for Public Expenditure and Reform are shareholders in State companies which are active in power generation and electricity and gas supply, such as the ESB and Bord na Móna. Under the directive, therefore, neither of us may retain a decisive or controlling role in Bord Gáis Éireann's network business, which, as I have stressed, will remain in State ownership.

The amendments to the Gas Act 1976 that are proposed in sections 30 to 38, inclusive, relate to the powers of Ministers in regard to the activities of BGE. They provide for capital stock in BGE held by Ministers, the revised functions of BGE taking account of the fact that BGE will no longer be engaged in electricity or gas supply, and the ministerial powers for conferring additional functions on BGE. The amendments also relate to the procedures for BGE to enter into capital commitments relating to networks, ministerial powers in regard to directions as regards financial objectives of BGE, and provision in regard to annual accounts, staff and superannuation and appointments to the board of BGE.

The consenting provisions in sections 30 to 38, inclusive, and throughout the Bill ensure that the current role of each Minister on the corporate governance and policy framework will be fully taken into account while also ensuring that legal obligations under the directive are met.

Sections 39 and 40 relate to the transfer to the majority-shareholding Minister of certain capital stock issued to BGE and to the functions of the majority-shareholding Minister regarding the network company. Sections 41 and 42 provide for technical amendments to relevant Acts to ensure that BGE may not engage in any business activity relating to energy supply or generation which would contravene the full ownership unbundling requirements.

Section 43 is a technical amendment. Section 44 amends section 16 of the Water Services Act 2013 to disapply to Irish Water, a BGE subsidiary, the obligations of this Bill which require the board to obtain the approval of the majority-shareholding Minister in regard to all capital commitments. The Minister for the Environment, Community and Local Government will remain the key consenting Minister in respect of Irish Water matters.

The Schedules provide for the detailed operation of the two transfer plans under this Bill. I intend to introduce a number of amendments on Committee Stage, primarily to clarify certain matters, to facilitate the sale of the BGE assets and business and to ensure maximum returns to the Exchequer from this sale.

I set out earlier the Government's overriding objectives as regards Irish energy policy, which are security of supply, competitiveness and sustainability. These objectives align well with the proposals in the Bill to create a strong State-owned network company within the BGE group. I look forward to early consideration of the Bill on Committee Stage. I ask members of the select committee to table their proposed amendments as quickly as possible to allow full and fair consideration to be given to them. I will of course carefully consider all amendments tabled by Deputies. I look forward to working constructively with Deputies and to an informed and meaningful debate. The input from Deputies from all sides of the House will help in advancing the measures proposed in the Bill.

It is also an important measure in delivering on the commitment in the programme for Government to fund investment for jobs and growth. I commend the Gas Regulation Bill 2013 to the House.

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