Jan O'Sullivan (Limerick City, Labour) | Oireachtas source

I thank Deputy Kirk for the opportunity to address this issue. Unfortunately, the Minister for Transport, Tourism and Sport, Deputy Varadkar, is unable to be here as he is in London at a number of tourism promotional events but this is a project the Minister is well aware of and has engaged with significantly over the past year.

As I am sure all Members of this House will now be well aware, the improvement and maintenance of regional and local roads is the statutory responsibility of each local authority, in accordance with the provisions of section 13 of the Roads Act 1993. Works on those roads are funded from local authorities' own resources, supplemented by State road grants. The initial selection and prioritisation of works to be funded is also a matter for the local authority.

In 2011, Louth County Council in conjunction with its Northern Ireland project partners, East Border Region and Newry and Mourne District Council, decided to submit the Narrow Water Bridge project for INTERREG IVA funding. Prior to this, the Department of Transport, Tourism and Sport had indicated that due to budgetary constraints and the need to prioritise road maintenance, it could not provide funding to progress the project by itself.

The project partners submitted an application for funding of €17.4 million based on a project cost of €18.3 million. The Special EU Programmes Body, SEUPB, approved the €17.4 million funding on 24 October 2012. The SEUPB indicated that given the amount of funding involved, project approval was dependent on financial support from the relevant Northern and Southern authorities.

After the SEUPB approved the project in principle, it sought confirmation from the Department of Transport, Tourism and Sport and the Northern Department of Finance and Personnel of the required financial support before issuing a letter of offer to the project promoters. In January this year the Department of Transport, Tourism and Sport confirmed its upfront contribution of €3.91 million. Confirmation of funding was also sought at the same time from the Northern Ireland Department of Finance and Personnel. The project was approved for funding by the Northern Ireland Minister in late May, subject to the letter of offer from SEUPB, including a number of specific conditions. These conditions included a commitment by Louth County Council that it would have sole responsibility for any cost overruns within the eligible spend time frame and in the event that the project extended beyond that period. In addition, Louth County Council was also required to meet all the maintenance and associated costs related to the upkeep of the bridge and its service area.

Pending receipt of project approval, Louth County Council went ahead with seeking tenders from short-listed contractors. The tender assessment process, which was completed in early July, showed a shortfall of the order of €15 million in the funding, as construction tender prices came in at nearly double the estimated cost. As mentioned previously, while Louth County Council had indicated to SEUPB that it was willing to meet any funding shortfall, this was on the understanding that any shortfall that did arise would be small.

On 9 July the council released a statement indicating that the tenders received ranged from €26 million to €40 million plus VAT, which was substantially above the allocated budget for the project, leaving the council with a substantial funding shortfall. The council also stated that while it would try to see if the shortfall could be filled through any combination of additional funding and cost reductions, the project had been put on hold. Unfortunately, on the basis of the tender prices received, the cost of the project is well beyond that projected and bridging the shortfall is very difficult. Furthermore, the increased cost of the project now has significantly reduced the benefit to cost ratio associated with it.

I understand that the SEUPB has been in discussion with Louth County Council and its project partners regarding the financial viability and deliverability of the scheme. This is to be expected given the scale of the cost increase. It is a matter for the SEUPB, taking account of its responsibilities for the allocation of INTERREG IVA funding, to assess the position and satisfy itself as to the deliverability of the project. As part of this process, SEUPB sought clarifications and additional information from the project partners which it is now assessing.

No formal proposal has been made by Louth County Council to the Department of Transport, Tourism and Sport on increasing the Department's funding contribution. Due to budget cutbacks, the Department for Transport, Tourism and Sport has had to curtail investment on major new or improvement projects in recent times in order to focus available funds on necessary maintenance and repair work, based on the current estimates. As the Deputy will be aware, a further reduction of in excess of €100 million in the 2014 budget for regional and local roads is scheduled. It is from this budget that any additional funds for the Narrow Water Bridge would have to come. Notwithstanding this, the Minister has indicated that he would be willing to consider helping to make up some of the shortfall but only in the context that there would be significant contributions from all other parties, including the Northern Ireland Executive. As I understand it, to date such a package of funding has not been put together.

If it does not prove possible to advance this project, there are a number of other transport projects of a cross-Border nature that can be pursued to ensure that this funding is not lost to the island. I wish to stress that the Minister is open to proposals.

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