Dáil debates

Wednesday, 27 November 2013

Gas Regulation Bill 2013: From the Seanad

 

The Dáil went into Committee to consider amendments from the Seanad.

10:50 am

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I call the Minister to make a short statement.

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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I apologise for being late. I was at a committee with a European agenda. I do not know why the timetabling was so tight.

We are dealing with some amendments from the Seanad to conclude the passage of the Gas Regulation Bill. Having regard to developments this morning, I felt it would not be appropriate in my dealings with the Opposition if I did not make some brief opening remarks in advance of discussing the outstanding amendments to the Bill.

As Deputies may be aware, this morning I made an important announcement on the Bord Gáis Energy sale, which is also the subject of this Bill. I have confirmed to Bord Gáis Energy that none of the final bids received for the Bord Gáis Energy business is at an acceptable value at the present time. The sale process attracted significant interest from a broad range of potential international acquirers, reflecting positive international sentiment towards Ireland. However, current conditions in the power and commodity markets are not favourable and based on clear advice I have determined that the current bids are not a fair reflection of the strength and potential of the Bord Gáis Energy business. Therefore, while I had introduced this Bill with a view to underpinning the sale of Bord Gáis Energy within 2013, the sale will not now go ahead within this timeframe. The Government will instead consider its options for the Bord Gáis Energy business and the enactment of this Bill keeps all options open to the Government, including a future sale of the company which would require this enabling legislation.

In the course of the debates on the Bill, several Deputies questioned whether the State should proceed with the sale of the Bord Gáis Energy business and whether the sale would amount to a fire sale of assets. On several occasions I reiterated to this House that there would be no fire sale and that disposals would be undertaken only when market conditions are right. This decision underlines my commitment and reflects my resolve to ensure the State achieves value from the State asset disposal process.

My Department, along with NewERA, will now work with Bord Gáis Energy to ensure continued investment in and development of the Bord Gáis Energy business, while also completing the separation of Bord Gáis Networks and Bord Gáis Energy, as required by the EU gas market directive.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I will give the Minister a chance to catch his breath. I apologise on behalf of Deputy Moynihan who has been delayed elsewhere. The Minister's comments on the lack of a sale this morning are welcome. It was always a concern that in the current market this company might have been sold undervalued. I ask him to clarify that this legislation gives him the power to proceed at any stage without coming back to the Dáil regarding any potential future offer for Bord Gáis Energy. Has the Government decided to postpone the sale entirely or if another bid were to come in and another process were to get under way, what is the Government's plan B?

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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As part of the assets-disposal process required by the troika as part of the programme we are now about to exit, the Government decided on the disposal of the energy business of Bord Gáis and the retention in State ownership of the distributive networks. The legislation before the House is to enable that to happen. It is not that the Government has taken any decision not to sell the energy business of Bord Gáis at some point in the future, but rather that there is a necessity to put the legislation in place by completing the enactment of the Bill.

The future will look after itself because this is a thriving business. Even if the marketplace may not be so congenial at the moment, it is a thriving business that is continuing to develop and is essential in our energy infrastructure. We will continue to develop it and assist the company in every way we can. If a fair price is on offer at some stage in the future, the Government will consider that at the time. I give an undertaking to the Deputy and the House that in those circumstances, of course, I would come back into the House and advise it of that decision.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Amendments Nos. 1 and 15 are related and may be discussed together.

Seanad amendment No. 1:Section 1: In page 5, line 19, after "Act" to insert ", other than section 46,".

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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The reference to section 46 in amendment No. 1 is a reference to the new section 46 proposed to be inserted by amendment No. 15. These amendments are considered necessary because at present there is no provision in primary legislation to provide for ministerial approval for the making of a pension scheme by Irish Water. The Water Services Act 2013 provided for the establishment of Irish Water as a subsidiary of the Bord Gáis Energy group and registered under the Companies Acts.

Irish Water was formally incorporated in July 2013. Irish Water has assumed responsibility for the domestic metering programme. In July, the Government also approved the general scheme of a water services (No. 2) Bill which is being drafted by the Office of the Attorney General. The No. 2 Bill will provide for the transfer of responsibility for the provision of water services from the 34 county and city councils to Irish Water. It was originally intended to include provision for ministerial approval of a pension scheme within the second water services Bill. However, Irish Water has commenced recruiting staff to manage the delivery of the metering programme and in preparation for its future role as the water services utility it is proposed to bring forward the Irish Water superannuation provisions and include them as an amendment within this Gas Regulation Bill 2013. This will ensure we establish at the earliest possible date a statutory basis for ministerial approval of any pension scheme established by Irish Water.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I am pretty new to this Bill. Can the Minister give a commitment that no Government could potentially sell Irish Water at any stage? Will this provision specifically block any potential sale of Irish Water?

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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No. I can certainly give the assurance he seeks. This is a very calculated and deliberate decision by the Government to establish a water utility in State ownership, and to grow it and maintain it in State ownership in order to deal with some of the acute problems we have in water provision and water wastage.

The purpose here is to enable it to get on with its business because key critical engineering and technical staff are being transferred from the local authorities to Irish Water as well as recruitment from the live register and outside. The intention here is that the conditions that people enjoyed in their present posts would be transferred. There is no intention to do anything but retain Irish Water in State ownership.

Seanad amendment agreed to.

11:00 am

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Amendments Nos. 2 and 13 are related and will be discussed together.

Seanad amendment No. 2: Section 18: In page 13, line 21, to delete “and”.

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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This is purely a drafting amendment.

Seanad amendment agreed to.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Seanad amendments Nos. 3 to 12 inclusive and 16 to 25 inclusive are related and will be discussed together.

Seanad amendment No. 3: Section 21: In page 14, line 10, after “BGÉ” where it firstly occurs to insert “and its subsidiaries”.

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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These amendments are grouped, as the Leas-Cheann Comhairle says. They are drafting amendments. They are purely technical and are proposed to provide greater clarity with respect to the assets, licences, rights and liabilities and staff of BGE and its subsidiaries, which may be included in the transfer plan and to provide that assets may be transferred to an energy company from BGE, a subsidiary of BGE or both.

Seanad amendment agreed to.

Seanad amendment No. 4: Section 21: In page 14, line 12, to delete “the” where it firstly occurs and substitute “a”.

Seanad amendment agreed to.

Seanad amendment No. 5: Section 21: In page 14, line 17, to delete “or” and substitute the following:“(c) all or any of the assets, licences, right and liabilities and staff (whether or not subject to exceptions) of, or relating to a specified function or business activity of, one or more than one subsidiary of BGÉ, or”.

Seanad amendment agreed to.

Seanad amendment No. 6: Section 21: In page 14, line 18, to delete “both of”.

Seanad amendment agreed to.

Seanad amendment No. 7: Section 26: In page 15, line 27, after “transfer” to insert “to the energy company”.

Seanad amendment agreed to.

Seanad amendment No. 8: Section 26: In page 15, line 28, after “BGÉ” to insert “and its subsidiaries”.

Seanad amendment agreed to.

Seanad amendment No. 9: Section 26: In page 15, line 28, to delete “to the energy company”.

Seanad amendment agreed to.

Seanad amendment No. 10: Section 26: In page 15, line 29, after “transfer” to insert “to the energy company”.

Seanad amendment agreed to.

Seanad amendment No. 11: Section 26: In page 15, line 29, after “BGÉ” to insert “and its subsidiaries”.

Seanad amendment agreed to.

Seanad amendment No. 12: Section 26: In page 15, line 30, to delete “to the energy company”.

Seanad amendment agreed to.

Seanad amendment No. 13: Section 28: In page 16, line 21, to delete “and”.

Seanad amendment agreed to.

Seanad amendment No. 14: Section 31: In page 16, after line 33, to insert the following:“Taxation of chargeable gains 31. (1) Sections 617 and 631 of the Taxes Consolidation Act 1997 shall not apply to any transfer to, or vesting in, an energy company under section 26(a) and Schedule 3.(2) Section 623 of the Taxes Consolidation Act 1997 shall not apply where, on a disposal of an energy company in accordance with section 30, the energy company ceases to be a member of a group of companies (within the meaning of section 616 of that Act) of which BGÉ is a member.”.

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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This amendment relates to a taxation matter and is designed to avoid a potential anomaly in the treatment of capital gains tax on the proceeds from any future sale of Bord Gáis Energy. Under existing tax rules the pre-sale transfer of the energy assets by BGE into a subsidiary known as the energy company, as provided for in the Gas Regulation Bill 2013 will automatically be subject to relief from capital gains tax under section 617, the group relief provision of the Taxes Consolidation Act 1997. However, when the subsidiary is subsequently sold a de-grouping charge is automatically triggered under section 623 of the Taxes Consolidation Act 1997 with the capital gains tax liability falling on the subsidiary at the point of sale completion rather than on BGE. This essentially means that the capital gains liability would fall on the purchaser rather than on the seller, which would be unusual. This amendment is structured specifically to dis-apply the group relief provision for any pre-sale restructuring to provide absolute clarity that BGE will be liable for all capital gains tax relating to the restructuring of the energy business. This would provide clarity for all parties to any future sale and ensure that the appropriate capital gains tax is paid to the Revenue Commissioners. My Department consulted with the Department of Finance and the Office of the Attorney General on the drafting of this amendment and I am satisfied that this ensures the best outcome for the Exchequer.

Seanad amendment agreed to.

Seanad amendment No. 15: New section: In page 32, after line 16, to insert the following:“Further amendment of Water Services Act 2013 46. Part 2 of the Water Services Act 2013 is amended by inserting the following section after section 18:“Superannuation 18A. (1) As soon as may be after the coming into operation of this section, the subsidiary shall prepare and submit to the Minister a scheme or schemes for the granting of superannuation benefits to or in respect of members of staff of the subsidiary. (2) Every such scheme shall fix the time and conditions of retirement for all persons to, or in respect of whom, superannuation benefits are payable under the scheme, and different times and conditions may be fixed in respect of different classes of persons. (3) The subsidiary may at any time prepare and submit to the Minister a scheme amending or revoking a scheme previously submitted and approved under this section. (4) A scheme or amending scheme submitted to the Minister under this section shall, if approved by the Minister with the consent of the Minister for Public Expenditure and Reform, be carried out by the subsidiary in accordance with its terms. (5) Every scheme made under this section shall make provision for appeals. (6) A superannuation benefit shall not be granted by the subsidiary to or in respect of any of its staff who are members of a scheme under this section and no other arrangement shall be entered into for the provision of any superannuation benefit to such persons on their ceasing to hold office, other than in accordance with such scheme or schemes submitted and approved under this section or an arrangement approved by the Minister and the Minister for Public Expenditure and Reform. (7) The Minister shall cause every scheme submitted and approved under this section to be laid before each House of the Oireachtas as soon as may be after it is approved, and if either such House within the next 21 days on which that House sits after the scheme is laid before it, passes a resolution annulling the scheme, the scheme shall be annulled accordingly, but without prejudice to anything previously done thereunder. (8) In this section ‘superannuation benefit’ means a pension, gratuity or other allowance payable on resignation, retirement or death.”.”.

Seanad amendment agreed to.

Seanad amendment No. 16: Schedule 3: In page 37, line 4, to delete “of BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 17: Schedule 3: In page 37, line 5, to delete “of BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 18: Schedule 3: In page 37, line 10, after “BGÉ” to insert “, a subsidiary of BGÉ or both”.

Seanad amendment agreed to.

Seanad amendment No. 19: Schedule 3: In page 37, line 13, to delete “of BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 20: Schedule 3: In page 37, line 14, to delete “of BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 21: Schedule 3: In page 37, line 18, after “BGÉ” to insert “, a subsidiary of BGÉ or both”.

Seanad amendment agreed to.

Seanad amendment No. 22: Schedule 3: In page 37, line 30, after “BGÉ” to insert “or a subsidiary of BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 23: Schedule 4: In page 38, line 4, to delete “BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 24: Schedule 4: In page 38, line 5, to delete “of BGÉ”.

Seanad amendment agreed to.

Seanad amendment No. 25: Schedule 4: In page 38, line 12, to delete “by BGÉ”.

Seanad amendment agreed to.

Seanad amendments reported.