Francis O'Brien (Fianna Fail)

I welcome the Minister of State, Deputy Tony Killeen, with this very important legislation. I support this Bill and the need to amend the Forestry Act 1988 to increase the statutory borrowing limit. Section 1 of the proposed Bill provides for an increase in Coillte Teoranta's statutory borrowing limit from £80 million, or approximately €101.5 million, to €400 million. The existing statutory borrowings limit was set in 1988 at the time of enactment of the legislation providing for the establishment of Coillte and has not been increased in the mean time.

Over the past number of years Coillte has been able to avail of the temporary borrowing provisions in the Forestry Act 1988 and its level of borrowings at the end of 2008 was €161.2 million. The company currently has approval to borrow up to a total of €260 million under sections 24(1) and 24(2) of the Forestry Act 1988.

The business environment in which Coillte operates, as a commercial State company, is a world apart from the business environment in which it operated in 1988 when it was first set up. Coillte has a significant capital investment programme each year and this includes reforestation, investment in forest infrastructure and plant and equipment.

It is necessary to increase the statutory borrowing limit to make adequate provision for the borrowing requirements of Coillte for its capital expenditure programme. In 2006, the Coillte group was reorganised around three key operating divisions - Coillte Forests, Coillte Enterprise and Coillte Panel Products. The average number employed by the group in 2008 was 1,250. Since it was established 20 years ago, Coillte has increased its forest estate by 37,000 hectares, developed its recreational facilities and extended its business base to include panel products. The agency currently manages 445,000 hectares of forest land of which 79% is forested with the remaining 21% encompassing open spaces, water, roads or land above the tree line. The company also owns two panel board businesses, namely, Smartply in Kilkenny and Medite in Tipperary and it has also entered into a joint venture arrangement with the ESB to develop a wind farm in Garvagh Glebe, County Leitrim. Coillte also contributes greatly to recreation by way of its forest parks and trails and its involvement in Lough Key Forest Park in Roscommon.

I welcome the Minister for Finance's announcement in last week's budget speech that he will provide €121 million for forestry and bioenergy. This includes a capital provision of €116 million to plant a further 7,000 hectares of trees next year, which demonstrates the Government's continued commitment to this vital sector as set out in the renewed programme for Government. Coillte has developed its business interests significantly over the past 20 years and it faces a positive future as it expands into the renewable energy sector and as Ireland commits to reducing its level of carbon emissions through increased forestry cover. It is, therefore, timely to revisit the statutory borrowings set down in the 1988 Act. The amount required was debated at great length and €400 million was considered the appropriate limit.

It is important that a commercial company such as Coillte is in a position to access sufficient funding to expand its essential business interests, which are critical to our economy and the future of the environment. I support the Bill and the need to amend the Forestry Act 1988 to increase the statutory borrowing limit. The commercial context in which Coillte operates is vastly different from that when it was set up in 1988 and I commend the Bill to the House.