Seanad debates

Tuesday, 13 February 2024

Gas (Amendment) Bill 2023: Second Stage


Question proposed: "That the Bill be now read a Second Time."

1:00 pm

Photo of Pat CaseyPat Casey (Fianna Fail)
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I welcome the Minister of State. The debate will follow in the normal pattern. The Minister of State will have ten minutes to speak, the group spokespeople will have ten minutes and any other Senators after that will have four minutes.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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I am pleased to address the House on the Second Stage of the Gas (Amendment) Bill 2023. As Deputies and Senators are aware, the Minister for the Environment, Climate and Communications is the Minister with responsibility for gas policy and all legislation relating to gas and energy policy. The European natural gas directive, Directive 2009/73/EC on common rules of the internal markets in renewable and natural gases and in hydrogen, in relation to the unbundling of ownership of generation, supply and transition systems in the energy market, prevents the Minister for the Minister for the Environment, Climate and Communications from assuming the role of majority shareholding Minister in Gas Networks Ireland and in its parent, Ervia. As such, the Minister for Housing, Local Government and Heritage is the majority shareholding Minister for Ervia. Ervia manages national gas infrastructure through its subsidiary, Gas Networks Ireland, GNI. As a consequence of that, the Department of Housing, Local Government and Heritage has a remit in respect of the governance of Ervia.

In 2020, the Government decided that having two separate State companies to operate the gas network and develop water services provides the optimal solution to meet the future challenges of decarbonising our energy supply and modernising our water services. Therefore, the Water Services (Amendment) Act 2022 was prepared and was signed into law on 7 December 2022. On the date appointed in the Act, 1 January 2023, Uisce Éireann was split from the Ervia group and became a stand-alone company. The Government decided that the most appropriate structure of the remaining gas utility business following the separation of Uisce Éireann from Ervia was the integration of Ervia into Gas Networks Ireland so as to become the single entity, Gas Networks Ireland. The Government's decision to integrate Ervia into Gas Networks Ireland is being led by the Minister for the Environment, Climate and Communications, who has responsibility for gas legislation.

Before outlining the provisions of the Bill, I would like to speak on a number of key points relating to it. Ervia's business, in terms of both revenue and activities, is predominantly the operation, maintenance and development of the gas networks and interconnectors that are in its ownership. Ervia and Gas Networks Ireland are currently operating as a single entity from a structure, strategy and operational point of view. Ervia was established as a statutory corporation pursuant to the Gas Act 1976, as amended, and its subsidiary, Gas Networks Ireland, was established as a company under the Companies Acts with its own constitution pursuant to the Gas Regulation Act 2013. Ervia is fully State-owned and is the sole owner of Gas Networks Ireland.

It is also relevant to note that the EU is currently in the process of agreeing legislation on the hydrogen and decarbonised gas market legislative package, namely, the European natural gas directive, Directive 2009/73/EC. This will provide for a further consideration of the functions of GNI regarding the decarbonisation of the gas network. The functions of GNI in this legislation reflect the current activities it engages in, and any changes to its function will be addressed in the implementation of the gas package when negotiations have concluded. A priority will be the decarbonisation of the gas network in line with the commitments set out in the climate action plan and programme for Government.

The main provision of the Bill is for the integration of Ervia into Gas Networks Ireland so as to become the single entity Gas Networks Ireland.The Bill provides for amendments to the Gas Acts so as to facilitate the integration and transfer of functions, assets, rights, liabilities, staff and records from Ervia to GNI as well as providing for the corporate governance arrangements relating to Gas Networks Ireland in terms of shareholding arrangements, the board arrangements and its chief executive, annual reporting and accounting provisions. These governance arrangements are being provided in primary legislation rather than in constitutional documents, which will enhance transparency and accountability.

I will elaborate on the Bill’s provisions. It is a relatively short Bill, with 21 heads in total, and is largely technical in nature. It is divided into two Parts. Part 1 provides for the Title to the Bill, the Bill's commencement and the definitions used in the Bill as well as the saver provision to maintain the existing ministerial consents that were given to Ervia to carry out telecommunications-related activities. Part 2 lists the provisions for the dissolution of Ervia and the integration of its functions, roles, responsibilities and liabilities into GNI. Part 2 also includes the chapters of the Bill that concern the amendment of other enactments to facilitate the dissolution of Ervia and the integration of its functions, properties, liabilities, staff and records into GNI.

The Bill's 22 chapters can be summarised as follows. Part 1 contains chapters 1 to 5. These are standard provisions that provide for the Short Title to the Bill and the commencement on enactment by means of ministerial order, as appropriate, of its various provisions, as well as definitions of certain terms referred to in the Bill and the saver provision to maintain the existing ministerial consents that were given to Ervia to carry out telecommunications-related activities. Such ministerial consents were previously granted under section 17 of the Gas (Amendment) Act 2000. That section is now being repealed by section 3(2) of this Bill because its scope is considered too broad. The inclusion of a saver is necessary to ensure that the consents previously granted under section 17 remain in place for Ervia and this telecommunications-related work can continue post integration into Gas Networks Ireland.

Part 2 contains the rest of the chapters, which provide for the integration of Ervia into GNI.

Chapter 6 establishes a transfer date, which will be set by the Minister by way of an order.

Chapter 7 provides for the cancellation of Ervia’s shareholding in GNI and for the issuing of new shares to relevant Ministers.

Chapter 8 provides for the issuing of new shares to the majority-shareholding Minister, namely, the Minister for the Environment, Climate and Communications, and the Minister for public expenditure and reform in the same proportions as shares of Ervia are currently held, that is, 90% of the new shares will be held by the majority-shareholding Minister and 5% by each of the other Ministers. Only the Ministers will hold all the rights associated with those shares, thereby providing that Gas Networks Ireland will be entirely publicly owned. This approach reflects the position in other State-owned bodies where the shares are held by Ministers.

Chapter 9 provides for the restatement of the definition of the majority-shareholding Minister, who is currently for Ervia, and will be for GNI, the Minister for Housing, Local Government and Heritage.

Chapter 10 sets out that the Minister for the Environment, Climate and Communications and the Minister for Public Expenditure, National Development Plan Delivery and Reform shall not directly or indirectly exercise control over Gas Networks Ireland in carrying out its functions or entitle them to appoint a member of the board of GNI or to exercise voting rights.

Chapters 11 to 15 cover the transfer of the existing functions, responsibilities, liabilities, assets and so on from Ervia to GNI. This includes the transfer of all functions concerning gas that are statutorily vested in Ervia to GNI, the transfer of land and any other property of Ervia to GNI, and the transfer of rights and liabilities of Ervia resulting from any contract or commitment Ervia has entered into to GNI, including all contracts or commitments involving Ervia. Furthermore, it provides for liability for loss occurring before the transfer date and ensures that GNI will assume any liability outstanding from Ervia.

Chapters 16 and 17 provide for the transfer of staff from Ervia to GNI and any records held by Ervia to GNI.

Chapter 18 provides that the final accounts and final annual report of Ervia can be prepared and progressed by GNI on Ervia's behalf. Further provision is included to enable GNI to carry out, after the transfer date, administrative tasks associated with the dissolution of Ervia.

Chapters 19 and 20 provide for amendments to the Gas Act 1976 to update terminology to reflect the integration of Ervia into GNI. Chapter 21 provides for a variety of miscellaneous amendments to the 1976 Act.

Chapter 19 provides for amendments relating to the board and constitution of GNI and the preparation of annual reports and financial statements.

Chapter 20 provides for amendments relating to the board and constitution of Ervia. The proposed amendments involve the repeal of Schedule 1 of the 1976 Act, the substitution of sections 6 and 7 of the Gas Regulation Act 2013 and a number of other minor amendments to the 2013 Act. These sections deal with directors of GNI and are being substituted to reflect the revised board structures that will be in place following the integration of Ervia. Schedule 1 of the 1976 Act is being repealed.Schedule 1 was originally drafted for the Irish Gas Board, Bord Gáis Éireann, which did not have a constitution, unlike GNI, which is registered as a designated activity company, DAC, under the Companies Acts. The Schedule of the 1976 Act is being repealed to eliminate duplication of the matters that are dealt with by either the GNI constitution or the Companies Act 2014. The revised section 6 reflects that GNI has a constitution under the Companies Act.

Chapter 22 provides for the consequential amendment to the Freedom of Information Act, which is being amended to remove Ervia as an exempt body. Gas Networks Ireland is already subject to this Act. I commend the Bill to the House and look forward to the debate.

Photo of Timmy DooleyTimmy Dooley (Fianna Fail)
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I welcome the Minister of State and thank him for bringing the Bill to the House. It is technical in nature, a tidying-up exercise resulting from a change in policy in how we manage our water systems. It brings to an end the sorry debacle that was the initial effort at charging for water. There are different views as to how that should have happened and I do not think we will ever reach a consensus on it but we are moving on and tidying up the legislative framework. That is to be welcomed.

This opens up an opportunity to start a debate around the decarbonisation of our gas networks, as the Minister of State has identified, how we intend to do that and where we intend to go with it. It is certainly something we need to look at in terms of becoming less dependent on imported fossil fuels. We saw the impact of the invasion of Ukraine by Russia two years ago and the impact that had across Europe. The increase in the price of gas, due to the way in which the Russian Federation manipulated the gas markets, created a scare. It sent, or if it did not, it should have sent, a signal to every country that there is no going back to Russian-provided or Russian-generated fossil fuels. We must become far more resilient.

To that end, I arranged a conference in Clare last Thursday and Friday on the future powering of Europe. Kadri Simson, the European Commissioner, was in attendance, as were a number of other environment ministers and ministers for transport. Many of the large energy companies across Europe had representatives there, as did energy users. The conference was aimed at having a collaborative discussion about the decarbonisation of our energy, not just our power grid but also from a liquid fuels perspective.

Not enough recognition is given to what the ESB is about. The Minister of State knows as does the Minister, Deputy Ryan but maybe the wider business ecosystem does not. I refer to recognition of the work that is under way and the vision the ESB has to generate electricity from floating offshore wind turbines. The real potential there is to be able to generate electricity for our own growing demand but also for a wider, growing European demand for electricity as we decarbonise and move towards electricity for some elements of transportation, for heat and for the generation of liquid fuels or gas. There is a plan to generate hydrogen through electrolysis in the Shannon Estuary, which can bring huge benefits not just through storage for use to generate electricity at times when the wind is not blowing but also as a liquid fuel from which derivatives can generated, such as sustainable aviation fuels or other fuel systems that can be used for our heat systems.

To that end, we need to advance more quickly in our ambition as a State and begin the process of capturing wind through floating offshore. I know that is expensive right now and the State's objective is to harness electricity in the south east and the south on those shallow beds where we can have fixed-bottom wind turbines in place. However, other countries such as Scotland, Portugal and Norway are moving in developing demonstrator projects on the floating offshore technologies. There is huge potential in terms of the scale of the wind that can be captured in the Atlantic to decarbonise not just elements of our network but right into Europe.Then there is the potential to develop the nascent technologies that can provide the jobs of the future. We could sit on our hands and wait until the technologies, particularly those relating to the pontoons or huge floating bases that will be required - there will be a need to manage and maintain these - have been developed. We will definitely benefit from the grid systems that exist across Europe to get that electricity at some point, but we will lose out by being late to the marketplace. Insofar as I can, I want to impress upon the Minister of State and the Government the importance of taking a leap of faith here and putting in place the upfront investment needed in the form of grant aid. Commissioner Simson was clear that there are moneys available in Europe if the Government is minded to work with the Commission to assist with early stage technologies. Such technologies are clearly not competitive. Offshore wind is not competitive. Onshore wind not competitive at the outset. In that context, we all made a contribution - via our electricity bills - towards making onshore wind market-ready. This was because it was far more expensive than the burning of coal, oil or gas at the time. We are in the same situation now. I am not suggesting that there needs to be a penalty imposed on energy users, particularly when we consider that energy prices have increased significantly. However, the State can set aside an amount of money that would help in the context of establishing the cost base that is needed to get a demonstrator project off the ground.

We also need to move very quickly on the designation of marine protection areas. There is a limited resource in this regard, but a number of local authorities have skill sets in house that they can deploy. Clare County Council has made it very clear to the Department that it is willing, able and technically resourced to do the designated maritime area plan work relating to the offshore potential that exists when it comes to the Atlantic. It will still be four or five years - maybe longer - before we see electrons coming ashore, that is for sure. However, let us not leave it so late that somebody can steal a march on us. The size and scale of the task are such that planning needs to start now and commitments need to be given now. It is time the Government made a commitment to floating offshore wind, put in place an appropriate amount of money to assist in delivering a demonstrator project of 400 MW and set in train the pilot project that will lead the way not only in the context of the sustainable provision of electricity to Ireland and parts of Europe but that will also provide the spare capacity at times when there is less demand from the grid to allow us to look at other opportunities. The latter could include generating hydrogen, as I said, or the powering of heavy industry that could be located in the region.

There has been much talk and, as the Minister of State knows, a great deal of pushback in certain quarters regarding data centres. To some, a data centre is merely something that is nice to have. Some people seem to suggest, for their own reasons, that these centres are just the constituent part that sits behind the folly that goes on in cyberspace, but they are not. They are, as was the case with what preceded them in the sixties and seventies, the advanced factories of the modern era.

The demand for office space is falling. I saw a report in The Daily Telegraphyesterday about the fact that the UK has decided that much of the office space it has will not be used in the future. Systems are being provided whereby office space can be converted into domestic accommodation. We are quickly reaching the same point, and that sends a signal that people are operating from the cloud rather than from office space. As a result, data centres are an important part of our future economic activity. If we can bring electricity ashore and ensure that these facilities are located close to source, we will not have to pull them off the grid further up the line, thus creating more stress and pressure on the already overloaded grid on the east coast.

I hope the Minister of State can think a little bit about this matter in due course and support those who are trying to advance the project in the mid-west that has been identified by the ESB and others.There is a company called Simply Blue Group that has done an amazing amount of work towards developing this resource and I hope it can get favourable Government support.

Photo of John McGahonJohn McGahon (Fine Gael)
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As my colleague, Senator Dooley, has said, this is a very technical Bill so I will be very brief. Naturally, it is a good Bill and is something we really need to welcome. Some of the proposed legislative amendments are quite important, particularly the establishment of a transfer date for the integration of Ervia into GNI. This, along with the dissolution of Ervia is pretty important, as is the allocation of the ministerial shareholding in GNI. I strongly support the preparation of the final accounts and the final annual report of Ervia as well as revised procedures for the preparation of future accounts and annual reports. This is a basic piece of technical legislation. It is just another example of this Government's very clear commitment to climate action and trying to do something about it. The fact that we are pushing this legislation through as quickly as possible is something to be very strongly commended.

Photo of Lynn BoylanLynn Boylan (Sinn Fein)
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Apologies, I am trying to triple-job.

As others have said, this Bill focuses on technical responsibilities for Gas Networks Ireland in the context of its separation from Ervia. I welcome section 21 and that the Freedom of Information Act is being amended to delete Ervia from the list of exempted bodies as GNI was already a relevant body and it is welcome that it will remain so. However, semi-State companies such as Ervia were exempt from complying with the climate Act because they were exempt from freedom of information requests. After the passing of the climate Act, I sought clarity on Committee Stage from officials from the Department of the Environment, Climate and Communications, on this point back in January 2022 and there was none forthcoming. In fact, no one could tell us which bodies were going to be considered relevant bodies under the climate Act. I even followed up with a parliamentary question to the Minister, Deputy Ryan, in May 2022, who again, could not provide any clarity and said that the Department was seeking legal advice at that time. Finally, it was only in September 2022 that the Minister was finally able to confirm that Ervia, along with other commercial semi-State companies such as Dublin Bus, Dublin Airport Authority, and the ESB, were not bound by the climate Act.

Would the Minister of State consider taking this opportunity to amend the Freedom of Information Act to remove the FOI and climate exemptions from other bodies, while he is removing Ervia from that proposal? In this legislation, we could also take the opportunity to remove those other bodies from the FOI exemption. While this is a rather technical Bill, it presents a crucial opportunity to take meaningful steps towards reducing our reliance on environmentally harmful and costly fossil fuels including gas. There are several aspects of the Bill which could be tightened up, and Sinn Féin will certainly be bringing amendments to address the role and the function of GNI regarding the climate Act, but today I will spend most of my time focused on the issue of islanded data centres. Since October 2022, I have been calling for emergency legislation to prevent data centres from being connected to the gas grid because as data centres were not allowed to connect to the electricity grid due to the moratorium, they were then taking it upon themselves to generate electricity on site with gas by connecting to the gas grid instead. Initially, there were 11 data centres seeking connection and the last we have heard is that there are more than 25 on top of these 11. These islanded data centre connections to the grid could completely blow our carbon budget out of the water with their ever-increasing demand for gas. Not only that, as gas supply from the Corrib gas field wanes and we face into a supposed gas supply crisis, it makes no sense whatsoever for us to simply swap the strain currently on our electricity supply, and shift that problem by putting a strain on our gas supply. The Government has said in the statement on data centres that the islanded data centres are inconsistent with Government policy but that Gas Networks Ireland maintains that it is legally obliged to provide anyone who seeks a gas connection with one.Not only that, GNI thinks that the principles in the Government statement on data centres can be achieved with continued data centre connection as long as we believe that hydrogen, biomethane and whatever fairy dust you are having yourself will decarbonise the gas grid. It is fanciful to think we can continue to grow demand for gas, electricity and flights while maintaining a liveable climate.

We are calling for urgent legislation. The Government's Climate Change Advisory Council has also come out in favour of much stronger action against islanded data centres. In a letter to the joint Oireachtas committee, the chair of the council, Marie Donnelly, outlined that she wants the Commission for Regulation of Utilities not to sign any more contracts to connect data centres to the gas network, and suggested that if the gas Act prevents such action from being taken, the Government should take immediate action to change it. As we have seen, GNI is clearly out of step with Government policy regarding connections for islanded data centres, and is showing very little willingness to accept its climate responsibilities and to play ball. Therefore, I think it will be necessary to take strong legislative action to force it to get on board with the transition.

There is a very important opportunity here to amend this legislation and to reduce our reliance on gas. The Government appears to have a general rule of not working collaboratively with the Opposition to implement constructive proposals when they are brought forward. I really hope it will not be the case with the amendments we bring to this legislation. We are in a unique position in this country because the vast majority of elected representatives in both the Lower and Upper Houses back the climate Act and the sectoral emissions targets, and are looking to work collectively so that we can achieve those climate targets.

I encourage the Minister of State to engage with Committee Stage of this legislation, and to engage with our amendments, which seek to bring GNI in line with the Government's own position around islanded data centres. I also have to ask whether any consideration has been given to the Climate Change Advisory Council's requests. After reviewing the Committee Stage debate from the Dáil, it certainly was not clear that the request from Marie Donnelly had been listened to, assessed or engaged with in any meaningful way in order to address the concerns raised by the council. I know the Minister of State said at the time that there was not sufficient time to accept the amendments on the basis that he had to have them checked through legally. Now that we are here in the Seanad, he has a second chance. I hope that when it comes to Committee Stage, he will engage with the process and adopt our amendments to prevent data centres from connecting to the gas grid.

As I said, we are unique. Climate denial is not a huge issue in this country. In fact, the polls consistently show that Irish people are very concerned about climate change. It is imperative that when we are in the position of trying to work constructively together on the Opposition benches, the Minister of State will engage in that process, hear us out in good faith and be willing to work with us when we bring forward amendments. It is not right, even in terms of the just transition, that we are telling people they have to reduce their electricity supply and the amount of gas they are using for home heating while at the same time we are literally linking up data centres to the gas grid with no potential for them to transition out of being connected to those gas grids because they are, as the name suggests, islanded data centres.

I look forward to engaging on Committee and Report Stages of this Bill. As I said, the two key points for us are the connection to the gas grid by data centres and making sure we use this opportunity to bring more of those semi-State bodies into the climate Act as relevant bodies by exempting them from the FOI legislation, as has been done with Ervia.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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I thank the Senators for their contributions. As Senators are aware, this Bill has been introduced to reorganise Ervia. Ervia was a holding company that owned Irish Water, and it also owned Gas Networks Ireland.Irish Water has been spun out and is now an independent company. We are now left with a structure where there is simply a company called Ervia that owns Gas Networks Ireland which then performs its functions. We are eliminating Ervia and we are folding the functions of Gas Networks Ireland into Ervia. It is very much technical legislation in which we are making sure we do not lose any of the functionality of the existing organisation. That is the scope of this legislation; it is mostly technical. I am happy to address the various points made by the Senators and I will engage on Committee Stage on any of the amendments that are put forward.

As the Senators are probably aware, the gas package was recently passed by the EU. It was agreed at a trilogue between the European Commission, the Council of the European Union and the European Parliament. That included the regulation and a directive which is focused on decarbonisation of gas companies and the use in the future of hydrogen and biogas instead of methane.

Senator Dooley mentioned the end of Irish Water, the spike in gas prices as a result of the war in Ukraine and the interaction he had with the Estonian Commissioner, Kadri Simson, in Clare. The Shannon Estuary in Clare is going to become a centre of activity. I do not think the media have come around to the idea that Ireland, which up to now has been dependent on fossil fuel imports for electricity, is now moving into a transition period where, within a few years, we will become a country that is energy independent, that is sovereign and more self-sufficient, and that is exporting electricity. It is a huge change from being a country that is dependent on others for energy to being an exporting country. Clare, Kerry and the Shannon Estuary will be a centre of this. A lot of power will be generated there. This is the region of the country where we first had our electricity generation a hundred years ago, where Moneypoint is situated and where we have many very strong grid connections. It is going to continue and the area is going to be revitalised. As I said, I do not think the media have realised this yet. It has not yet entered the national consciousness that we are on this journey of transition.

Senator Dooley also mentioned that the development will be dependent on floating, offshore wind power, which is true, and that this is not yet a wide-scale commercial technology. It is only available in demonstrator projects, although it is certainly coming. It is not something on the never-never like some other technologies such as cold fusion. It is a very viable and feasible technology that is coming. Demonstrator projects exist already in Portugal and Scotland, and I think one of the committees was taken to visit some of these. The Senator suggested we should be doing one as well and I agree with him. We should be doing a demonstrator project in Ireland.

The Senator said that there should be Government involvement in this project. It will be a major piece of research for the country. We will be moving to a situation where we have 32 GW of offshore wind generation. At current prices, that is an approximately €70 billion investment between now and the end of 2040. It is a huge amount of activity, it is about to happen and it is a very promising future for Ireland and the west of the country in particular. A whole lot of new industries will be enabled as result. Countries like Norway and Iceland that have large surplus of electricity run industries that add value through the use of cheap electricity, and we are going to be in that market as well.

Senator McGahon made points along the same lines. He also pointed out that this legislation is badly needed. It is technical in nature but these things have to be done. It is a tidying-up operation but it is also the final separation of Irish Water from Gas Networks Ireland and to the creation of a new, independent entity.

Senator Boylan asked if this is an opportunity to extend the freedom of information legislation to other commercial semi-State bodies. The freedom of information legislation is being extended to Gas Networks Ireland, which is absolutely right. It is a major organisation in terms of its environmental impact so it certainly should be subject to FOI. If Senator Boylan would like to engage with me on how she would like to amend the FOI Act, I am happy to look at that. It is very unlikely to happen in this legislation, the scope of which is about renaming the gas company. On Senator Boylan's other points, she mentioned data centres and she is absolutely right that our islanded data centres are contrary to Government policy and we need a mechanism to prevent them from being developed. We will not require legislation for that. It will be done in the form of a planning direction which is being worked on at the moment. It uses the existing powers under the Planning and Development Act 2000.

Coming back to the legislation in hand, I acknowledge the significant work of the Attorney General and his officials and industry stakeholders with whom we consulted to get this legislation done. I also extend my appreciation to the Joint Committee on Environment and Climate Action, which conducted the pre-legislative scrutiny of the general scheme of this Bill last year. The report was published last July and, of course, was considered in detail in the drafting process of the Bill. I thank all the Senators for their interest. I look forward to discussing in further detail any proposals to amend or improve the Bill on Committee Stage.

Question put and agreed to.

Photo of Pat CaseyPat Casey (Fianna Fail)
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When is it proposed to take Committee Stage?

Photo of Timmy DooleyTimmy Dooley (Fianna Fail)
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Next Tuesday.

Photo of Pat CaseyPat Casey (Fianna Fail)
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Is that agreed? Agreed.

Committee Stage ordered for Tuesday, 20 February 2024.

Cuireadh an Seanad ar fionraí ar 3.51 p.m. agus cuireadh tús leis arís ar 5 p.m.

Sitting suspended at 3.51 p.m. and resumed at 5 p.m.