Broadband costs won’t derail other State projects, says Government

Additional funding for National Broadband Plan to come from ‘future revenues’

The additional cost of the National Broadband Plan (NBP) will come from “future revenues” and will not eat into other planned projects, the Government has said.

The cost to the exchequer of the scheme, which aims to connect some 540,000 rural homes and businesses to high-speed broadband, is now projected to be in the region of €3 billion, a multiple of the original estimate.

In the latest series of spending review papers, the Government said additional funding of up to €477 million will be required for the initial rollout over the period 2019 to 2022, and a total of €1.6 billion up to 2027.

This is on top of the €800 million already allocated for the scheme under the National Development Plan (NDP), the Government’s strategic development and climate emergency plan, which runs to 2027.


Capital ceilings

However, the Government insisted the additional funding will come from future revenues, which would be incorporated into its multi-annual capital ceilings and would not affect any of the other planned projects within the NDP.

The Minister for Finance, Paschal Donohoe, said recently the decision to appoint a consortium led by US investment firm Granahan McCourt as preferred bidder for the project would have no repercussions for other planned projects.

Eir had originally been part of the process but dropped out, citing problems with the tender

“No other projects will be delayed or rescheduled, and no other changes will be made to the capital allocations for other projects as set out in the NDP as a consequence of the Government’s decision to proceed with the National Broadband Plan,” he said.

Justify the cost

The Government has been under pressure to justify the cost of its flagship communications project after the State’s largest telco, Eir, claimed it could deliver the scheme for a third of the current price tag. Eir had originally been part of the process but dropped out, citing problems with the tender.

The spending papers reveal that an initial allocation of €275 million was provided under the Government’s 2016-2021 capital plan towards the development and rollout of the NBP.

However, as the finalisation of the tender process was significantly delayed, expenditure on broadband in the period 2016-2018 has been much lower than the allocated amounts, amounting to just under €25 million, including VAT.

“This expenditure includes the cost of corporate and economic advice, technical support and network design, the cost of legal and environmental advice,” the papers said, while noting this was expected to change from the final quarter of 2019, when the contract is due to be signed.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times