Broadband plan a complex project ‘with significant inherent risks’

KPMG’s head of corporate finance will tell committee that oversight of the project is possible if it is ‘monitored appropriately’

KPMG was appointed as procurement advisers on the national broadband plan in December 2014 following a tender process. It was appointed to advise on ownership options and the procurement phase.  Photograph: iStock

KPMG was appointed as procurement advisers on the national broadband plan in December 2014 following a tender process. It was appointed to advise on ownership options and the procurement phase. Photograph: iStock

 

The national broadband plan’s contract is only effective if it is appropriately adhered to and implemented by both parties, KPMG’s head of corporate finance will tell an Oireachtas committee on Wednesday.

In her opening statement seen by The Irish Times, Michele Connolly will tell the Oireachtas Committee on Communications, Climate Action and Environment that the solution to providing rural broadband is capable of delivering on the State’s requirement.

It is, however, “more expensive than originally envisaged”, Ms Connolly will tell the committee, warning that “it is a large complex project with significant inherent risks”.

She will add that exercising oversight over the long-term operation will be possible as long as the contract is “implemented and monitored appropriately”, something that will allow the Government to “share in certain upsides and to limit the downsides of the project”.

KPMG was appointed as procurement advisers on the national broadband plan in December 2014 following a tender process. It was appointed to advise on ownership options and the procurement phase.

During that phase the department received solutions from Granahan McCourt and Eir in September 2017. In their submissions, “both of the bidders that remained in the procurement projected significantly higher levels of subsidy than the department’s budget model”, Ms Connolly will tell the committee.

Since it was approved the awarding of the contract which aims to connect 540,000 rural properties to high-speed internet has been criticised given the projected total State investment of about €3 billion despite not owning the network.

Monetary terms

Ms Connolly will address this at the Oireachtas committee, and note that the gap-funding model, which KPMG viewed as being the least expensive option in monetary terms, will provide a higher commercial obligation to Granahan McCourt than a contractual obligation would have.

“Under the recommended option the State transfers significant downside risk to the private sector such as technological obsolescence and long-term renewal of the asset whilst retaining upside through a variety of financial sharing mechanisms over the life of the contract,” she will say.

ComReg will also appear before the committee.