State underwrites new €100m borrowing by Irish Water
New funding involves loan from pension fund and €50m overdraft facility with Bank of Ireland
A State-guaranteed loan facility from the National Pension Reserve Fund to Irish Water has been upped by €50 million to €300 million
The State is underwriting another €100 million in borrowing by Irish Water as it moves to complete its start-up and fund installing water meters.
A State-guaranteed loan facility from the National Pension Reserve Fund (NPRF) to Irish Water has been upped by €50 million to €300 million. Meanwhile the State will also underwrite a new €50 million overdraft facility with Bank of Ireland.
The Government now has a significant financial commitment to Irish Water on a number of fronts. It will invest some €240 million in equity in the company, most of it already committed. The body has also received €424 million from the exchequer in day-to-day funding to the end of last month, money which was previously paid to local authorities to run water services.
Further substantial funds are due to be committed over the next year to support Irish Water’s day-to-day operations and its investment programme.
The new borrowing arrangements were revealed by Minister for Finance Michael Noonan in reply to a parliamentary question from Fianna Fáil finance spokesman Michael McGrath. The arrangements came by way of a two-year bridging loan negotiated with the NPRF in July 2013, and now increased, and the recent overdraft facility signed with the Bank of Ireland.
The money borrowed from the NPRF is due to be repaid next September, highlighting the importance to the company and the Government of getting other revenue into the company via domestic charges.
The Government is due to announce revised charging plans for households next week, but will still have to ensure that significant revenues come into Irish Water. Mr Noonan said failure to collect the revenues from customers would affect Irish Water’s ability to undertake planned investment in the public water infrastructure.
Large-scale non-payment of water bills could also endanger the Government’s plan to keep Irish Water off the State balance sheet, according to a reply by the Minister to another question from Mr McGrath. This problem would emerge if Irish Water had to start writing off money which had not been collected as a bad debt, forcing the Government to step in and provide extra funding.
The Government’s revised charging plan will attempt to keep the State’s contributions off the exchequer balance sheet for EU purposes. For this to happen more than half of its operating costs must come from water charges paid by households and businesses.