FF wants committee to investigate broadband contract

Granahan McCourt consortium says it will invest initial €220m in rural project

Minister for Communications Richard Bruton: ‘The State’s risk is absolutely capped. I think this is a good deal from the point of view of the taxpayer.’ File photograph: Tom Honan

Minister for Communications Richard Bruton: ‘The State’s risk is absolutely capped. I think this is a good deal from the point of view of the taxpayer.’ File photograph: Tom Honan

 

The Oireachtas Communications Committee has been asked to open an investigation into the Government’s decision to award preferred bidder status on the multi-billion euro national broadband contract to Granahan McCourt.

Timmy Dooley, Fianna Fáil’s communications spokesman, made the call ahead of the committee meeting on Tuesday to discuss the contract and process with Minister for Communications Richard Bruton.

Granahan McCourt, the private company leading the consortium due to take on the broadband contract, which may cost up to €5 billion, earlier said it plans to invest an initial €220million in the project. It said this was a “first, minimum spend”.

The Government had come under pressure in recent days to reveal how much the private company would put into the rollout.

In a statement, the company confirmed it would use the €220 million “to get the project up and running”. The capital funding would go towards the design and build activities of the rural broadband network, and would be invested ahead of State subsidies coming on-stream, the company said.

“The contractual and financial obligation on National Broadband Ireland includes shareholder equity, working capital, performance bonds, operating and revenue risks,” the statement said. “These are not capped – unlike the State’s subsidy – and NBI also assume both construction and commercial revenue risk.”

‘Incredibly low’

Fianna Fáil public expenditure spokesman Barry Cowen said the contribution by the firm was “farcical” while his colleague, finance spokesman Michael McGrath, said the sum was “incredibly low”.

“The taxpayers bill is going to be up to €3 billion for infrastructure that we will not own at the end of it,” Mr McGrath told reporters at Leinster House. “And there’s no guarantee that broadband will be delivered to those people who need it.”

The aim of the project is to deliver high speed broadband to 540,000 households, farms and other businesses who are currently not on such a network.

Mr McGrath said he wanted to see the full contract and any break clauses included in it.

“The bulk of the money is being committed by the Irish taxpayer...Granahan McCourt are going to be relying on revenue raised from consumers in order to meet their commitments,” he said.

He also raised the prospect of the contract being sold on in the futue.

“There’s a real concern that because of the nature of the consortium - in essence it is an investment firm that is bringing in some expertise but it’s not a firm that in and of itself has expertise in this area, that you may well see an scenario in which this contract is flipped on, that it’s sold on in a period of time.”

Mr McGrath said that the Government “did not come clean. They did not give all the facts to the general public”.

“The upfront commitment from Granaghan McCourt is €175 million in equity and then €45million in working capital and that in essence the balance of the money paid would come in user charges that will actually be paid by the consumer and not by the company.”

Carry risk

Mr Bruton said the private company would “carry all the risk” for any additional costs in the broadband project, he told RTÉ Radio’s News at One.

While the contract for the deal will not be signed for a number of months, “reversing this decision is not on the table,” Mr Bruton told reporters earlier on Tuesday.

“The State’s risk is absolutely capped. I think this is a good deal from the point of view of the taxpayer,” he said.

“We’ve been more transparent about this investment than I’ve ever seen. We’ve published reams of documentation so people can see the evaluation that we undertook,” Mr Bruton said.

Internal advice on the plan from Robert Watt, secretary general of the Department of Public Expenditure, revealed officials had “strongly recommend against approval of the appointment of the preferred bidder”, due to concerns over the high cost of the plan.

The project was envisaged to supply broadband to homes and businesses where current commercial providers would not, due to their remote locations.

Despite the significant investment of public funds, the State will not own the broadband network when it is built, under the deal with the Granahan McCourt consortium.