National Broadband Plan may cost more than €3 billion

There are growing fears at the highest level of Government about the escalating costs of the National Broadband Plan, now estimated at some €3 billion, and officials are working on “plan B” in case the entire process collapses, The Irish Times has learned.

The process, intended to bring high-speed broadband coverage to over half a million homes, has currently been paused while an independent auditor assesses if it has been compromised by frequent contacts between the former minister for communications Denis Naughten and the leader of the sole remaining bidder for the contract.

Mr Naughten resigned a fortnight ago after details of the meetings with David McCourt, whose company is leading the last consortium remaining in the bidding process, were made public by the Taoiseach Leo Varadkar.

The Government is now awaiting the auditor’s report before deciding whether to scrap the process or whether it can continue. The report is expected to be presented to the Department of the Taoiseach in two weeks.

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However, senior sources have said the escalating costs of the programme have also thrown its future into doubt.

While exact figures are unknown, it is understood that the estimated final costs have ballooned towards and perhaps past €3 billion.

The original estimate for the costs to the State of the programme was €500 million – one-sixth of the current estimate.

Other options

Senior officials have been considering other options should the existing process be judged fatally tainted by the Naughten-McCourt meetings. These may involve asking a semi-State company such as the ESB – an option suggested by Fianna Fáil – or Eirgrid to take on the project.

Other options include re-tendering for the project on a national basis, or rolling out a series of local or regional tenders.

Senior Government figures acknowledge the current difficulties and the escalating costs, but say the project is a high national priority and is certain to proceed.

One source insisted that rural communities would see “shovels in the ground” next year. A number of Cabinet Ministers who spoke to The Irish Times on the subject acknowledged that broadband is a huge political issue in rural Ireland.

The new Minister for Communications Richard Bruton briefed his Cabinet colleagues on the issue this week, but did not disclose the extent of the ballooning costs of the programme. Ministers say they were aware the project was in difficulty before now, but not of the extent of the problems.

Delays

The plan to extend high-speed broadband to all of the country has been bedevilled by delays since 2012. While broadband has been rolled out to most urban and easily accessible rural areas, more than 540,000 homes and businesses in parts of rural Ireland are still waiting for effective high-speed broadband connections. Connecting the whole country will require laying more than 110,000km of fibre-optic cable, in many cases across remote and difficult terrain.

In a statement last night, Government Buildings reiterated its commitment to “providing high-speed broadband to every home, business and farm across Ireland”. However, it said a decision on whether to proceed with the current programme would not be made for some weeks.

“The legal evaluation of the National Broadband Plan tender is due to conclude in the coming weeks,” the statement said.

“At that point, if concluded satisfactorily, a recommendation will go to Government and a decision will be taken. This will include consideration of costs. The Government has made no such decision at this point.”

Rural broadband will be one of the key elements in talks between Fianna Fáil and Fine Gael on extending the confidence and supply deal, which began yesterday.