State considered renationalising Eir, says Varadkar

Taoiseach claims taking over company would have cost €8bn before funding broadband plan

Taoiseach Leo Varadkar told the Dáil ‘we did think about’ renationalising Eir to “get out our hands on the real infrastructure which is the poles and the ducts”. File photograph: Maxwells

Taoiseach Leo Varadkar told the Dáil ‘we did think about’ renationalising Eir to “get out our hands on the real infrastructure which is the poles and the ducts”. File photograph: Maxwells

 

The Government considered the renationalisation of Eir as part of its discussions on the national broadband plan but it would have cost €8 billion or €9 billion, Taoiseach Leo Varadkar has said.

He told the Dáil “we did think about it” to “get out our hands on the real infrastructure which is the poles and the ducts”.

He told Labour Party leader Brendan Howlin that two-thirds of that company sold recently for €3.25 billion and to renationalise it “we would have to compensate the shareholders by €5 billion or €6 billion” before any money was spent on connecting rural Ireland to the broadband network.

The State would then have all the risk and it would cost €8 billion or €9 billion, he insisted.

As the ongoing row over the plan to provide broadband to 540,000 homes, businesses and farms intensified, Mr Varadkar appealed to party leaders not to rule out supporting the plan and to listen to all the arguments.

He warned that if this did not go ahead they would be back to square one.

Mr Howlin said the State would pay €3 billion to a private contract and still not own the asset.

He said Granahan McCourt were borrowing against future income and the shares within the company would be allowed to be sold within nine years.

Mr Howlin said there should be a State-owned company to control the broadband company.

But the Taoiseach said the only physical asset the company would own was the fibre and that had to be renewed after 25 years.

He said the State had considered the renationalisation but the whole project would cost up to €9 billion with that. Mr Varadkar also told Mr Howlin that he believed the broadband plan was a Labour Party project as it had been signed in 2012 by then minister for communications Pat Rabbitte who agreed with the Government that it was the right approach.

Mr Varadkar also insisted that the risk to the State in the national broadband plan was capped but the risk to the investor was not.

The overall project would cost €6 billion including about €1 billion in VAT.

Mr Varadkar insisted that the State would not be paying until the work was done. Fianna Fáil leader Micheál Martin said Minister for Communications Richard Bruton would tell the Oireachtas communications committee that Granahan McCourt’s upfront investment in the plan would be €220 million.

The Taoiseach said “this is a €5 billion project €6 billion, if you include VAT and contingencies”.

‘Roughly half’

The Taoiseach also denied there was an “unprecedented risk” to the State and insisted that public investment would only occur “once all the work is done”.

“The State is putting up nothing up front, the State only makes its contribution when the work is done.”

He said the funding would be “roughly half” in State subsidy and “roughly half” by the investor.

Mr Martin questioned the reliance of Granahan McCourt on a separate entity to underlie its financial security.

The Department of Communications paid €11.5 million to KPMG who were both auditors to Granahan McCourt and gave advice to the Government, he added.

But the Taoiseach said: “I think KPMG is a respected company and respected accounting house and respected auditors and it would be wrong to cast aspersions”.

Sinn Féin leader Mary Lou McDonald called on the Taoiseach to publish the contract and said this was the best way to proceed.

She asked if he had complete confidence in the project, which was very expensive. Mr Varadkar said: “I’m confident that National Broadband Ireland has the capacity to deliver and if it does not there are protections in the contract.”

Mr Varadkar said it was expensive “because it is so ambitious”. He said Ireland would be one of the first countries, if not the first, to connect every house, farm and business in the country.