State firms to invest €8bn in energy projects

CAPITAL PROGRAMME:MINISTER for Finance Brian Lenihan said the Government is committed to continuing to spend money on infrastructure next year to "sustain growth and jobs".

In recent budgets, the Government has committed to spending at least €6 billion on roads, schools, water treatment plants and other public projects.

The National Recovery Plan has already budgeted for a capital spend of €4.7 billion next year, about €2 billion less than committed in last year’s budget.

“The exchequer capital programme will amount to some 3.6 per cent of gross national product in 2011,” Mr Lenihan said, adding that State companies will boost this with their own spending plans.

State energy companies the ESB, Bord Gáis and national grid operator Eirgrid are investing €8 billion in a range of power generation and distribution projects.

The ESB is responsible for more than €6 billion of this while Bord Gáis has committed €1.3 billion. All three companies announced these investment plans over the last two years and a proportion of the money has already been raised and committed.

Mr Lenihan said the National Pensions Reserve Fund has confirmed it is willing to invest in infrastructure on a commercial basis in partnership with third-party institutional backers such as banks and pensions and life companies.

He added that the Government would help to identify projects for the reserve fund.

The plan also stated that water services would be a key priority for capital spending, and the Government said it believed it would deliver significant returns to the State. The Government is obliged to invest in water services to implement the EU’s Water Framework Directive.

The reserve fund will also invest up to 5 per cent of its discretionary portfolio in other infrastructure projects.

It will place up to €500 million in individual undertakings. Initially, it will buy existing assets.

The Construction Industry Federation, whose industry is relying on State spending since the collapse of the commercial and residential markets, said yesterday the cuts in infrastructure spending amounted to over half the overall savings announced in the Budget.

The federation’s director general, Tom Parlon, warned that this could result in the loss of up to 25,000 construction jobs.

“We acknowledge that the Government was faced with difficult choices, but believe that the impact of the cuts in capital investment will create a significant drag on economic recovery next year and that productive investment should have been ring-fenced to support recovery,” Mr Parlon said.