From top: David McCourt with Taoiseach Leo Varadkar at a Science Foundation of Ireland event in new York, March 2018; Economist and associate professor at University of Limerick Stephen Kinsella
Economist, associate professor at University of Limerick and Sunday Business Post columnist Stephen Kinsella spoke to RTÉ Radio One’s Seán O’Rourke.
It followed Fine Gael Minister for Agriculture Michael Creed saying Granahan McCourt will be putting less than €200million into the National Broadband Project, compared with €3billion from Irish taxpayers.
Mr Creed’s comments were made on Clare FM last Wednesday and reported by Justine McCarthy in The Sunday Times yesterday.
Mr O’Rourke asked Mr Kinsella for his thoughts on a ministerial press statement saying that Granahan McCourt is “responsible for €2.4billion towards costs” in relation to the project.
Mr Kinsella said:
“They have to run the network but they’re not being paid to actually install it. We’re paying them to install it. So the State fronts up the money first, builds up the network and they then operate the network.
“And in operating the network they recoup fees from the operators that they’re going to contract out to – to sell you your broadband: Vodafone and so forth.
“So while they will have to invest that money, they’ll be getting it in, in revenue as they do so. So the actual amount of the money that they front up, as the minister said, will be in the region of €180million.
“This time last week, we conservatively estimated, my colleagues Eoin Reeves and Donal Palcic, estimated it [the €180million figures] to be around €300million-€400million. And we assumed that we were very conservative when we assumed that.”
Asked if he thinks it’s a good deal for the State, Mr Kinsella said:
“…The negatives are that the advice from the Department of Public Expenditure has been ignored and the public spending code hasn’t been adhered to. And we don’t really have full confidence that the private sector is bearing enough of the risk to justify the amount of investment that the State is putting into it.”
Given Mr Kinsella’s earlier estimate of €300million to €400million now being confirmed as €180million, Mr O’Rourke asked Mr Kinsella: “how could they get it so cheap?”
Mr Kinsella replied:
“This is the question. It would be a very low-ball figure in the history of public-private partnerships like this and again my colleagues at the University of Limerick, Eoin Reeves, and and Donal Palcic are very well published on this, and around €300million-€400million would have been a conservative estimate. €180million seems quite low.”
“But again we are where we are now. The Cabinet has decided to award preferential bidder status to this company. If they decided to cancel it tomorrow there could well be very serious legal implications for the State.
“So the question is, right now: What aspect within the contract structure exists, to make sure that three or four years down the line, this company can’t just flip and asset strip it, extract the public value that is already put in there – that’s the key question for me at least.”
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