Coillte estimates gorse fire damage bill at €4m

Coillte has estimated that recovery costs arising from this week’s destructive gorse fires in Co Galway will total at least €3m to €4m if not more.

The fire, which yesterday was largely under control, has caused considerable damage to 1,200 hectares of forest land owned by the state-owned forestry and renewable energy company in the Cloosh Valley area of Galway. The area also houses the Galway Wind Park, the country’s largest wind farm project.

Coillte, Galway fire services and the air corps have been battling the fires this week and Coillte chief executive Fergal Leamy yesterday said the final bill for damage would probably top the €4m mark.

Mr Leamy was speaking as Coillte unveiled a more positive set of annual results for 2016, which showed record earnings and revenue and positive operating cash flow. Pre-tax earnings rose 10% to €98.3m, while revenue grew by nearly 1.7% to €287.7m. Coillte grew its operating cashflow by 130%.

“A key focus of our new strategy is to grow operating cashflows so that we can increase the return to our shareholder. In 2016, operating cash increased significantly to €15.2m from €6.5m in 2015. Historically, operating cash has been negative or break-even,” said Mr Leamy.

The company’s debt has declined from €192m to €158m in the past three years and the refinancing of €260m debt facilities — with its existing bank consortium and the European Investment Bank — will result in savings of over €3m in interest costs.

While Coillte’s wind energy business has grown significantly in recent years, Mr Leamy said forestry remains the company’s core business area. He said the forestry division has the potential to be the best forestry company in Europe and deliver cash returns of between 3.5% and 4% per annum by 2020; up from the current level of just 1%.

In 2015 Coillte embarked on a plan to build six wind farms around the country by the end of 2018, generating enough electricity to power 300,000 homes. That plan is still largely on course, with four of those farms set to be in operation by the end of this year, meeting the needs of between 220,000 and 250,000 homes.

Coillte will have five such joint-ventures (its current windfarms are in partnership with the ESB, Bord na Móna and SSE Airtricity) up and running by the end of 2018, with completion of the final planned project possibly slipping into 2019.

Coillte only plans to be a medium-term owner of its windfarms and may in the future just act as a developer for other parties. It has also identified a number of sites for prospective new windfarm projects.

Mr Leamy said Coillte can be a huge enabler of Ireland’s wind energy ambitions, given the size of its landbank.

However, he said Coillte has largely mothballed plans to develop solar energy sites.

Due to the nature of much of its land, it could only generate around 100 megawatts of solar electricity, while 1,000 megawatts of wind-generated power should be achieveable over the next decade. The company will, though, be looking at further partnerships in its Medite Smartply MDF panel manufacturing division.

This follows on from a near €70m partnership agreement, signed in March, with BP and chemicals company Accsys, which is investing in a UK-based factory to make specialist wood chips.

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