Ireland may face crisis election over EU ruling on Irish Water viability
A senior Cabinet source told the Irish Examiner the Government would not be able to continue in office if the Eurostat agency rules in April that the utility is not financially independent.
Ministers scrambled to downplay fears Irish Water could fail the market corporation test to be decided on by Luxembourg-based Eurostat in three months’ time, which would mean its borrowings would be included in official Government debt, thus putting proposed tax cuts in jeopardy.
Alarm was raised following a draft report by the European Commission stating that “uncertainty” over Irish Water’s financial position has been created by the major reductions in charges forced by mass protests.
The European Commission study states the reductions have caused “increased uncertainty surrounding Eurostat’s decision”.
The report added that the prospect of the utility “becoming self-funded seems distant” due to charges being frozen until 2018.
The study also questioned the independence from political interference of the energy regulator and expressed concern cuts in charges — which saw costs for a family of two adults and two children cut to €160 a year — may have a detrimental impact on the company’s ability to borrow.
The Cabinet source insisted the Government was confident it would pass the Eurostat test, but Fianna Fáil also stressed that failure to do so would trigger a May general election.
Environment Minister Alan Kelly said he does not accept the commission’s interpretation of events at Irish Water and insisted there was still an incentive to conserve water as households would see bills cut.
Fianna Fáil environment spokesman Barry Cowen said: “The fact that question marks are now being raised over the feasibility of Irish Water passing the market corporation test at a European level is a significant development.”
Sinn Féin called for the Government to “reflect” and scrap water charging.
