Broadband group ‘on hook’ for cost overruns

Broadband group ‘on hook’ for cost overruns

The consortium behind the Government’s multi-billion euro national broadband plan will be “entirely on the hook” to pay any extra costs if the project continues to surge over-budget.

Communications Minister Richard Bruton confirmed the clause in the contract, saying it could be filled by customer fees, more funding or investment from another outside company.

Speaking to reporters before a crunch meeting today with the Oireachtas communications committee, Mr Bruton continued to defend the Government’s decision to announce the McCourt consortium as its “preferred” broadband bidder.

The Communications Minister said he is willing to face down criticism in the committee meeting today and will demand Opposition parties explain what other options are available.

And, asked about public fears the taxpayer could be left with a bill for the project far in excess of what has already been outlined, he insisted the consortium and not the Government will be responsible for any extra costs.

“They [the consortium] have a responsibility under this contract for €2.4bn of the total cost of the project,” said Mr Bruton. 

The State has responsibility for somewhat the same sort [of money] but part of the State’s cost is a contingency so it may not be called upon.

“They have a responsibility under that contract to provide initial equity, but working capital equity and also should there be any risks encountered if they find that the projections aren’t fulfilled. 

"They’re entirely on the hook for injecting new equity or new cash into the business to sustain it.”

Mr Bruton refused to explain exactly how much the consortium is currently pumping into the project, despite weekend revelations from Agriculture Minister Michael Creed they have put forward just €200m of their part of the bill.

Concerns over how the project will be paid for if its price continues to rise into the future are likely to form a key part of today’s Oireachtas communications committee meeting with Mr Bruton.

However, while both Fianna Fáil and Sinn Féin have called for the ESB to be used as a way to lower potential costs, Mr Bruton has insisted the existing plans are “the best and most cost-effective option” available.

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