Taoiseach: Renationalising Eir to run National Broadband Plan would be double cost of proposed plan

Opposition calls to renationalise the former state telephone company, Eir, and have it run the National Broadband Plan would cost up to €9 billion, Taoiseach Leo Varadkar has said.

The controversy surrounding the roll-out of high-speed internet access to rural Ireland dominated Leaders' Questions in the Dáil where Mr Varadkar confirmed the private consortium would only be providing €220 million initially, compared with a State investment of nearly €3 billion.

Mr Varadkar said any proposal to take the phone company back into public ownership would lead to a legal battle and end up costing near double what the proposed plan will cost.

“To renationalise it, which would take quite some time and, possibly, a legal battle, we would have to compensate the shareholders, probably to the tune of €5 billion or €6 billion. That would be the outlay before we provided any money at all to connect any home in rural Ireland, which would amount to a cost of €8 billion or €9 billion,” he said.

While confirming the €220 million figure in initial equity and working capital, Mr Varadkar said Granahan McCourt will invest €2.4 billion over the 25-year lifetime of the project.

“As to the financial model, this is a €5 billion project and it is important to bear that in mind. It is €6 billion if one includes VAT and contingencies over 25 years. Of that €5 billion, the company must come up with €2.4 billion in equity, working capital, borrowings and user charges,” he said.

“The State will only pay the subsidy after the work is done. The company must roll out the fibre and only after it has passed the home, farm and business threshold will it be paid. It will be paid more when those premises are connected. The company must come up with the full €2.4 billion,” he added.

Asked why the ESB could not simply take the process over, Mr Varadkar said the Government has the Attorney General's advice which said: “It is not a position that we can hand over, even to a State-owned enterprise like ESB, a massive subsidy without a process and without a tender operation.”

Mr Varadkar accused Fianna Fail leader Micheál Martin of being over-selective in his focusing in on the €220 million figure, which he said was just one aspect of the deal.

“What Deputy Micheál Martin has zeroed in on is one aspect of the funding, namely the initial equity and working capital totalling €220 million. It is made up of €175 million in equity and €45 million in working capital. That is only the initial, up-front investment by the company. The total amount it has to find is €2.4 billion in what is a €5 billion project,” he said.

Labour Leader Brendan Howlin said the Government is preparing to repeat the “folly” of privatising Telecom Eireann.

“The Taoiseach makes a compelling case against the folly of the privatisation of Telecom all those years ago. It was a disaster. The point I am making is that instead of learning from that disaster the Government proposes to do the same thing in that it proposes to privatise the next generation of telecommunications,” he said.

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