NET losses and borrowing
Browne asked about the causes of NET’s deficit, its borrowing and interest costs, and funding needs. The Minister cited plant delays and cost overruns, inadequate equity, high borrowing and financing charges, currency movements, and depreciation.
asked the Minister for Industry, Commerce and Tourism the steps he proposes to take to establish the reasons for the size of the deficit in NET; the amount of money borrowed by NET in each of the last five financial years; the origin of the funds borrowed and the amount of interest paid, or due to be paid, by NET in each of those financial years; and the estimated funds required for the company this year.
Comment on this
The principal reasons for NET's losses in recent years have been (i) the effects of the delay in construction and the cost escalations associated with the company's ammonia/urea plant at Marino Point, County Cork; (ii) the company's inadequate equity and high borrowing level and consequent heavy financing charges; (iii) the impact of the continuing strength of sterling and the US dollar (particularly in the last quarter of 1980) on NET's substantial foreign currency borrowings; (iv) the high depreciation charge associated with the Marino Point plant; (v) changes in production technology which have made the company's involvement in the manufacture of phosphoric acid and compound fertilisers at Arklow unprofitable resulting in increasing financial losses at the Arklow plant; (vi) the general depression in fertiliser price levels since the 1973 oil crisis; and (vii) overmanning and high labour charges in many of the company's operations. In addition, NET's losses for 1978, 1979 and 1980 were also influenced by the write-off of substantial losses associated with NET's Arklow Gypsum plant and the effects of a four months strike at the Arklow fertiliser plant in 1978-9.
With the permission of the Ceann Comhairle, I propose to answer the Deputy's questions relating to NET's borrowings and interest payments in a tabular statement to be circulated with the Official Report, showing the borrowings outstanding at the end of each year.
As regards the estímated funds required for the company this year, capital repayments amounting to approximately £50 million—based on exchange rates prevailing at 31 December 1980—will be required to be made by NET in 1981. The level of additional funds which will be required in 1981 will depend on the company's financial performance this year.
Following is the statement:
NÍTRIGIN ÉIREANN TEORANTA
Based on Foreign Exchange Rates ruling at 31st December in each year
10.