Irish businesses hit by rising energy costs

Rising energy costs are forcing one in six Irish businesses to consider relocating, according to the findings of a survey published today.

Business and employers' organisation, Ibec, is calling on Noel Dempsey, the Minister for Communications, Marine and Natural Resources, to broaden his review of the electricity sector to develop a national energy strategy.

Ibec's director of enterprise, Brendan Butler, warns today that the Republic's energy costs are seriously out of line with competing countries, and affecting its ability to attract foreign direct investment. An Ibec and Amárach Consulting survey published today reveals that rising energy costs and concerns about the security of supply are placing Irish-based businesses at a major competitive disadvantage.

The survey shows that on average, energy costs have risen by over 30 per cent since September 2001. Two thirds of respondents indicated that they compared their energy costs in Ireland to other locations.

On average they found that energy costs were 8.1 per cent lower abroad. As a result, one sixth of respondents are considering relocating to areas with lower cost bases.

Most industries have absorbed the increased costs, with only 11 per cent of those surveyed passing on some or all of the increase to their customers.

Ibec concedes that international factors are driving energy price increases. However, the organisation says in a statement that the Government and the regulator should ensure that the cost drivers that are in national control are managed in a way that supports Irish industry's ability to trade internationally.

The organisation is calling on the Minister to take a number of steps, including spending the dividends from the ESB and Bord Gáis on energy infrastructure and developing an all-island energy market.

It is also demanding that the Minister for Environment, Heritage and Local Government, Dick Roche, clarify, as a matter of urgency, Government proposals for fast-tracking major infrastructural projects. Mr Butler says that Mr Dempsey should review the current model of market liberalisation, which has added significant costs to Irish business.

He adds that review of the whole energy sector "should articulate a clear vision for the future development of this market, by providing a policy framework within which a suitable model of competition for the size and scale of the Irish energy market can be developed".

Small business group, ISME, also issued a survey yesterday saying that high mobile costs are hitting small and medium-sized enterprises (SMEs).

The group found that the cheapest package for a typical small business user in Ireland is 17 per cent higher than similar packages from the UK and 74 per cent higher than Sweden. ISME chief executive, Mark Fielding, said that the number of small businesses not using mobile phones has doubled since 2001.