Broadband bidder will be ‘on hook’ for injecting more cash if required - Bruton

The chosen bidder for the national broadband plan will be “on the hook” for injecting more cash into the project if required to sustain it, Minister for Communications Richard Bruton has said.

The preferred private consortium chosen to deliver the plan had responsibility to cover the cost of €2.4 billion or just under half the cost of the €5 billion national broadband plan, he added.

Mr Bruton declined to say how much cash the consortium was investing or comment on the estimate given last week by Minister for Agriculture Michael Creed, who said the bidder was investing almost €200 million of equity in the plan.

Mr Bruton, speaking to reporters on the fringes of the British-Irish Parliamentary Assembly at Druid’s Glen in Co Wicklow, said that it was the responsibility of the preferred consortium, led by private equity company Granahan McCourt, to come up with the €2.4 billion commitment to the project.

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Under the 25-year contract, the consortium had to meet its obligations to invest the pledged cash into the project and that it will have to show it has the funds under the due diligence process.

“They have a responsibility under this contract for €2.4 billion of the total cost of the project. 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,” he said, referring to a contingency of almost €500 million.

“They have a responsibility under that contract to provide initial equity, of course, 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.”

He conceded that the plan was “not a risk-free project”, but the model being followed was chosen to build off the existing network and a system “that will stand on its own two feet at the end.”

Mr Bruton said the Government had picked the preferred model to bring high-speed broadband internet to people in rural Ireland as the design protected the taxpayer and was “the best and most cost effective option” and would be delivered as quick as possible.

“The State’s exposure is absolutely capped so that, if as some people are predicting, that this will be a very difficult to persuade people to take this up, they are carrying that risk,” he said.

Using the ESB semi-state energy company to deliver broadband - as proposed by Fianna Fáil and Sinn Féin - would mean restarting the procurement process, which could take between two and three years, he said.

This option would be as costly or more expensive than the plan chosen, he said.

Setting up a State standalone company “from scratch” like Irish Water was another option that the Government had looked at but it would also require a new procurement process and take time, said Mr Bruton.

Mr Bruton said he was happy to discuss the models and alternatives examined by the Government tomorrow when he appears before the Oireachtas joint committee on communications.

“There is an issue for those who say that this isn’t the right project to say what is their view of the correct project because we have examined all of those,” he said.