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Inside the world of business

Inside the world of business

Total nonsense spouted on water

HOT ON the heels of the suppression of Leo Varadkar and his plain speaking on Ireland’s debts the Government was yesterday spouting nonsense about water tax.

Water meters, we are told by the Minister for the Environment, are not being put in place to raise a water tax as agreed with the EU and IMF. They are in fact a conservation measure that will encourage people to use less water.

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“I see this not as a charging or taxation issue. I see this as a very important water conservation issue,” explained Minister for the Environment, Phil Hogan.

If this really is the case, then someone had better inform the IMF and the EU, because we signed a legal agreement with them last December in which we committed to start charging for water in 2012 and 2013.

The EU and IMF are probably as committed to water conservation as the next international bailout giver, but one has to suspect their reason for including water charges in the programme was fiscal rather than environmental. They would only include it if they expected it to bring in some significant amounts of money.

Mr Hogan, however, seems incapable of acknowledging this truth, probably because water charges are a political hot potato. Such cowardice is not all that surprising given the nature of politics and hopefully that is all that it is.

It would be very worrying if this was indicative of some sort of delusion over what we have committed ourselves to, or a wider belief by those in Government that they can bring in the various tax and other measures agreed with the EU and the IMF, without anyone noticing.

Time to let Shell get on with Corrib project

BOTH THE relevant Minister and a senior economist yesterday emphasised the need to get natural gas flowing from the Corrib field as quickly as possible.

The project, which has been on the go since the mid-1990s, has been the subject of various disputes, protests and planning hearings, which are well documented at this stage.

It’s no accident that the Minister (whose brief includes energy), Pat Rabbitte, and John FitzGerald of the Economic and Social Research Institute (ESRI) are singing from the same hymn sheet on the issue at this stage. They both told the Energy Ireland Conference yesterday that Corrib is vital to Ireland’s future energy supplies.

Natural gas plays a central part in the economy: it fuels power plants that produce electricity, and is a key source of energy for a range of industries and large organisations, most of which are big employers.

Renewable energy may ease our dependence on it, but it is unlikely to lose its central role for some time to come.

Our link to the main source of this fuel, the North Sea, is relatively limited. Much of it comes through a pipeline connecting Ireland to Scotland. There is no threat or problem with this interconnector, but the more gas resources we have, the better.

World demand for gas looks set to grow. Germany’s decision to ditch nuclear power, and a likely rethink about it in other large energy consumers on the back of the Fukushima disaster in Japan, will mean more pressure on supplies.

The markets are more than sensitive to this. The price of supplies for next winter ticked up on the back of Germany’s announcement earlier in the week, even though it’s essentially a long-term plan.

Along with the obvious advantage of having a gas field on our own doorstep, once it starts to flow, it may convince others to take the risk of exploring for other fields off our coast, particularly if prices continue to go up.

All in all, the upside to getting Corrib gas ashore outweighs any potential downside. It’s almost time to let Shell get on with it.

TODAY:Exchequer returns for May are due, while the Director of Corporate Enforcement will issue his annual report.

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