EU energy ministers yesterday agreed a new directive on gas liberalisation which provides an important derogation for Ireland to protect potential investment in a gas pipeline to the midlands or the west. Investors in pipelines in "emerging areas" will be allowed to protect their investment for ten years before being required to give access to competitors.
The Minister of State at the Department of Public Enterprise, Mr Joe Jacob, welcomed the derogation and the overall directive which reflects substantially Irish practise.
The situation is unusual in Ireland in that some 75 per cent of the market is already liberalised, the ESB and IFI buy their gas independently of Bord Gais under provisions made in the 1995 Energy (Miscellaneous Provisions) Act. The Act also provides for independent use of the BGE pipelines by third parties.
But there had been concern in Dublin that investors, whether public or private, would not put money into a new pipeline to the west if they thought they would immediately have to provide access to it to competitors the directive might require access to it by other enterprises. A ten-year derogation was agreed on access to new pipelines by third parties in "emergent areas" such as the west of Ireland. Fifty per cent of the area of Ireland is not served by natural gas. The derogation is subject to approval by the Commission.
The Government has no plans to provide a pipeline to the west, but officials were saying that the derogation provides the best conditions for protecting any potential investor.
The directive which sets the framework for gas liberalisation in the Union has been in the pipeline since 1992 with that on the liberalisation of electricity. The latter was finally approved in December last year during the Irish Presidency and the drafting of the gas directive owes much to Ireland's experience.
Member states are required progressively over five year periods to allow greater access to the market. Major users like power stations will be able to get their supplies from alternative suppliers using the established pipeline network.
Initially 20 per cent of the market will be opened by allowing consumers using more than 25 million (3 metres cubed) a year to buy from alternative suppliers. The directive is likely to come into force in mid-2000.
After five years the figure rises to 28 per cent, with access by users of over 15 million m3 to third-party suppliers, and 33 per cent after another five years. By this stage users of over 5 million m3 will be able to purchase freely on the world market.
