The Minister for Rural, Community and Gaeltacht Affairs, Mr Ó Cuiv, says he intends to conduct an immediate review of State-subsidised ferry services between Galway and the Aran islands following an investigation by the Comptroller and Auditor General (CAG).
The CAG's report identifies serious flaws in the current arrangements made with one ferry company by the Minister's department, formerly the Department of Arts, Heritage, the Gaeltacht and the Islands.
It questions the department's decision to renew a contract with the company in 1997 when the department was aware of shortcomings in that service.
The CAG audit covered all State-subsidised transport services to the Aran islands - by sea and air - from Galway city, Rossaveal and Inverin.
The Aran Islands Transport Act 1946 authorises the subsidy of shipping services between Galway and Aran, and a contract for a passenger service from Rossaveal has been running since 1991.
However, the CAG reserves most criticism for the subsidised passenger and goods service running between the city of Galway and the Aran islands, which has been contracted out to a private operator since 1992.
O'Brien Shipping of Galway, whose directors, Mr Bill O'Brien and Kevin O'Brien (not related), are also directors of Doolin Ferries in Co Clare, were the successful bidders, and a 1992 agreement was extended for a seven-year period from January 1st, 1998, to December 31st, 2004.
The first contract (1992-7) was agreed at an annual cost of €603,126. It provided for three sailings a week every month, with an additional sailing each week during June, July and August. It also required provision of at least one direct sailing a week to each of the three islands all year round.
The contract was agreed on the basis that the operator had invested heavily in a purpose-built vessel for inter-island use.
However, during the first contract period, the CAG report notes that the operator was given a once-off additional payment of €126,794, and the annual subsidy was increased by €95,230 to €698,356. This subsidy was pulled back to the original annual sum of €603,126 when the contract was renewed in December 1997.
The CAG notes that the ferry operator had applied on several occasions for increases on foot of financial difficulties - and such requests were acceded to in 1994 and in 2000. On the second occasion (2000), an advance of €201,041 for four months was paid by the department directly to the company.
When it emerged that the increase should have been paid through the Bank of Scotland, the company rebuffed attempts by the department to recoup this. However, the department deducted the outstanding sum when further cash aid was agreed for "special facilities".
The CAG notes that until recently the department had not carried out any systematic performance review of the service operator, nor had sailing logs been compared with the contract. The department had not reduced the subsidy payments when some contracted sailings had not been provided, although it was entitled to do this.
The CAG says that a monitoring committee had informed the department that the service was not satisfactory, but the department still renegotiated the seven-year extension in 1997. It notes that in view of the improved level of passenger service from Rossaveal since 1999, the ongoing need for a passenger service from Galway city needs to be reviewed to ensure value for money to the Exchequer. It says that retendering for a cargo service only from Galway may be advisable.
The CAG says the stand-by vessel nominated by the ferry operator for the city of Galway service did not have a load-line certificate for carriage of cargo, and was not fully complying with the terms of the contract. It understands that a certificate had been applied for recently by the owner from the Marine Survey Office.
Representatives of O'Brien Shipping were not available for comment.
Mr Ó Cuiv told The Irish Times that he "welcomed" the CAG report and there was "nothing in it" that he could not stand over. He supported subsidising ferry services to islands, and had extended services to non-Gaeltacht islands during his time as junior minister in the former department of Arts, Heritage, the Gaeltacht and the Islands.
He was "aware" of reports about the quality of the service from the city of Galway, and it was his department's view that the contract would be fully enforced. Payments would only be made on foot of compliance with the terms and "steps had already been taken" in relation to certain sailings which had not taken place.
Mr Ó Cuiv said he had never agreed with the idea of both passengers and freight being carried in one vessel, but a decision in support of this had been taken by the majority of public representatives in Galway. He was "not involved" when the first contract was awarded to O'Brien Shipping in 1992, but was involved in reducing the subsidy back to its original level in 1997.
It was clear now that Rossaveal was proving to be more popular for passengers, partly due to the shorter sea-crossing, and passenger and freight would have to be separated in future.
