Officials at the Department of Public Expenditure and Reform (DPER) warned of the “financial risks” involved in proceeding with the National Broadband Plan (NBP) in its current form, according to documents released by the Government.
According to the observations made by the department, specifically department principle officer Brendan Ellison and department secretary general Robert Watt, the Department of Public Expenditure voiced a number of concerns.
Memo
“The Department of Public Expenditure and Reform supports the ambition to extend high-speed broadband more widely to areas that are currently not well served,” the memo said.
The document added that there is a “strong case for public subsidy to underpin the significant investment that has already been taken by the private sector”.
“However, we strongly recommend against approval of the appointment of the preferred bidder to the current NBP procurement process,” the memo, dated May 3, reads.
- Cost and affordability;
- Impact on the NBP and on projects forgone as a result;
- Value for money and, specifically, uncertain benefits;
- Unprecedented risk for the Exchequer; and
- Compatibility with the spatial objectives of Project Ireland 2040.
“Incremental improvements in broadband based on NBP investment are more affordable and sustainable from a risk perspective.
“The department believes that significant progress can be made with an alternative affordable approach, with strong deliverables possible in the short-medium term within the context of a more realistic and affordable budget [of, say, €1 billion].”
Alternative
According to the officials, such a move would prioritise investments to complete the main infrastructure backbone across the country.
“This approach could increase broadband availability rapidly, while minimising the unprecedented risks associated with this project including: construction cost inflation; potential low take-up; and commitment to an approach for the most expensive premises which, over time, will in all likelihood be surpassed by cheaper technologies.
Our alternative approach allows these risks to be managed and investment decisions to be taken at more appropriate intervals, over time, as more information on costs, benefits and new technologies emerge.
“This is a more prudent approach to a long-term investment of this nature compared with committing to a 25-year contract which, by its nature, does not have the same flexibilities.”
€3 billion plan
According to the Government, the roll-out of the plan – announced yesterday Tuesday, May 7 – will commence in quarter four of 2019 – “with significant pre-mobilisation activities” ongoing over the next number of months.
Granahan McCourt Capital consortium – the only bidder left in the tendering process for the project – has been awarded the contract for the project which is expected to cost in the region of €3 billion, over a 25-year period.