EU project hits Irish taxpayers: Spending on ’emergency’ Brexit facility ‘out of control’

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Dublin initially planned to shell out some £24.5 million to refurbish an oil storage facility amid fears Brexit could cause reserves to run dry. The project involved the renovation of a 40-year-old oil storage facility to help protect against an “oil emergency” sparked by Brexit. But the coronavirus pandemic saw costs of the scheme escalate with an enforced closure of the site for almost three months and increased claims from contractors caused by the public-health measures.

An internal memo, according to the Irish Times, conceded that “management of the Poolbeg project has been problematic”.

Spending of £24.5million had initially been approved by the Department of Public Expenditure.

But more funds were needed to complete the job, with the National Oil Reserves Agency requesting some £1.4 million extra.

The ministry was told spending by the agency still represented “acceptable value for money”.

The memo, prepared for the environment minister Eamon Ryan, said the oil storage would help mitigate supply risks associated with Dublin’s commercial oil berths being located close together in Dublin Port.

“This is significant as the Poolbeg facility provides for an alternative source of diesel and kerosene to Dublin and Leinster markets, in the event of a disruption to Dublin Port, including for example one caused by potential traffic congestion at the end of the UK’s transition period,” it said.

The document said a potential alternative to having oil reserves in Ireland was to lease storage capacity from providers in the European Union.

“In the wider context of Brexit, the development… will increase the percentage of our 90-day stocks reserves held in Ireland, which will improve our security of supply of oil products in the event of an emergency, and over time, replace stocks currently held in the UK,” the memo added.

It said the location of the project was vital in the event of an “oil emergency” and would allow stocks to be filled by tankers and released to the Dublin market if needed.

The National Oil Reserves Agency said the project had been managed with “due rigour and care”.

Its chief executive Pat Meehan said: “It is currently estimated that such additional costs will amount to circa €1.5 million from the impact of COVID-19 alone.”

He also claimed that claims by contractors had exceeded contingency figures when the scheme was first approved.

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Mr Meehan added: “Every effort is being made by the agency to minimise additional costs while adhering to and fulfilling contractual obligations.

“There are multiple layers and eyes on invoices that are presented for payment.”

Officials have recommended that ministers accept the £1.4 million spending hike on the project.

A statement by the Irish government said: “Ireland is required by its membership of the EU and the International Energy Agency to maintain strategic oil stocks equivalent to 90 days of usage. The Poolbeg project is of significance in terms of meeting this requirement and oil security of supply generally.

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“The site provides capacity to increase the volume of the State’s strategic diesel and kerosene reserves held in Ireland, and particularly in Dublin, where national demand is greatest.

“In addition, it provides primary storage capacity capable of supplying product directly to the market and allows for the repatriation of some oil stocks which, due to a shortage of storage capacity in Ireland, are held abroad.”

Prior to Brexit, Ireland was warned it could breach EU oil reserves with its preparations for the UK’s divorce.

Dublin previously relied on Northern Ireland and Wales to help store some of its reserves.

The National Oil Reserve Agency held 57 percent of the 90 days’ supply in Ireland.

As the Republic did not have the capacity to store its entire reserve, nine percent is kept in Northern Ireland and 12 percent in Wales, with 22 per cent in other EU States.

The emergency project was designed to bolster Ireland’s domestic ability to store oil.

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