The Ulster Canal 19: update to February 2012

This page, created on 27 February 2012, provides a precis of several posts made since 24 November 2011. There has been some interesting news in that period.

The Joint Communiqué from the Plenary Meeting of the North/South Ministerial Council meeting on 18 November 2011 [read it here or download a PDF] had much to say about the Ulster Canal:

Progress on the Ulster Canal is progressing incrementally with the planning process ongoing.

Progress was progressing, which is nice.

Difficulties with a source of funding

I remained unconvinced by the government’s statement that

A key consideration throughout the process that the Ulster Canal project would be supported by a significant level of projected income from the commercialisation of certain Waterways Ireland assets – a scenario that was affected negatively by the economic downturn.

I had two reasons for doubt: first, that the minutes of the North–South Ministerial Council say nothing about this and, second, that it is not clear to me that the assets of Waterways Ireland form part of the Irish Exchequer such that the government can direct their use.

Of three parcels of WI land in Dublin that the government hoped to use, by far the most valuable was the Plot 8 site at the Grand Canal Docks, Ringsend, Dublin, where Waterways Ireland hoped to profit from development in cooperation with the Dublin Docklands Development Authority (DDDA), which  had the leasehold interest in the site. It was reported in November 2011 that the DDDA’s interest in the site had passed into the control of NAMA. Some background information from the Oireachtas Committee of Public Accounts here; the DDDA announcement is here but I despair of ever being able to find anything on the NAMA website.

DDDA withdrew permission for IWAI Dublin Branch to work on the graving docks at the site.

The ROI budget for 2012

When Waterways Ireland spends on capital investment in either RoI or NI, the total cost is paid by the jurisdiction in which the expenditure occurs (apart from the decision by the RoI government to pay the total cost of a canal from Lough Erne to Clones, where about half of the route lies in NI).

For current spending, Waterways Ireland gets 85% of its grant income (which constitutes the vast bulk of its total income) from the RoI Department of Arts, Heritage and the Gaeltacht and the balance from the NI Department of Culture, Arts and Leisure.

The RoI government expenditure plans were announced on Monday 5 December 2011. The Comprehensive Expenditure Report 2012–2014 section on the Department of Arts, Heritage and the Gaeltacht mentions waterways, or matters affecting them, in several places. But waterways seemed to have a low priority: they, and An Foras Teanga (which covers Foras na Gaeilge and Tha Boord o Ulster-Scotch/The Ulster Scots Agency) , were listed jointly as the eighth and last of the department’s priorities.

The summary of measures in the Estimates for 2012 said:

Any savings, in excess of the agreed 3% per annum efficiency savings, for the North/South Implementation Bodies will require the approval of the North/South Ministerial Council. It is envisaged that savings will be achieved through efficiencies and a focus on front-line services.

The figures suggested a cut of about €2.2 milliion (5.4%) in WI’s current allocation for 2012, with a further €1 million to be saved in each of 2013 and 2014. It was not clear whether the amounts of €2.2 million, €1 million and €1 million were to be in addition to the “3% per annum efficiency savings” or whether they included the 3%.

The capital allocation figures suggested that WI would get €4.5 million in 2012, down from €6 million in 2011 (and €11 million in 2008).

The cost of the Clones Canal

Some time ago, I pointed out that the figure widely quoted as the cost of the canal to Clones, €35 million, was not to be relied upon. The last ab initio assessment of costs was done by ESB International and Ferguson McIlveen for Waterways Ireland in 2000–2001. But that was described as an updating exercise, so it in turn may have been derived from work done on the feasibility study of 1997–1998. Accordingly, it seemed that the costings may have been over twelve years old.

The point came up at a meeting of the NI Assembly Committee for Culture, Arts and Leisure. Julie McClean, for PricewaterhouseCoopers, said:

That figure was worked out by the engineers, Ferguson & McIlveen. The estimate was made specifically for our study at that time, and would need to be recalculated.

And David McNarry MLA quite rightly replied:

It is unsatisfactory to be presented with figures estimated at a time when the project was still five years away. Surely a guestimate of the current figures could be made. Has the estimated cost increased by 10%?

I wrote:

If the costs turn out to be even higher than the [Updated Economic] appraisal shows, the net present costs will be even higher and the project will be even worse value.

Guess what?

On 16 December 2012 I wrote:

Waterways Ireland tells me today that the latest estimate of the costs of building a canal to Clones is €38 million plus VAT. I asked for more details.

Waterways Ireland refused to provide a breakdown because it would be anti-competitive to do so before going to tender (although I publish all such information here). I pointed out that they had no money and wouldn’t be going to tender in the foreseeable future, but answer came there none.

A helpful correspondent pointed out that the total cost, including VAT, would be about €45 million. So has this prompted reappraisal in the Department of Arts, Heritage and the Gaeltacht (DAHG), in Waterways Ireland or in Clones? Has anyone worked out what this does to the return on this proposed “investment” (I use the word loosely)?

I am not aware that anything has been published, but I would be glad to hear from anyone who knows better.

DPER and DAHG

On 19 December 2011 I wrote about the submission by DAHG to the Department of Public Expenditure and Reform (DPER) pleading, like all other departments, to be spared the financial axe. I thought that the submission on waterways (which are seen as part of northsouthery) was very weak:

The interesting thing here is that there is no connection whatsoever between the high-level objective and either the programme for government or the contribution to economic recovery. The two sets of points exist in completely different universes; even DAHG itself makes no attempt to show that northsouthery can help the economy or vice versa. […]

What is really needed is something to show whether spending on waterways is good value: something comparing inputs and outputs or, if you prefer, costs and benefits. The only comparison the reader can make here is that, in 2010, €7.8 million of capital spending produced €9 million in “tourism revenue”, whatever that is; the gimlet-eyed scrutineers of DPER will no doubt have added WI’s current spending allocation to the capital and decided that waterways were not the most productive use of scarce capital resources.

More on funding

On 11 January 2012 I was able to report that the BBC had realised that the Clones Canal was not being funded.

On 24 January 2012 I wrote about the WI Corporate Plan 2011–2013 [PDF], which was approved by the North/South Ministerial Council on 12 October 2011

[…] subject to budgetary considerations by the Northern Ireland Assembly and the Houses of the Oireachtas.

Business Objective 2 includes this:

Progress restoration of the Ulster canal from Upper Lough Erne to Clones.

But Annex B shows these amounts of expenditure:

2011: €390,000
2012: €140,000
2013: €390,000

With an expected total cost of €45,000,000, it seems that there won’t be much progress in the next few years. However, we may expect DAHG to be looking for substantial wodges of money in the years 2014–7 so that it can get a canal built before the planning permissions run out.  If Waterways Ireland gets planning permission in 2012, and the permissions (NI and RoI) last for five years, it will presumably have to begin (or perhaps complete) work before 2017.

The Minister meets the Clones chaps

On 2 February 2012 the Minister for Arts, Heritage and the Gaeltacht met a delegation of Clones enthusiasts; the CEO of Waterways Ireland was also present. One statement from the Clones lobbyists implied that the minister had initiated the meeting:

The Minister had invited the delegation to Dublin to discuss the canal proposal.

Another implied the opposite:

Well Kathy, ever since the Minister came to Clones last July and made his famous remark that the funding was “not ring fenced” there has been a general air of despondency and we requested a meeting with the Minister so that matters could be clarified. There was a danger that all the progress made to date had been lost in the reports about this announcement.

I pointed out that:

The Clones dudes have got Jimmy Deenihan to say that the canal to Clones is a great idea.

They haven’t got him to fund it. Or to say where money is to be found (perhaps the Monaghan gold mines?)

There’s going to be another revivalist meeting in Clones in March. Note that doubt — about the value of the project to the taxpayer, about whether it will ever happen or about whether there will be any significant benefits to Clones — is not allowed.

Note, though, that nobody seems to be suggesting that the canal will ever get beyond Clones.

The Clones and the Royal

On 17 February 2012, I reported that I had asked Waterways Ireland about the restoration of the Royal Canal, to provide some basis for assessing the likely costs and benefits of the Clones canal:

I would be grateful if you could tell me the cost of the restoration of the Royal Canal, the annual cost of running it and the revenue it generates.

The reply (for which I am, as always, grateful) said:

Restoration of the Royal Canal commenced in 1987.

€37m Capital Expenditure on the restoration project funded through (1) Operational Programme for Tourism 1994-1999 (2) National Development Programme 2000 – 2007 and (3) National Development Plan 2007-2013.

The Maintenance Cost for 2012 is €2.46m.

The revenue generated by the canal in 2011 is not available.

I didn’t really expect that there would be a meaningful figure for revenue. A full assessment of the benefits would cover far more than the (probably minimal) direct revenue; I think such an assessment should be done, but that’s not what really got my attention.

According to Waterways Ireland, the Main Line of the Royal is 146 km long and has 46 locks and many bridges, some of them newly built as part of the restoration. Harbours have been improved, slipways have been provided and service blocks have been built. And all of this was done for €37 million (I don’t know whether that’s in constant prices and, if so, at which year’s rates: I’ve asked a supplementary question).

A canal to Clones would be 13 km long and, according to WI’s final restoration plan [PDF], would have one double lock (staircase pair). Some dredging would be needed on the River Finn and a new canal 0.6 km long would have to be provided; the work at the Finn end would cost €8.5 million altogether. On the line as a whole, work would be required on up to 17 bridges, some major and some minor or private bridges. And there would be a cost for land acquisition, although the Updated Economic Appraisal put that at a mere £1,268,280, a very small portion of the total cost. And then there would be the pumps and pipes to take water from the Erne, pump it to Clones and let it flow back down; it is not clear whether WI would have to pay for the water. And the total cost of this lot would be €38m + VAT, which I am told is about €45 million altogether.

Now, even allowing for the facts that there had been some voluntary and FÁS scheme work on the Royal, that no land had to be acquired and that parts of the canal were in water, I still find it difficult to see how a 13 km canal with one double lock can cost more than a 146 km canal with 46 locks. I have asked WI for a comment, but perhaps readers — especially if any of them are engineers or accountants — would be able to help to explain the mystery. Maybe it’s something simple like a mistake in the figures, maybe different methods of assessing costs were used or maybe I’m missing something about the nature of restorations …. Enlightenment welcome.

Here is an update to April 2013.

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