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[Article] Higher subsidy advised for Galway-Aran ferry

08-02-2004 8:13pm

#1

Victor

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http://www.thepost.ie/web/DocumentView/did-807534361-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

Higher subsidy advised for Galway-Aran ferry
08/02/04 00:00
By Simon Carswell

A review of the state's island ferries services, commissioned by the government, is expected to recommend an increase in the annual subsidy paid to the Galway-Aran Islands service.

The report, to be released in the coming weeks, is expected to acknowledge that the ferry service needs a higher subsidy to be economically viable.

The state pays the Co Clarebased firm O'Brien Shipping €603,000 a year to operate a mixed cargo and passenger service from Galway city. The company is controlled by Kevin O'Brien of Doolin and William O'Brien of Kilfenora, who are not related.

Informed sources said it was likely that the new contract, from January 1, 2005, will allow an increase in the subsidy if overheads rise. The tender competition for the Aran Islands service will be held later this year.

The report is also expected to recommend that the cargo and passenger services be separated and that the cargo service sail from Rossaveal, near Spiddal, if new facilities are developed at the port. A five year contract may also be preferred, as opposed to the current seven-year deal.

The Department of Community, Rural and Gaeltacht Affairs commissioned the independent report of ferry services after the Comptroller and Auditor General John Purcell criticised the Aran Islands contract in a 2002 report.

Purcell said the 1992 contract was renewed for seven years in 1997, even though the department was aware of shortcomings in the service. The comptroller said the department should have evaluated the performance and use of the service before renewing the contract. Since then, O'Brien Shipping has been paid €4.22 million to operate the service.

O'Brien Shipping was awarded the five-year contract in 1992 and was paid £475,000 (€603,000) a year initially. In 1994, after lobbying by the company, the department increased the annual subsidy to £550,000 (€698,000).

The department was advised by the Chief State Solicitor's office that it had to give first refusal to the Co Clare company when the contract expired in 1997. Instead of accepting a renewed £550,000-a-year contract for five years, O'Brien Shipping and the department agreed a seven-year contract at £475,000 a year.

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