The National Broadband Plan contract is set to be reviewed after more details recently emerged about the money going in and out of the costly project.
After a lengthy and controversial bidding process, the contract for the plan was signed in 2019 as part of efforts to provide high-speed internet to more than 500,000 homes and businesses in rural Ireland.
The State has committed up to €3 billion.
However, the government at the time insisted private investors - led by the Granahan McCourt group that was given the contract - would also be investing, including an initial €220 million equity investment.
Recent media reports in the Business Post and The Currency have detailed how the funding and payouts have worked to date.
It's reported that much of the private investment has taken the form of high-cost loans - something that would significantly lower the risk for private investors.
Peter O’Dwyer, reporter with the Business Post, spoke to On The Record to explain the recent developments.
He said: “Minister Ossian Smyth has launched a review of the plan, essentially to see if what has happened in the first two years of the plan accords with what was agreed in the 2019 contract.
“The review follows a number of revelations over the last six months or so, which essentially boil down to the money going into the plan and the money going out of the plan.”
One important issue is around funding to date, and the €98 million in “very expensive loans” provided by NBI CEO David McCourt and his business partners to the company (National Broadband Ireland) they set up to deliver the plan.
Peter explained: “They’ll get those loans back - it’s a state-backed scheme, so you’d be especially confident of getting that money back in time.
"Then they’re earning this quite handsome [12%] interest on top of it as well, which will also be due from the company they set up back to their own investment vehicles.”
Meanwhile, some investors have already taken tens of millions of euro out of the company “through fees for various services" - such as surveying - provided to NBI.
That amounted to around €38 million in fees in 2020, before National Broadband Ireland had earned any income from customers they’ve connected.
Meanwhile, there was €42.5 million of a State subsidy paid into NBI in 2020.
Representatives of NBI have rejected any suggestion that taxpayers' money is going into investors’ pockets.
The new review will look into whether the investors have complied with the contract terms.
Peter said: “I suspect that quite a lot of what has gone in is permitted under the contract… but if that is the outcome, that will raise very serious questions about how good the contract was in the first place.”
Meanwhile, the plan has fallen “very far behind” its broadband connection targets - that's partially pandemic related, but due to many other factors as well.
Around 3,500 homes and businesses have been connected to high-speed so far, with another 17,000 having the option to connect.
However, the initial target was to have 115,000 homes able to connect by end of January 2022. That’s been revised down to 60,000 - but Peter said NBI is still set to fall “some way short” of that target.