Minister Hogan passed up option to save €350m on water meter installation

Hannibal · 25-04-2012 11:58PM #1

http://www.independent.ie/business/irish/siemens-cheaper-water-meter-offer-snubbed-by-minister-hogan-3088254.html

Environment Minister Phil Hogan snubbed a private-sector offer to finance water meters that could have saved over €350m.
German infrastructure and energy giant Siemens offered to foot the €810m-plus cost of installing meters in 1.3 million Irish homes back in 2010, but Mr Hogan didn't pursue the option when he took over at the Department of the Environment.
One of the biggest players in the British water meter market, Siemens proposed funding the fitting of water meters through an investment to be paid back through savings made in the multibillion-euro cost of providing water services once the meters were installed.
Instead the National Pensions Reserve Fund will be raided for €450m to pay some of the bill. The loan from its coffers will have to be paid back with interest at commercial rates, Mr Hogan has admitted, which would be at least €350m. Added to the estimated €810m installation fee, that brings the national water meter fitting bill to well over €1bn.

So Big Phil wants to raid the National Pensions Reserve Fund and set up a new company off the back of Bord Gais just so he can fleece us for installing these things that no one wants, talk about getting the tax payer the best deal.

Cookie_Monster · 26-04-2012 12:04AM

I somehow doubt the Seimens deal was quite as simple as stated above, without knowing the details maybe there was a very good reason for not taking them up on it.

Overheal · 26-04-2012 01:30AM

My experience with contract bidding (The flooring and construction industry of the US) is that multimillion dollar contracts will land on whomever is willing to tell the biggest lie. Oh yes, these materials are 100% American. Yes, this estimate is the total cost of the project. It was [is] standard practice by big firms to underbid the work to secure the contract and as the project progresses re-project the actual cost of the work onto the property holder. Reminds me of hiring movers, you look for the best offer but the best offer is usually by the guy who will raise his fee on the day of the move, putting you in a bind (we chose to move the sh*t ourselves, incidentally).

Like Cookie Monster has already said there is a lot more to that than saying "I'd do it for tree fiddy less!".

Sully · 26-04-2012 11:13AM

Its a safer bet going with the devil you know rather than the devil you don't know so well. If they went with the cheaper option and it failed / cost more - imagine the backlash!

Pete_Cavan · 26-04-2012 11:50AM

We dont even know what kind of meters Siemens were offering, they could be trying to offload cast offs that were not approved for use in other countrys on us for cheap to get some money back. Modern water meters are read digitally by simply driving past with special reading equipment, if Siemens were offering bog standard meters, the labour cost of reading them would wipe out any savings in a few years.

As for using the NPRF, it was set up to cover the cost of future pensions and must be invested in order for the fund to grow. Irish Water seems like a good investment because we will need water in the future regardless what happens. The standing charge will ensure the money is repaid but no doubt people have issues with this as well - how dare they build in a charge to ensure they will be able to repay, with interest, the loan they got from our pension fund! What would people rather see the NPRF invested in, an apartment in Santry?

If Hogan took up Siemens on the offer, everyone here would be crying that it is the first step towards privatising water infrastructure in Ireland.

Manach · 26-04-2012 11:56AM

From my own rather distant experience with Siemans, they always seemed to be a professional and well run organisation liable organisation whose post bid processing was liable.
That the water might have ended up in private hands would be welcome given the general efficiency and cost effectiveness of the Private sector.

Gurgle · 26-04-2012 12:06PM

Sully wrote: »

Its a safer bet going with the devil you know rather than the devil you don't know so well.

A new 'Irish Water Board' quango better than a German multinational with decades of experience?

Tragedy · 26-04-2012 01:04PM

Pete_Cavan wrote: »

We dont even know what kind of meters Siemens were offering, they could be trying to offload cast offs that were not approved for use in other countrys on us for cheap to get some money back. Modern water meters are read digitally by simply driving past with special reading equipment, if Siemens were offering bog standard meters, the labour cost of reading them would wipe out any savings in a few years.

Right. And they could have been fantastic new modern units that will be superior to the ones installed by Irish Water.

Fear, uncertainty and doubt - you nailed all three

My understanding was that Siemens were offering to essentially be the first private sector water utility company in Ireland. If so, it wouldn't have mattered to taxpayers what meter they installed.

As for using the NPRF, it was set up to cover the cost of future pensions and must be invested in order for the fund to grow. Irish Water seems like a good investment because we will need water in the future regardless what happens. The standing charge will ensure the money is repaid but no doubt people have issues with this as well - how dare they build in a charge to ensure they will be able to repay, with interest, the loan they got from our pension fund! What would people rather see the NPRF invested in, an apartment in Santry?

What does that have to do with a private bid that could have potentially saved €350m?

Having to take €350m from NPRF vs potentially not having to spend €350m, and you portray it as a positive thing.

*sigh*

Pete_Cavan · 26-04-2012 01:22PM

Tragedy wrote: »

Right. And they could have been fantastic new modern units that will be superior to the ones installed by Irish Water.

Fear, uncertainty and doubt - you nailed all three

And having no clue whatsoever about water meters, who is to install them or the industry in general, you hit that particular nail right on the head.

Irish Water is only in the process of being established so it will fall on the existing water service departments in the County Councils to have meters installed. They in turn will let out the work to private contractors, usually with the contractor supplying the meter. Siemens can still sell their meters to the contractors and if they are cheaper than other meters on the market, and within the specification, the contactors will buy them, reducing the cost of the meter installation programme without tying yourself into a €800m+ contract with Siemens without having a proper tender process. Doing it through the Councils will spread the work around to smaller local contractors and be more beneficial to the overall economy than handing the whole lot over to Siemens.

Siemens were only interested in providing meters because having their meters as standard across the country would put them in an excellent position for future long term contacts such as billing and system management. Bord Gais were chosen to run Irish Water because they already have a nationwide billing system in place so have no need for these services anyway.

Tragedy wrote: »

What does that have to do with a private bid that could have potentially saved €350m?

Having to take €350m from NPRF vs potentially not having to spend €350m, and you portray it as a positive thing.

*sigh*

The NPRF is money that has been set aside to meet as much as possible of the costs of Ireland's social welfare and public service pensions from 2025 onwards, when these costs are projected to increase dramatically due to the ageing of the population. The €350m goes back into the NPRF, which is €350m more in the pot than previously was there and €350m less for the government of the day to come up with. The majority of the €800 given to Siemens would leave the country. Investing in a resource which is vital to the economy and fundamental to sustaining human life, while reducing the cost to the exchequer of providing water is a good idea. Do you have a saver investment or should people go without a state pension despite having paid towards it?

Tragedy · 26-04-2012 01:55PM

Pete_Cavan wrote: »

And having no clue whatsoever about water meters, who is to install them or the industry in general, you hit that particular nail right on the head.

I don't need to know about water meters to point out in your lust to defend your political party of your choice, you, on the basis of no information, facts or knowledge, made up an unlikely scenario in order to spread FUD and make what on the face of it appears to be a stupid decision by Phil Hogan, suddenly a smart and rational move.

Again, you did all this based on no information or facts and just decided to posit a scenario to cast Phil Hogan's decision in the best possible light.

Irish Water is only in the process of being established so it will fall on the existing water service departments in the County Councils to have meters installed. They in turn will let out the work to private contractors, usually with the contractor supplying the meter. Siemens can still sell their meters to the contractors and if they are cheaper than other meters on the market, and within the specification, the contactors will buy them, reducing the cost of the meter installation programme without tying yourself into a €800m+ contract with Siemens without having a proper tender process.

I don't recall any mention of Siemens stating the offer would be rescinded if it was put to tender. The point of the Siemens offer was that they would be financing the installation and offering very low commercial interest rates.

Doing it through the Councils will spread the work around to smaller local contractors and be more beneficial to the overall economy than handing the whole lot over to Siemens.

Sure

Siemens were only interested in providing meters because having their meters as standard across the country would put them in an excellent position for future long term contacts such as billing and system management.

FUD or do you have evidence?

The NPRF is money that has been set aside to meet as much as possible of the costs of Ireland's social welfare and public service pensions from 2025 onwards, when these costs are projected to increase dramatically due to the ageing of the population. The €350m goes back into the NPRF, which is €350m more in the pot than previously was there and €350m less for the government of the day to come up with.

It's also €350m more that the Government has to borrow or cut. Your maths are pathetic.

The majority of the €800 given to Siemens would leave the country.

Really? Siemens were going to import contractors to install ~1.2million water meters? Evidence, or more FUD?

Investing in a resource which is vital to the economy and fundamental to sustaining human life, while reducing the cost to the exchequer of providing water is a good idea.

Water meters aren't a resource, water is.

Do you have a saver investment or should people go without a state pension despite having paid towards it?

What? Seriously, what?

I can't wait for your forthcoming FUD based on scenarios that so far exist only in your head. Please do tell us how amazing Phil Hogan is with your nonsensical maths and silly economics.

Pete_Cavan · 26-04-2012 05:26PM

Tragedy wrote: »

I don't need to know about water meters to point out in your lust to defend your political party of your choice, you, on the basis of no information, facts or knowledge, made up an unlikely scenario in order to spread FUD and make what on the face of it appears to be a stupid decision by Phil Hogan, suddenly a smart and rational move.
Again, you did all this based on no information or facts and just decided to posit a scenario to cast Phil Hogan's decision in the best possible light.

FG are not my political party of choice. What information, facts or knowledge have you provided. Your senario about meters provided by Siemens being "fantastic new modern units that will be superior to the ones installed by Irish Water" is equally as made up as the senario I suggested above, although I qualified mine by first stating "We dont even know what kind of meters Siemens were offering". I wasnt defending Phil Hogan, I was defending the decision not to hand over a €800m contract to the first guy to knock on the door.

I don't recall any mention of Siemens stating the offer would be rescinded if it was put to tender. The point of the Siemens offer was that they would be financing the installation and offering very low commercial interest rates.

I didn't mention Siemens stating the offer would be rescinded if it was put to tender, although it would no doubt change were they submitting an offer as part of a competitive tendering process.

Sure

FUD or do you have evidence?

Data and metering services for water utilities is part of their business model, see here. You dont believe having their meters installed across the country will put them at an unfair advantage for any such future contracts?

It's also €350m more that the Government has to borrow or cut. Your maths are pathetic.

Neither borrowed nor cut but recouped through a standing charge on customers as is standard with utilities.

Really? Siemens were going to import contractors to install ~1.2million water meters? Evidence, or more FUD?

No, but digging a whole is only one of the costs. The task of installing meters to all the houses in Ireland is a huge logistical and administrative challenge, that is why it is best to leave it to the local authority water services department, they have knowledge of the network. With Siemens supplying the meters and providing the technical and adminstrative support to run the operation, they will walk away with most of the money.

Water meters aren't a resource, water is.

Installing water meters is investing in water because it saves water.

What? Seriously, what?

The money in the NPRF has to be invested to grow the fund, investing in our water infrastructure is a pretty safe investment

I can't wait for your forthcoming FUD based on scenarios that so far exist only in your head. Please do tell us how amazing Phil Hogan is with your nonsensical maths and silly economics.

I was giving my opinions based on my experience of the industry, you on the other hand keep mentioning fear, uncertainty and doubt yet you dont know the first thing about this. You think Irish Water would be installing meters, which is not the case.

murphaph · 26-04-2012 07:17PM

Sully wrote: »

Its a safer bet going with the devil you know rather than the devil you don't know so well. If they went with the cheaper option and it failed / cost more - imagine the backlash!

But Ireland knows Siemens very well indeed. The new Free State turned to Siemens Schuckert to build it's new power stations.

Siemens worked hand in hand with the ESB to electrify Ireland.

oppenheimer1 · 26-04-2012 07:47PM

Siemens didn't make an offer to Ireland out of the goodness of their hearts. If they invested €350m in Ireland they would be looking for it back some way - most likely in standing and usage charges. It is better that Irish water is a state owned and run utility meaning that they will plough their profits back into the network or general exchequer funding rather than pay dividend to overseas investors.

It would have been short sighted to have taken up the offer. Of course people will criticise the reasons for its rejection without understanding the offer in the first place.

Whether its Siemens or Irish Water that installs the meters they will want to be paid and in the end the bill will fall on the consumer either way. Personally I'd prefer the money to stay in Ireland.

Cookie_Monster · 26-04-2012 10:25PM

Manach wrote: »

From my own rather distant experience with Siemans, they always seemed to be a professional and well run organisation liable organisation whose post bid processing was liable.
That the water might have ended up in private hands would be welcome given the general efficiency and cost effectiveness of the Private sector.

this of course is the flip side of the arguement: they are a company with very good history and reputation and compared to the many names that could have come up they would be a good choice to run something like this IMO.

Gurgle · 27-04-2012 08:58AM

oppenheimer1 wrote: »

It is better that Irish water is a state owned and run utility meaning that they will plough their profits back into the network or general exchequer funding rather than pay dividend to overseas investors.

Or (more likely) sub-contract their buddies / families to run a terrible service at sky-high prices and find themselves top-heavy in €100k+ management within 5 years. I'd rather see a decent German company who know what they're doing and who will lose the contract if they can't provide a quality service at a minimum price.

Bullseye1 · 27-04-2012 09:05AM

What is wrong with investing in something and then looking to make your money back? Some people are obsessed with keeping the private sector out and protecting the bloated public sector. This country does not need more public sector workers it needs private sector workers.

astrofool · 27-04-2012 09:11AM

So how many years until we have competition in supplying water here?

kippy · 27-04-2012 09:11AM

Bullseye1 wrote: »

What is wrong with investing in something and then looking to make your money back? Some people are obsessed with keeping the private sector out and protecting the bloated public sector. This country does not need more public sector workers it needs private sector workers.

Privitastion of all services is very simply NOT the answer.
Sure, privatisation has a place and certain services are more suitable to it than others.
There are many examples where privitisation hasnt worked out and its amazes me that people believe privitisation s the answer to this countries ills.

I and everyone here, have no idea about the ins and outs of the Siemens offer. They have plenty experience in this area, that is for sure and without knowing the facts, it does look rather short sighted not to have used them in some capacity for some part of this rollout (they may be used anyway to be fair)

Gurgle · 27-04-2012 10:06AM

kippy wrote: »

Privitastion of all services is very simply NOT the answer.

True, it must be considered carefully on a case by case basis.
What we do know is that the councils currently operating the water supplies are managing to get rid of €1.2 billion per year supplying an estimated (by me) 1.5 million households.

I simply do not believe that €800 per year to make diluted mud come out of my tap is an efficient and well managed system.

And that's excluding the cost of fitting the meter, maintenance (its not going to last 5 years trying to measure diluted mud) and reading it regularly.

flutered · 27-04-2012 10:22AM

this baloney about co.councils doing the buisness and being the bees knees i find laughable, my local co.council is limerick ask many around west limerick about their service, ask around galway about the service that they have, to include any co council and siemens in the same sentence is unbelieveabley naive.

_Kaiser_ · 27-04-2012 09:29PM

oppenheimer1 wrote: »

Siemens didn't make an offer to Ireland out of the goodness of their hearts. If they invested €350m in Ireland they would be looking for it back some way - most likely in standing and usage charges. It is better that Irish water is a state owned and run utility meaning that they will plough their profits back into the network or general exchequer funding rather than pay dividend to overseas investors.

Umm.. have people somehow forgotten the reason for all this?

Where pray tell do you think the "profits" from any of the charges/levies/taxes introduced in the last few years are going, because they certainly aren't being "ploughed" back into Ireland Inc - there's just enough being spent to keep the lights on (unless it's a hospital or Garda station apparently).

If people really think that any money collected from these meters will (beyond the bare minimum needed to keep the system running) be somehow beneficial to us in the longer term then I think ye need to splash some of that water on your face and take a look around.

Sully · 28-04-2012 12:08AM

Worth pointing out;

1) Service wont be done by the councils.

2) There will be no installation fee for the meter and no charges until 2014 at the earliest.

3) The offer subject to the first post and many discussions can not be taken up directly. They must tender for the service, like many others, under EU Competition Laws.

femur61 · 28-04-2012 06:59AM

Sully wrote: »

Worth pointing out;

1) Service wont be done by the councils.

2) There will be no installation fee for the meter and no charges until 2014 at the earliest.

3) The offer subject to the first post and many discussions can not be taken up directly. They must tender for the service, like many others, under EU Competition Laws.

Why did he do this before the Fiscal Treaty? I know other countries in the EU have household rates of some kind but people are finally begining to question where all the money is being spent. But begining to question and protesting about it are different I know - at least it is a start.

Pete_Cavan · 28-04-2012 10:12AM

After everything that has gone before, with Ray Burke, Lowry and the recent findings of the Mahon tribunal, do people really think the government should just hand over a nine figure contract to a private company because they were kind enough to offer to do the work without bothering with a tender process?

Foghladh · 28-04-2012 03:41PM

Pete_Cavan wrote: »

We dont even know what kind of meters Siemens were offering, they could be trying to offload cast offs that were not approved for use in other countrys on us for cheap to get some money back. Modern water meters are read digitally by simply driving past with special reading equipment, if Siemens were offering bog standard meters, the labour cost of reading them would wipe out any savings in a few years

Is there any indication that it's proposed to install smart meters? I know that a few utilities companies in the UK are installing them but they're the exception rather than the norm. Bord Gais haven't even installed them on their gas network yet as far as I know, except on a trial basis. A lot of the more recent builds in Ireland are already fitted with volumetric water meters as it is. The local authorities I've dealt with here would specify them as a precondition to connecting to the water supply. I certainlt can't see them rolling out in excess of 1 million of them in the time frame proposed

Pete_Cavan · 29-04-2012 11:30AM

Foghladh wrote: »

Is there any indication that it's proposed to install smart meters? I know that a few utilities companies in the UK are installing them but they're the exception rather than the norm. Bord Gais haven't even installed them on their gas network yet as far as I know, except on a trial basis. A lot of the more recent builds in Ireland are already fitted with volumetric water meters as it is. The local authorities I've dealt with here would specify them as a precondition to connecting to the water supply. I certainlt can't see them rolling out in excess of 1 million of them in the time frame proposed

They are not proposing to install smart meters here. Smart meters are read remotely, the meters being used here will be read by driving past using infra-red technology.

Foghladh · 29-04-2012 11:49AM

Pete_Cavan wrote: »

They are not proposing to install smart meters here. Smart meters are read remotely, the meters being used here will be read by driving past using infra-red technology.

OK. Have you got a link to that?

Pete_Cavan · 30-04-2012 09:45PM

Foghladh wrote: »

OK. Have you got a link to that?

A link for what exactly? There has been no mention of rolling out smart water meters here.

oppenheimer1 · 30-04-2012 09:56PM

Kaiser2000 wrote: »

Umm.. have people somehow forgotten the reason for all this?

Where pray tell do you think the "profits" from any of the charges/levies/taxes introduced in the last few years are going, because they certainly aren't being "ploughed" back into Ireland Inc - there's just enough being spent to keep the lights on (unless it's a hospital or Garda station apparently).

If people really think that any money collected from these meters will (beyond the bare minimum needed to keep the system running) be somehow beneficial to us in the longer term then I think ye need to splash some of that water on your face and take a look around.

I haven't forgotten anything. The point I was making was that I would rather see the money paid for water be spent in Ireland - even if its not all spent on water infrastructure rather than be siphoned off to pay dividend to Siemens stockholders overseas.

Siemens offer wasn't generous or altruistic, it was more like the vulture circling over the dying antelope. Can people not understand that?

Foghladh · 01-05-2012 12:48AM

Pete_Cavan wrote: »

A link for what exactly? There has been no mention of rolling out smart water meters here.

You mentioned that the meters to be installed here will be read by infrared technology. I haven't seen anything published to say what will be the meter type will be but you sounded like you knew. I was merely enquiring as to your source.

charlemont · 01-05-2012 01:06AM

Gurgle wrote: »

A new 'Irish Water Board' quango better than a German multinational with decades of experience?

I'd actually feel more comfortable at the thought of Siemens being involved than another quango..

Minister Hogan passed up option to save €350m on water meter installation

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