2026-04-16

3. Deputy Mairéad Farrell asked the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation to provide an update on the impact of current global fuel price increases on the delivery of infrastructure; and if he will make a statement on the matter. [27580/26]

The programme for Government set out the clear prioritisation for the NDP review to ensure that investment can be maximised in the coming five years for strategic infrastructure. This includes the key energy, water and transport networks on which all future development relies. This is critical to allow Government to meet the additional targets in terms of building more homes and also to support our competitiveness. My Department’s Build Report 2025 identified cost volatility and capacity constraints as key risks to NDP delivery and the recent fuel price developments accentuate these risks. While construction inflation in Ireland moderated through 2024 and 2025, recent fuel price increases are reintroducing cost volatility and will impact in a number of ways, including on direct construction costs, materials manufacture and the wider supply chain. Global fuel prices have increased sharply, driven primarily by geopolitical conflict in the Middle East and disruption to oil and gas supply chains, particularly through the Strait of Hormuz. International Energy Agency analysis indicates that this represents the most significant oil supply disruption in decades, with severe short-term volatility in crude and refined product prices. The OECD and IMF have both warned that sustained high prices will place upward pressure on inflation and weaken growth prospects across energy-importing economies, including Ireland. That is why, over the last number of weeks, we implemented a significant cut in excise duties, reducing the price per litre of both diesel and petrol. We have also extended the fuel allowance. That package was €250 million, and a new package of measures on fuel costs has been introduced in support of particular sectors. This is all about keeping supply chains moving, supporting jobs and making sure our economy continues to function. In 2023, my Department introduced a suite of amendments to the public works contracts to address the risks. I will return to that when I come back in.

The Minister and Deputy Sheehan were just talking about the approval of the ring road. In Galway we have been waiting decades for the approval of the Galway ring road. We also have a chronic infrastructural deficit across Galway city and county. People in Galway have been waiting decades for the approval of the ring road. This is the kind of infrastructure that has been desperately needed to reduce congestion within the city, particularly for those who may be travelling to hospital appointments from Connemara. That is always the way I see it. Similarly, the Galway harbour development has just been approved after 12 years of planning delays. We want to see this happen but there is a real fear now of the impact of global fuel prices delaying these projects further. Can the Minister reassure the people of Galway that the current increase in fuel prices will not slow down the delivery of infrastructure projects across Galway city and county?

I was about to say that we introduced a suite of amendments to the public works contracts to address risks relating to the price inflation of materials, fuel and energy in public works contracts. These amendments introduced a risk-share approach to price inflation of materials, fuel and energy prices. We utilise specific indices published by the Central Statistics Office which address the main input cost categories that are common to most construction projects. Price movements in the specified indices above a predetermined threshold result in an adjustment to each interim payment to reflect inflation, taking into account the weightings applied to the different materials and fuel categories. The amended price variation provision represents a proportionate and balanced approach to the risk posed by inflation to the delivery of critical public works projects. Like the Deputy, I want to see that project move quickly. It has been going on for decades. It is hugely important for housing supply in Galway and also for wider industrial development, in addition to other public transport objectives which we want to achieve in the west of Ireland. I know all of us want to see it move quickly now over the period ahead.

It really has been decades that we have been waiting. I do not remember a time when we were not talking about the Galway ring road. It is also about people being able to access services through a gridlocked city, which is incredibly difficult. I was talking to one mother who said that to get to a 9 a.m. appointment in Merlin Park hospital from Connemara, really she would have to stay the night before but the prices are expensive, so she was leaving the house at 6 a.m. That is the reality of it. The Minister mentioned public infrastructure and public transport as well. We have had some delays on that as a result of waiting on the decision on this. It should have always been done in tandem, from the 1990s onwards. It was always a matter of waiting for that decision to be made. Do the Government's cost estimates for infrastructure projects such as the Galway ring road provide leeway for the type of cost increases that are currently happening?

We have significant immediate volatility in pricing but the inflationary context is something that takes a more sustained impact. There is still wider uncertainty on that. Next week we will publish the annual progress report, where the Department of Finance will set out updated forecasts on the inflationary environment and the predictions around that, and will also provide a scenario analysis depending on how this evolves. We have good flexibility within the public works contracts, which are important. We want to proceed with our national development plan and with a lot of the priorities we have. Transport, in particular, has one of the biggest allocations for the next five years, with over €24 billion or just under one in four euro going to transport. Notwithstanding what was raised earlier, and earlier in the week, many of the projects from a transport perspective are in public transport, in low-carbon projects in terms of bus, rail and others that we want to see advanced over the next five years.