An increase in the Public Service Obligation (PSO) levy, the subsidy charged to all electricity users to support Irish Government energy policy objectives, is having a major impact on a Westmeath firm which employs in excess of 250 people directly and indirectly.

Lagan Cement of Kinnegad is facing an annual increase of 88.52% in its PSO contributions on top of large increases which were imposed in previous years. For a firm which is competing in an extremely competitive export environment with nations like Spain, Germany, England and the Benelux countries, this is an increase which could have very serious consequences, according to Managing Director of the Lagan Cement Group, Jude Lagan. Exports account for 40% of Lagan Cement's total production.

Mr Lagan said: "Electricity costs at Lagan Cement now amount to over 50% of all our variable costs, up from 30% in 2008. This is a cost which we have to absorb ourselves, in Spain and Germany, Central Government actually assist our competitors in terms of energy overheads.

-- Advertisement --

"The mantra of Ireland being the best small country in the world in which to do business is often trotted out. In our experience, regrettably this couldn't be further from the truth. In an area of the Midlands starved of much alternative employment, we contribute €30 million to the local economy annually yet nobody seems to be listening to us in spite of the employment we create through exports.

"What's more, we are expecting a further increase in energy prices in September. There comes a point when in spite of having done everything possible to survive the bitter recession and maintain a sustainable business model, we quite simply won't be able to compete on exports and the consequences will be very serious for Lagan Cement. This also applies to all manufacturers which are exporting."

In the last four years alone during the worst of the recession, medium and large industry has been asked to pay a 242% increase through the PSO.

"We would have to question as to what the fund is achieving. Is it becoming a way to prop up ways of generating electricity which aren't commercially viable since the subsidies being given to them are being paid by us on top of energy costs which are already among the highest in Europe?," concluded Mr Lagan.