The cost of the National Broadband Plan to the state could drop by €1bn, a senior government official has claimed.

Fergal Mulligan, programme director of the National Broadband Plan, said it is a “very optimistic” but doable scenario to significantly reduce the overall subsidy to the Exchequer.

Under the current plan, the total cost to the taxpayer is capped at just under €3bn.

The roll-out of the scheme, which will bring fibre broadband to 1.1 million people across the country, will begin at the end of the year.

Ciaran O hObain, the senior department official in charge of the broadband, said in the first year of roll-out, National Broadband Ireland (NBI) will deploy some 300 broadband connection points across the country.

Appearing before the Communications Committee he said: “It is anticipated that between seven and 23 broadband connection points (BCP) will be deployed in each county.

“These BCPs will provide a community-based high speed broadband, enhancing online participation and allowing for the establishment of digital work hubs in these locations.

“Turning to value for money, there has been, and rightly so, a very key consideration in preparation of the NBP contract over the past three years.

“The contract contains strong provisions. These contractual controls will play a key role in ensuring the costs are minimised and the deliverables are met.”

He told the committee that there are “extensive controls” in the contract, adding that there are substantial oversight arrangements to monitor progress, costs and take-up.

“There is significant checkpoints at various stages in the project in addition to ongoing monitoring,” he added.

Fine Gael’s Hildegarde Naughton and chairwoman of the committee queried the capped cost and asked how that could be reduced.

She also queried whether the ESB infrastructure can be used instead.

Mr Mulligan said he hoped for the overall cost to be a lot less than three billion.

“The €2.9 billion is the overall capped subsidy, which includes the VAT of €355 million,” he added.

Mr Mulligan confirmed that the department will pay up to €2.6 billion.

He said: “Within €2.6 billion there’s €480 million that is set aside for eventualities that are unforeseen and unavoidable.

“That is not going outside the department until the actual cost incurred is verified as something that wasn’t foreseen.

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“The question of where can we reduce cost, and where we plan to reduce costs, we absolutely hope and expect it to be a lot less.

“What that billion includes is all the material you have to buy, the brackets on poles, possibly 144,000 km of new cable.”

He said another big area is the cost of connecting to “every single house and farm”.

“It is a very difficult area to go to in terms of estimating costs, so what we have done in the bid model, and accepted, is somewhere in the order of 400 million to 700 million euro to connect homes,” he added.

“That will also be paid on actual costs.

“In a very optimistic scenario, but is quite doable, you could see that subsidy come down by up to a billion euros.”

Patrick Neary, from the Department of Communications, said using ESB infrastructure during the roll-out is still an option.

Green leader Eamon Ryan raised concerns in a letter from Secretary General Robert Watt, who strongly recommended against the Government appointing the preferred bidder, Granahan McCourt, on grounds of affordability, risk and value for money.

“Their warnings in this regard are very stark,” he added.

He also raised a detail contained in a letter from the Department of Communications which said that the department would incur a €10m year-on-year cost to maintain the team to oversee the project.

Mr Ó hObain confirmed the cost of governance has not been factored into the cost of the project.

Mr Ryan said that this would cost an additional €25m of public funding.

- Press Association