Bord Gβis may sell part of its gas interconnector with Scotland as part of a deal to secure private funding for a new sub-sea pipeline parallel with its existing link.
The State company was given the go-ahead by the Government for the second interconnector last February, but subject to private sector investment being secured for the €279 million (£220 million) project. The plan was sanctioned only because demand for gas is expected to exceed supply by the end of next year.
While the process of finding a co-investor is in its early phase, the view of certain senior sources is that such backing may prove difficult to secure because the second interconnector will operate at full capacity only when demand grows.
That will limit projected revenues for investors, making financial support for the project less attractive in the short or medium term. Because the existing interconnector operates at full or near-to-full capacity, the company is said to be giving consideration to bundling private sector investment in the second pipeline, known as I/C2, with access to the existing connection between Loughshinny in north Co Dublin and Moffat in Scotland.
According to informed sources, such an agreement could take two forms: sale of a stake in the first interconnector; or a licensing agreement enabling the private investor to derive revenues from the first interconnector while demand builds up on the second.
Consideration of this question is likely to be one of the first to be addressed by the company's new chairman, Mr Ed O'Connell, who succeeds Dr Michael Conlon next Friday.
Mr O'Connell's previous chairmanship in the State sector was at the Irish National Petroleum Corporation, which was sold for €116 million earlier this year to the US group Tosco, which in turn is now controlled by Phillips Petroleum.
Some informed observers see Mr O'Connell's appointment as a precursor to a flotation of Bord Gβis, an option favoured by the management. However, the question of the company's future ownership is not expected to be addressed in earnest until after the General Election, which must be held before next summer.
The investment breakdown with the private investor preferred by Bord Gβis for I/C2 is not known. One person familiar with the scene said a 49:51 ratio - with either party holding the controlling stake - is likely to be considered.
A Bord Gβis spokesman said: "The company is in discussions with the Department of Public Enterprise on the possibility of private sector involvement in I/C2."
In addition, informed sources said it was difficult for private investors to assess the viability of a project in the absence of certainty over the transmission tariffs they could charge to put gas through the pipeline.
These are under review within the Department of Public Enterprise and final proposals are expected within the next two months. Any price rise will be implemented before the Commissioner for Electricity Regulation, Mr Tom Reeves, assumes responsibility for the gas industry.
