Bord na Mona is get the majority of the outstanding £61 million equity injection from the Government, probably by the end of this year. The cash will dramatically improve the company's balance sheet and put it on a sound commercial footing.

It will mean that Bord na Mona's outstanding debt will fall to around £50 million and the semi-state will have to pay far less in interest charges. It will also accelerate the semi-state's move to become more competitive.

It is understood that the Minister for Public Enterprise, Ms O'Rourke, is currently in discussions with the Minister for Finance, Mr McCreevy, about the matter. To date, £49 million of the £110 million due has been paid.

It had been planned to pay the monies in three tranches. However, because the economy is so buoyant, it is understood that the Government will bring forward the date and pay virtually all the £61 million outstanding this year.

In return, Bord na Mona will have to reduce the price of milled peat for electricity generation. It is estimated that this will save the ESB about £18 million a year.

It will also have to cut the price to other users, such as the new Europeat station, to commercial levels.

Bord na Mona has already warned that these changes will lead to a reduction in turnover and profit in the future "as the existing pricing arrangements contained an element which, up to now, has been used to service and amortise the unsustainable debt".

Bord na Mona has laboured under a crippling debt for more than a decade. In 1993, an independent consultant's report said a large part of the debt was unsustainable.

In 1995, the Government decided to address the problem and, with European Commission permission, agreed to inject £110 million into the company. It paid the first tranche last December and the money will used to pay off debt.

Last month Bord na Mona's chairman, Mr Pat Dineen, said the most noticeable feature of the financial year had been the first tranche of equity.

In the year to March 28th, the semi-state increased its pre-tax profits by almost 50 per cent to more than £7 million, its highest earnings in a decade. However, it has warned that this year is proving difficult and the bad weather meant the company has achieved only half of its production target, which will obviously affect profit levels.

The ESB is in the process of being restructured into a group of limited liability companies.