Bord na Móna is planning a major acquisition drive in Ireland and overseas starting with the purchase of the Edenderry power plant in Co Offaly for approximately €90 million.
Talks between the plant's owner, German energy giant Eon, and Bord na Móna are described as at "an advanced, but sensitive stage". The board of the company met within the last fortnight and it is believed the issue was discussed then. The company declined to make anyone available to talk about the deal or the price likely to be demanded by Eon.
The company has yet to seek sanction for the purchase from the Department of Communications, a Department spokesman said. But he added that Minister for Communication Noel Dempsey had met the Bord na Móna board. Major acquisitions by State companies require shareholder approval.
In parallel to the Eon deal, the company is also casting an eye over other acquisition opportunities as it seeks to transform itself from a sleepy peat harvesting and supply company into a more broadly based energy enterprise. Its last annual report for 2004 echoes this theme and says the company was "originally based on peat", but is now aiming to work in "environmental, renewable energy and waste management" sectors.
Last week the company invited applications for a panel of advisors on acquisitions and other financial developments. The company wants consultants to perform due diligence on potential investment projects. The invitation literature refers to "the Republic of Ireland, United Kingdom, EU, the United States and other markets as appropriate".
It is likely the Edenderry purchase will be the first of the acquisitions. The company already has an energy subsidiary called Bord na Móna Energy Ltd.
The 120 megawatt Edenderry peat-fired station has a contract to supply power to the ESB until 2015. It is possible its output can be sold on the open market after that. The contract with the ESB makes the plant an attractive one to outside investors. However, the idea of one State-owned utility holding a contract with another may send the wrong signal to other market participants.
Last night a spokesman for Viridian, which owns the Huntstown plant in Co Dublin said: "At a time when customers would like to see more independent players promoting a competitive market, we are instead seeing private companies quit Ireland."
Peat is generally one of the less economical fuel sources for electricity production. It has to be supported by a public service obligation levy. However it may be possible to also power the plant with biomass - a renewable fuel derived from a living organism or by product of a living organism. Biomass fuels include wood, dung, methane gas, and grain alcohol.
