BP is walking away from a project to build a power station it planned with a group controlled by Esat's founder, Mr Denis O'Brien.
The multinational's decision to sell a 40 per cent interest in the generation station it planned at Mulhuddart, west Dublin, is a significant blow for the Ireland Power project whose partners are Mr O'Brien's group, ePower, which owns 40 per cent, and a US businessman, Mr Larry Thomas, with 20 per cent.
BP is the third largest group to leave the Irish market. It bought its share from Mr Thomas's original partner, Scottish Power, which left before the market was partially liberalised last February.
Last year, the Dublin-controlled building materials group CRH sold a half-share in a north Dublin power plant to its partner Viridian. No alternative buyer emerged for the stake it sold. Electricity market insiders believe BP was frustrated at the slow pace of deregulation here.
A senior BP director did not return two telephone calls when The Irish Times sought clarification on its position. An Ireland Power spokeswoman also declined to comment. But ePower's chairman, Mr Leslie Buckley, yesterday confirmed that BP wanted to sell its interest.
He said: "We would like BT to continue but it's not a major setback. There are other interested parties and it's not unusual in an international business such as this one." Mr Buckley did not anticipate that ePower would buy BP's share. He believed BP wanted to leave the Irish market because it had decided to concentrate on power projects where it could use gas from its own supplies. The departure was no threat to the continuity of supply to ePower customers, he added.
"We have majority share in the whole market supply arm of the business. BP will continue to support us in this area." Because of constraints on the transmission system in Dublin, the Ireland Power plant has yet to secure a connection to the network that would allow it to supply enough power to the national grid to make the plant sustainable.
While the electricity regulator, Mr Tom Reeves, has proposed changes to the system which would facilitate such a connection, the plan has been opposed by the ESB and by the operator of the grid, EirGrid.
The EU competition commission is understood to have written to the Minister for Public Enterprise, Ms O'Rourke, informing her that implementing the system proposed by Mr Reeves is crucial to competition in the market.
EPower joined Ireland Power last year after it failed to secure planning permission for an electricity generation station at Navan, Co Meath. It is primarily a supply firm. Such operations need to generate their own power to compete with others with generation capacity.
EPower's allegation that the ESB's Independent Energy subsidiary was engaged in anti-competitive practices prompted an inquiry by Mr Reeves, who concluded it was insufficiently ringfenced from its parent. The ESB has challenged this in the High Court.
