The Government intends to allow the ESB to extend its borrowing limit to €6 billion in a new Bill to go before the Oireachtas shortly.

The company recently borrowed €811 million in a private placement in the US, which, added to its existing €1 billion of debt, pushes the company towards the Government limit on ESB borrowing of €2 billion.

Mr Dermot Ahern, the Minister for Communications and Natural Resources, said yesterday the Cabinet recently approved a new Bill to deal with this situation and facilitate investment in the electricity network. It will be known as the Electricity (Supply) (Amendment) Bill, 2004.

He said the Bill would be given priority status and be "enacted as quickly as possible".

Mr Ahern said: "ESB's statutory borrowing limit currently stands at €2.03 billion. This has remained unchanged for the past 22 years. The purpose of the new Bill is to raise this limit to €6 billion to take account of the reality of today's economy.

"This will increase ESB's borrowing capacity and will be particularly beneficial in the context of the extensive capital expenditure programme currently being undertaken by the company."

The decision was taken on foot of advice from the Attorney General, the Department revealed yesterday. The Bill only applies to the ESB and not other State-owned companies.

Mr Ahern said the ESB was currently investing 2.7 billion in improving the electricity network to support continued national economic growth in Ireland.

"Our economy has grown by many multiples since 1982 - a period when many people were leaving our shores. The Republic of Ireland peak-time demand is now more than double what obtained in 1982. Electricity demand has risen as much in the past 15 years as it did in the previous 60," said Mr Ahern.

Last year the ESB planned to raise about $500 million in the US, but increased the offering in response to strong demand from investors.

"The very positive response is a sign of the high regard in which the company is held internationally and is also a vote of confidence in the Irish economy," said ESB chief executive Mr Padraig McManus, at the time.

The ESB historically raised its funds via bank debt, but the terms for these loans were not very attractive last year so the company decided on a private placement instead. It has not ruled out raising further funds on the bond market.