The ESB has raised $300 million (€252 million) on the US capital markets. In the past fortnight, the company has concluded a private placement agreement with ABN AMRO and Barclays Capital banks based in New York.

The deal is the first of a number of such placements planned by the state-owned power utility, which aims to raise €578 million in borrowings next year to fund a €1.2 billion investment programme, according to the Public Capital Programme published last week.

The ESB was not willing to comment on the placement or on the potential use of the funds last night. However, it is believed that the funds will be used to renew the company's extensive network and to upgrade certain power stations.

The company is facing a major decision on whether to spend €250 million upgrading Moneypoint power station in Co Clare.

The station produces high nitrogen oxide emissions and the ESB is looking at installing a flue gas sulphurisation system to deal with this problem. This is estimated to cost up to €250 million.

The private placement is believed to be the first step in a much larger fund raising. The company's chief executive, Mr Padraig McManus, said earlier this year that large borrowings were on the way.

"Our borrowings are going to increase from €700 million to about €3 billion over a period. I suppose we are going to the bond market maybe for €1 billion," he said at the time.

It is understood the money borrowed has maturity dates ranging from seven to 15 years.

Experts on the US capital markets have described the loan rates as competitive. One source said the ESB got a marginally better deal than Bord Gaís, which raised similar finance last month.

The US capital markets are significantly better value at present than European markets.

The company would not provide any comment on the arrangements with the US finance houses. A spokesman would only state: "ESB has been looking at a number of options for future funding over the past year. Among these were a syndicated loan, which was concluded earlier this year, and a private placement. ESB is engaged in the largest infrastructure investment programme by any company in the history of the State."

The ESB's debt profile has been growing in recent years. The company had net debt of €632 million in 2001, but this rose to €902 last year - a 43 per cent increase. Some of this had not been drawn down by the end of 2002.

The company's debt profile, which is below other State companies, is managed by ESB Treasury.

According to the company's annual report: "The group has developed strong banking relationships, which will be of benefit to the ongoing financing of the business."

While large borrowings are likely in future, the company remains a strong generator of cash. In 2002, €563 million net cash came from operating activities. The company's results for 2003 are expected to be strong, possibly exceeding last year's €196 million pre-tax figure.