The ESB is to take a stake in a Co Derry power plant; the deal is believed to be worth around £500,000. The move will see the State-owned company buy 15 per cent of Coolkeeragh Power Ltd, an oil-burning generator company that currently supplies Northern Ireland Electricity (NIE).
A spokesman for the ESB last night refused to confirm or deny that the company was on the point of signing the deal, while the managing director of Coolkeeragh, Mr Richard Sterling, also offered no comment.
The Coolkeeragh plant, which is not far from Derry city, was sold to a group dominated by its own management team as part of the liberalisation of Northern Ireland's electricity market in April 1992. Management now owns 30 per cent of the company, with the remaining 70 per cent owned by some 200 shareholders.
Industry analysts say that although the plant burns oil, one of the most expensive fuels, and is the second-oldest plant in Northern Ireland, it is still a profitable company. With an output of 360 megawatts, it has a lucrative Power Purchase Agreement (PPA) with NIE, which last for at least another 10 years.
But apart from its profitability as a power plant within Northern Ireland, analysts say several elements could transform the investment for the ESB. At the moment, there is no direct transmission link from Coolkeeragh to the ESB network in nearby Co Donegal, but in the future, the State-owned agency could build such a link, and use it to supply power in both states.
In September, Mr Sterling said that he hoped to persuade the ESB to take to buy electricity from the plant for use in Donegal
"Businesses throughout the north-west region have experienced power problems, a new supply would attract industry to the area and would substantially reduce future upgrading of power lines in the north west," he said.
Also, there have been suggestions that the gas pipeline that currently supplies homes and industry in the Belfast area would be extended to Derry. Such a move would have major implications for Coolkeeragh because it would allow the plant to switch to a Combined Cycle Gas Turbine (CCGT), which would be enormously profitable.
Although the company remained silent last night about the deal, the investment forms part of a corporate strategy already outlined by the ESB's new chief executive, Mr Ken O'Hara.
"In line with international trends and with existing ESB successes in the international electricity market, the company will vigorously pursue profitable opportunities for significant expansion in the industry, both in Ireland and abroad," its corporate strategy document reads.
The same document refers to how the ESB should raise the return on the capital it invests to around 12 per cent, which is in line with the best international utility companies' returns.
The ESB already has a 20 per cent stake in a gas-fired power station in Corby, Northamptonshire.
