A key post in the Republic's largest State-owned company becomes vacant Monday week, leaving the Government with a crucial decision on how to fill it.

ESB chairman Tadgh O'Donoghue's term of office ends September 5th, amid a radical review of the energy company's future.

Industry sources say the Minister for Communications, Noel Dempsey, may see this as an opportunity to introduce further change in the company, although extending Mr O'Donoghue's term for another year is another option the Government may consider, according to sources.

When ordering the review earlier this year, he indicated a substantial overhaul of the ESB's operations may be necessary. Although the chairman's post pays €66,000, not huge by comparison to other posts at that level, it is considered an important one in industry circles. Mr O'Donoghue is understood to be prepared to serve a further five-year term, but the Government has not yet indicated whether he will be asked to do so.

The Minister's department declined to comment last night.

Mr O'Donoghue, a former senior partner with PricewaterhouseCoopers, has been involved in several controversies during his period in office, but he has also presided over a major increase in the profitability of the company. The company's pretax profits have almost tripled in the last five years.

However, Mr O'Donoghue has clashed at times with union representatives, most notably with deputy chairman Joe LeCumbre, a worker director and senior trade unionist.

Earlier this year, Mr LeCumbre accused Mr O'Donoghue of effectively dismissing him when he was not allowed to chair meetings when Mr O'Donoghue was not available. This row was defused following an intervention from Mr Dempsey.

Mr O'Donoghue has also strongly disagreed with some union members over the best way to deal with the company's €500 million pension deficit.

Some union members, including Mr LeCumbre, believe it is irresponsible to continue paying the Government dividends while the pension problem remains unresolved.