The ESB will pay up to a third of its post-tax profit to the Government in a dividend policy signed two days ago by the Minister for Finance, Mr McCreevy, writes Arthur Beesley.
It is understood the agreement takes effect immediately, with the ESB set to pay 25 per cent of its post-tax profit last year to the Government. The dividend rate will increase annually to reach 33.33 per cent in 2005.
While the dividend range is in line with what the ESB sought during its engagement with the Government, the company wanted an agreement up to 2007. It is thought that the Government, which initially sought a 50 per cent dividend, has sanctioned the policy up to 2005.
The agreement is seen in some circles as paving the way for the Government to sanction a €550 million investment in a major generation project in northern Spain.
Based on preliminary figures, which are understood to project last year's post-tax profits in the €140-€160 million range, the full-year dividend for 2002 will be €35-€40 million. Although final accounts are not ready, informed individuals believe the most likely dividend will be €37-€38 million.
The ESB has already paid a €20 million interim dividend, with €19 million going to the Government and €1 million going to the employee share ownership trust, which owns 5 per cent of the company. Depending on the actual result, the trust will receive a final dividend of €750,000-€1 million.
It is understood the ESB board agreed this week to sanction the final go-ahead of a major investment in a 400 megawatt (MW) power station near Bilbao in the Basque region of Spain.
With the dividend agreed, the ESB is expected to seek State approval within days for the investment and the financing arrangement. Such approval is expected but all involved in the process are conscious that the Government refused two years ago to endorse a proposed ESB investment of about €1.8 billion in Poland.
The refusal was highly embarrassing for the ESB, coming within hours of the deadline for a binding bid to purchase a cluster of supply companies. While the Spanish project is smaller, it is thought the company has gone to considerable effort to lobby the support of senior Government figures for the initiative.
Certain Ministers are understood to have considered themselves poorly informed about the Polish project, which they said had the potential to double the size of the ESB.
The Minister for Communications, Marine and Natural Resources, Mr Ahern, is understood to have given approval in principle before Christmas for the Spanish investment. He is expected to bring the matter to Cabinet before next Friday.
