PRIVATISING Bord Gais Eireann will not be an option until Ireland has a viable gas industry and that will not happen the end of 1999, Bord Gais chairman, Dr Michael Conlon, has stated.
Speaking as Bord Gais announced a 22 per cent jump in profits to £82 million, Dr Conlon said that, although the company is currently generating a return on investment of 19 per cent - comparable to industrial companies such as CRH - the question of privatising would not arise until the Irish gas industry becomes viable.
"We really have not got a viable gas industry at the moment - we will by the end of 1999 so the question of privatisation will not arise until then, if it arises at all," he said.
Bord Gais reported strong growth last year with pre tax profits up 22 per cent to £82 million. Last year was a comparatively cold period and this resulted in a 13 per cent increase in gas consumption and a 14 per cent increase in sales to £271 million.
Bord Gais succeeded in reducing its borrowing by £59 million to £149 million and paid a dividend of £9 million to the exchequer. Dr Conlon said that the dividend to the exchequer will rise to £26 million in 1997.
The dramatic rise in the dividend to the state is due to a change in the method of computing the payment, said Dr Conlon, explaining that Bord Gais had now agreed with the Government a method based on its profits and level of borrowings.
"We feel that, although this agreement will at some stage cost us more if our profits drop and our borrowings increase, it's a reasonable arrangement," he said, adding Bord Gais had, since its establishment, contributed £400 million to the state.
Reiterating the company's guarantee that residential gas prices would not rise up until 2000, Dr Conlon said that last year, Bord Gais has increased its number of residential customers by 17,000 to 258,000. This year, Bord Gais will spend £20 million extending the network to a number of new towns and an additional 46,000 homes.
Industrial and commercial business was up by 6 per cent to 9,207 customers, giving an overall increase in volume sales of 13 per cent, while the company invested £43 million in network development last year, said Mr Conlon.
The company will, however, have to buy increasingly more gas from abroad at higher prices as the Kinsale Head gas field runs down. Last year, Bord Gais imported 18 per cent of its needs through the interconnector with Scotland and this year the figure will rise to 27 per cent, he said.
The chief executive, Mr Philip Cronin, said that active consideration is being given north and south of the Border to interconnecting the two gas networks. A feasibility study sponsored by the Department of Transport, Energy and Communications in the Republic and by the Department of Economic Development and Phoenix Natural Gas in Northern Ireland is currently under way.
Mr Cronin said the company had succeeded in reducing operating costs by £3 million in 1996 and increasing efficiency of operations would help the company compete in a single European gas market.
"We are satisfied that when European companies come into play, we will be able to withstand the competition through matching them on price and offering a level of customer service second to none so our customers won't want to change," he said.
Dr Conlon said that under an EU directive, companies using more than 9 million therms can currently buy gas from other sources. But these companies - which account for 80 per cent of Bord Gais sales - have opted to stay with Bord Gais.
The company might consider using the Kinsale field for storage purposes as it was keen to maintain two lines - the interconnector and an alternative into the greater Dublin area.
