Brussels approves £114m capital injection

THE European Commission has cleared the proposed £114 million equity injection by the Government into Bord na Mona and the first £50 million is expected to be provided by the Government before the end of the year.

The £50 million injection will be used in total to reduce Bord na Mona's debt, which stood at £167.5 million at the end of last March. Further equity transfusions will be linked to the reduction of the price that Bord na Mona charges the Electricity Supply Board for peat for its midland power stations.

Currently Bord na Mona charges the ESB £19 per tonne for peat and the plan is to progressively reduce the price to the ESB to the market rate - currently around £14 per tonne. Chief executive, Mr Paddy Hughes, said that when this price reduction programme is completed, it would reduce Bord na Mona's turnover by around £15 million per annum. The ESB currently accounts for £58 million of Bord na Mona's £141 million annual turnover.

At a briefing on the annual results, the chairman, Mr Pat Dineen, stated that a consultant's report on the proposed Europeat peat-powered station in the midlands was expected early in the new year.

Various consortia, including the ESB, are expected to pitch to build and operate this power station which is expected to cost about £100 million and employ 65 people directly. Bord na Mona will also employ around 250 people in providing peat for the power station, which is expected to be located at Clonbullogue on the Kildare/Offaly border.

Bord na Mona's financial performance for the year to the end of last March showed a small drop in pre-tax profits from £5.17 million to £4.89 million while sales rose 9 per cent to £141.5 million.

Even though the £50 million equity injection will reduce Bord na Mona's interest charges, the chief executive, Mr Paddy Hiighes, said pre-tax profits would not increase directly as a result because of the requirement to reduce the price charged to the ESB.

Net debt increased from £166.3 million to £167.5 million due to the cost of financing the bumper peat harvest in 1995 and the £3.9 acquisition of CHL coal distribution business. When these factors are taken into account, the underlying trend in debt reduction was maintained. A bumper peat harvest of over seven million tonnes was produced last year - 150 per cent of target.