ESB chiefs considering 'refinement of strategy'

Senior management and board figures at the ESB met last Saturday to discuss a revision of the electricity company's strategic plan.

Parts of the meeting at the Parcnasilla Hotel in Co Kerry were attended by the energy regulator, Mr Tom Reeves, and by officials from the Department of Public Enterprise.

The revised strategy will be put to a board meeting on June 25th. The initiative must reflect the ownership plan adopted by the new Government, particularly if it decides to pursue privatisation. That option is favoured by the Progressive Democrats party, Fianna Fáil's most likely partner.

The review was described by an informed figure as a "refinement" of the current strategy. The meeting on Saturday was the first in the process and activity is expected to intensify.

On ownership, management figures have championed the flotation option. However, ESB chairman Mr Tadhg O'Donoghue has said the company might not be ready to be sold until 2006.

Whatever modifications are made to the current strategy, the chief executive designate, Mr Padraig McManus, will be responsible for its delivery. He takes over in July from Mr Ken O'Hara, who is retiring.

It is understood there were four strands to the discussion:

Strategy in the Irish market, which is partially liberalised;

International expansion;

Delivery of the PACT rationalisation programme;

Upgrading the national electricity network.

With the ESB facing competition for industrial customers in 40 per cent of the market, its market share is likely to diminish further when the market is fully opened in 2005. In addition to competition for electricity customers, the company is no longer the sole generator in the market.

These obligations are not new. But a degree of uncertainty surrounds the company's international ambitions.

It was forced last June by the Government to withdraw from a competition to buy eight power supply firms in Poland for €1.8 million within hours of the deadline for a binding bid.

The company has committed to expand internationally and it is thought that the review will address the manner in which it will attempt to achieve this.

The expansion of the company's networks is the subject of a €2.5 billion plan. While this is required to replace ageing infrastructure throughout the State, it is thought that consideration will be given to delivering the five-year plan in a shorter period. This would demand greater use of outside contractors.

The PACT programme sees the ESB staff reduced by 2,000 to 6,000 in return for a 21 per cent pay rise. Applications for a severance package are currently being processed.

Mr Reeves's spokesman said there was nothing unusual in the regulator's attendance at parts of the meeting. He added: "There was a presentation to the board on the stark realities facing ESB as a result of competition and on emphasising in particular the implications when the market opens 100 per cent in 2005."