O'Rourke considers flotation of ESB in review of group's future

The Minister for Public Enterprise, Ms O'Rourke, said yesterday she was reviewing the future of the ESB, with stock market flotation among the possibilities being considered.

She said the company was facing a "new competitive era" and several options needed to be examined.

Apart from flotation, there was strategic alliance, disposal and further employee share ownership, she said. A spokesman for the company declined to comment on the review yesterday.

While the time-scale for the process was not disclosed, sources said the outcome of the Telecom Eireann flotation would have a bearing on what option was chosen for the ESB.

Ms O'Rourke was speaking as the Electricity Regulation Bill entered the second stage in the Dail.

The Bill sets up a new independent regulator for the industry and allows competition for 28 per cent of the market from next year and 32 per cent from 2003. The Government is obliged to open up the market under an EU directive.

However in the speech, Ms O'Rourke signalled that the whole market may be opened up after that.

She pointed out that EU states, like the UK, Germany, the Netherlands and Spain have opened their markets completely. She said the "picture emerging" was of a "progressive opening up of the electricity market" and a downward pressure on prices. She added that she regarded the Bill as a "first step" in the process of liberalisation.

Ms O'Rourke said the EU directive on electricity stated that, in 2006, member-states would look again at how much of the market should be liberalised.

She added that future competition would present opportunities for the ESB because it could "compete in the whole EU market for the generation and supply of electricity". She added that she expected the ESB to remain the dominant player in the industry for years to come.

Several electricity companies are looking to enter the Irish market and compete against the ESB. Among them are Northern Ireland Electricity, Canadian Utilities, Arco and IVO.

In the last year the ESB has repeatedly looked for a 3 per cent price rise from Ms O'Rourke, but she has rejected this several times. Her speech yesterday made no reference to this issue.

Ms O'Rourke said she would retain a policy role in relation to the electricity sector. This would include the power to decide the level of market opening, dealing with security of supply issues and the protection of the environment.

She said the new regulator, Mr Tom Reeves, currently an assistant secretary in the Department of Public Enterprise, would be accountable to the Comptroller and Auditor General and to an Oireachtas committee.