ESB management in change of mind on privatisation as it expands in US

PRIVATISATION of the ESB has been stalled indefinitely sources close to the company believe.

This is a significant departure from the mood in the company before the former ESB chief executive, Ken O’Hara retired.

During his term top management conveyed their view to government that privatisation was in the best interests of the group’s future development as electricity markets were opened up under EU directives.

One corporate source said the sector has had no approaches from the government about a possible flotation which looks much further away now than people could have imagined two years ago when management was pushing hard to have the country’s main provider of electricity floated on the stock market within two years.

When the ESB announced profits of €165m for last year its recently appointed chief executive Pádraig McManus, hinted that gung ho attitude for flotation had receded somewhat.

A company spokesman said that at the time Mr McManus said the company was being prepared for whatever the stakeholder decides it wants to do.

“In other words the company doesn’t have a preferred option that it want’s flotation, this year, next year or the year after.”

“The ESB is not preoccupied with the question of flotation,” said the spokesman.

News that the flotation question has gone off the boil comes as the ESB is on the verge of raising €200 million to fund planed expansion in the United States.

ESB is part of a consortium negotiating a €750m contract to supply electricity transmission across a number of US states including Georgia, Alabama and Florida. The consortium includes EirGrid, designated to takeover responsibility for Ireland’s national grid and Accenture, formerly known as Andersen Consulting.

While the situation in the US is presenting significant opportunities the stock market downturn post the high tech crash has left Irish investors less than enthusiastic for another major flotation of a state body.

eircom was a disaster from the markets perspective and only the state, the corporate advisers and the top management came well out of the process.

Ordinary investors lost at least one third of their money and the company is now privately owned by Dr Tony O’Reilly and a number of US investors.

Meanwhile the view within ESB is that if the government decides to privatise ESB, the company will be prepared for it, which is very different form the stance of the previous senior executive team under Mr O’Hara.

However market sources said the huge change in sentiment and the bad taste left by eircom could see the flotation, given its potential size, postponed indefinitely.