Bord Gáis is believed to be close to sealing a deal worth up to €20 million to buy the Irish interests of German company RWE, one of Europe's largest energy and water companies.
RWE announced over a year ago it planned to exit the Irish market and subsequently a sales memorandum was circulated among interested parties. It is understood a shortlist of three was drawn up.
Bord Gáis is believed to have submitted the highest bid for the assets, and pending shareholder approval from Government the deal should go ahead. Yesterday the company refused to comment on the deal however.
The assets include the following: a 10-year contract to supply gas to the 400 megawatt Tynagh Energy power plant in Galway, the rights to sell on about 10 per cent of the output produced by Tynagh to corporate customers and a sales contract with the Seven Heads gas field in the Celtic Sea.
The deal would give Bord Gáis a large gas supply contract, plus access to electricity which it can sell on to its corporate customers. At present it has no generation of its own, although it is developing plans to build a new 440 megawatt gas fired power station in Whitegate, Co Cork.
The proposed power plant will involve an investment of approximately € 300 million and is scheduled to be fully operational by 2009.
Bord Gáis has been sourcing its electricity from auctions of ESB power and by taking output from the Synergen plant in Ringsend, Dublin. But these sources are likely to dry up over coming years so that company has been seeking alternative sources.
RWE Trading Ireland, based at North Wall Quay Dublin, had plans at one stage to develop a gas and electricity business in the Republic but it found it hard to compete with incumbents like ESB and Bord Gáis. Disappointing production results from the Seven Heads field also came as a blow to the company.
The company posted a pre-tax profit of €3.4 million in its last set of accounts dated year end December 2004.
Despite announcing aggressive growth plans for the Republic, the company had no employees according to its last set of accounts, although there were three directors.
The failure of the Seven Heads field to meet its original targets mean RWE was forced to import gas from the UK through the gas interconnector which originates in Scotland. RWE is Germany's second largest utility. The company produces power through a range of sources, including nuclear power.
