The ESB is close to reaching agreement on increasing its stake in the Coolkeeragh oil power plant in Co Derry to 40 per cent.

The company currently has a 15 per cent stake in the plant and an increase of the stake to 40 per cent would cost in excess of £1 million.

Last week, the Northern Ireland Economy Minister, Mr Adam Ingram, announced that licences will be given to private interests to build a new gas pipeline from Belfast to Derry. This would mean a new gas source to be used by power generators.

Specifically, it would allow the Coolkeeragh plant to convert to gas, making it more efficient and in a position to supply customers in the north-west of the Republic.

It is understood that if the ESB takes a 40 per cent stake it would allow some portion of its customers in the north-west to be supplied from Coolkeeragh.

Coolkeeragh currently supplies electricity to Northern Ireland Electricity (NIE) and it is unclear how this arrangement will change if the ESB increases its stake. NIE and ESB are rivals for the 28 per cent of the Republic's electricity market which will be liberalised in 2000. NIE has successfully completed a gas interconnector with Scotland which gives it more capacity going into the future.

Coolkeeragh is part of a consortium seeking to build the gas pipeline and its managing director, Mr Richard Sterling, said gas to the north-west "will bring considerable economic, environmental and social benefits to the communities along the pipeline and the whole of Northern Ireland".

The ESB is currently looking for a gas source of its own to supply a new station it has planned for Ringsend. Because gas plants can produce electricity more cheaply, they are becoming the most popular option in the industry.