Managers at the ESB, who want to cut its workforce by 2,000 before 2004, believe the State-owned electricity company should be floated on the stock exchange, its chief executive, Mr Ken O'Hara, said yesterday.
The job cuts, which would reduce the ESB's staffing levels by one quarter to 6,000, are being sought as the company faces competition for the first time. The ESB's long-term target was to retain 60 per cent of the power market after it was fully opened to competition in 2005, Mr O'Hara said at a briefing.
The company reported a 22 per cent rise in pre-tax profits to £266 million (€338 million) for 1999 on the back of a 7.5 per cent increase in turnover to £1.35 billion. ESB's 8,000 workers were paid £17 million under a profit-sharing scheme last year.
The sale of the group's 50 per cent stake in the Internet service provider Ocean to British Telecom realised £75 million after tax. The company plans capital expenditure of £2 billion in the next five years, on new generation plant and the development of its transmission network.
While the Minister for Public Enterprise, Ms O'Rourke, has asked the ESB's board to make recommendations on its future ownership and strategic options, its chairman, Mr Billy McCann, said directors were "a long way" from finalising their views. The board would report to the Minister towards the end of the year, he said, although any decision would be for the Government to make.
But Mr O'Hara said ESB managers believed a change of ownership was desirable. This was especially so because there was concern that the Government was acting both as regulator of the industry and owner of its leading player.
Asked whether a trade sale or an initial public offering was preferred, he said: "Management favours a flotation."
There will be no compulsory redundancies in the programme to achieve competitiveness and transition (PACT), said the ESB's group finance director, Mr Tony Donnelly. Asked whether reports that the ESB was seeking 2,000 job cuts in the rationalisation programme were accurate, Mr O'Hara said: "That's not a bad estimate."
Negotiations on a voluntary severance and early retirement scheme with trade unions are at an early stage, although the company wants to implement the programme in the next three years, or sooner if possible.
An earlier programme which reduced staff from 10,000 to 8,000 had been implemented successfully - with annual savings of £90 million - between 1996 and 1999. The company was hopeful of a positive outcome to the current discussions, Mr McCann said.
The company has yet to reach agreement with the Commissioner for Electricity Regulation, Mr Tom Reeves, on the reserve price for a supply of 800 megawatts of power which is to be auctioned by the commissioner to independent power suppliers.
Mr O'Hara rejected criticism by groups hoping to bid for power in the auction that the reserve price proposed by the ESB was too high.
The auction of virtual capacity, which has been delayed for some time, is intended to open part of the market to competition as groups hoping to generate power had yet to build power stations. The power would be auctioned at a cost to the ESB, Mr O'Hara said.
On proposals by the ESB to build a gas-fired generation station in a joint venture with Statoil at Ringsend, central Dublin, Mr O'Hara said the company was hopeful that it would secure a gas supply in an allocation which would be made by Mr Reeves this summer.
