Vol. 562 No. 4
126 Ms Burton asked the Minister for Communications, Marine and Natural Resources the main features of the dividend policy agreed in regard to the ESB; the reason such a large dividend was sought by his Department having regard to the fact that the ESB charges were recently increased by 13%; and if he will make a statement on the matter. [5360/03]
The agreement reached between the ESB, the Department of Finance and my Department on the question of ESB dividends, provides for a payment of 25% of profits for 2002, growing to 33% by the year 2005. In October 2002 an interim dividend of €19 million was paid to the Exchequer out of the ESB's 2002 half yearly accounts.
The Electricity (Supply) (Amendment) Act 2001, while providing for the establishment of an employee share ownership plan, also repealed the company's break-even mandate which had existed since 1927. This in essence means that the ESB may declare and pay dividends in a manner akin to a commercial public limited company.
The operations of State companies are increasingly taking place in the context of liberalised competitive markets and many of these companies are also increasingly engaged in activities outside their core businesses. In such circumstances, it is appropriate that they pay dividends to their shareholders out of their profits.
The Commission for Energy Regulation allows reasonable returns in the regulated segment of ESB's business. There is no direct link between the CER's decision on prices and the ability of the company to pay dividends. Decisions on annual dividend payments to shareholders are ultimately a matter for the board.
