The chairman of the ESB has said it would be a "terrible day" for the company if it used taxpayers' money to fix the company's €511 million pension deficit.

Tadhg O'Donoghue said he strongly disagreed with suggestions from some people that the ESB should not pay the Government a dividend in the period ahead until the pension deficit is significantly addressed.

Some board members, including deputy chairman and worker-director Joe LaCumbre, support the idea of the energy company taking a dividend "holiday" until the pension deficit is addressed.

But Mr O'Donoghue strongly rejected this idea.

The ESB is paying the Government a dividend of €77 million for 2004, the highest on record.

This decision has angered some of the worker-directors, including Mr LaCumbre, who in recent weeks declined to approve the company's accounts because of the current policy.

However, Mr O'Donoghue said withholding the dividend from the Exchequer would simply mean using taxpayers' money to plug a hole in the company's pension fund.

"I don't think there is any reason for the consumer or the taxpayer to pay for this," he told reporters.

He was speaking after presenting the company's 2004 annual results.

"It would be a terrible day for this company if that were to happen," Mr O'Donoghue added.

Asked how the deficit was likely to be reversed, Mr O'Donoghue hinted the company might be prepared to increase its contribution by two-thirds in the expectation of staff increasing their payments by a third.

However, he cautioned that talks were ongoing.

He was at pains to stress that the company's pension fund had no real problem.

He said pensions could be assured their cheques would arrive as normal each month.

Speaking about the company's 2005 performance, he said that he expected profits to be broadly similar to this year, with pretax profits at €314 million on turnover of €2.6 billion.