THE ESB is to receive benefits of around £1 million per annum following the completion of a lease arrangement on part of its generating station at Moneypoint, on the Shannon estuary. The deal was approved yesterday by Mr Lowry, Minister for Transport, Energy and Communications, following agreement with the Minister for Finance, Mr Quinn.

About one-third of the generating station is involved, a statement from Mr Lowry said. The deal involves a lease to a consortium of US banks which have leased back the property to the ESB so that the latter retains the ownership and operation of the station.

Mr Lowry noted the positive financial benefits which the transaction will confer on the ESB and its consumers. Although these have not been quantified, the ESB last week conceded that there would be a net benefit of around £1 million per annum, putting the total net present value of the deal at £20 million.

The ESB is to receive a lump sum of $400 million (£250 million) from the consortium headed by First Union National Bank. In return, the ESB will pay an unspecified annual sum to the banks for a period of 20 years.

The leasing arrangement allows the banks to benefit under US tax legislation.

The Department of Transport, Energy and Communications noted that the "proposal is a recognised form of financial engineering of a kind transacted on a regular basis in the main international financial markets both here, in Europe, the US and elsewhere".

Negotiation have been taking place for about a year. Moneypoint was completed 10 years ago at a cost of £700 million. The ESB reckons that it is now worth about £850 million.