BORD Gais yesterday reported a profit increase of 48 per cent to over £67 million, the largest percentage profit growth since it took over the State's gas utilities 10 years ago.
The profit growth was largely attributed to a 15 per cent increase in sales to the ESB, an expansion in all other areas of business and a £7 million reduction in operating costs. With Britain, Ireland is now one of the most advanced EU countries in opening up its market for competition and Bord Gais currently imports 15 per cent of its gas through the interconnector pipeline, completed two years ago.
Bord Gais reduced its operating costs and increased turnover by 10 per cent to over £238 million last year. From a profit of £67 million, the board paid a dividend of £8 million to the State and reduced its borrowings by £27 million to £207 million. The reduction in the debt resulted in a £2.8 million fall in interest repayments to £11.9 million.
The £7 million drop in operating costs was due to lower rationalisation charges. The company plans to channel roughly half its pre tax profits into debt reduction, with a target of bringing total debt down to £100 million over the next five years.
Bord Gais chairman Dr Michael Conlon said preparing for open competition was vital and the company had to bring its debt down to a reasonable level as soon as possible.
While Bord Gais always claimed to be in competition with other energy providers, the company has this year for the first time faced competition from another gas supplier, British Gas. This results from the ESB purchasing gas at a special cheap rate from the British company and importing it through the interconnector.
Bord Gais took advantage of the reduction in North Sea gas prices and imported significant quantities of gas.
As a result of recent legislation, any user of more than 9,000 therms of gas annually can import it using the Bord Gais line from Moffat in Scotland to Loughshinny, north of Dublin. New legislation will also appoint a regulator to set the cost of gas for customers of the interconnector.
Prices for gas to the domestic user would remain competitive relative to other energy sources but the main area where the company could compete successfully was by offering a top quality service, said chief executive Mr Philip Cronin. A new tariff has been introduced that streamlines the payment system and offers better value, while customer service has been reorganised.
Future developments include the possible extension of the gas network to Belfast - the Department of Energy is currently carrying out a feasibility study on this project.
There is four months' supply of gas in the recently opened south western lobe of the Kinsale gas field and the company was investigating the possibility of using this gas reservoir to store gas imported at periods of low usage, such as the summer months. A decision would be made on this by June next year, said Mr Cronin.
Work has yet to start on the new Bord Gais offices in Albert Road in Cork but when they are completed in about three years time, the board hopes to move from its present premises in Little Island. Dr Conlon said he believed the headquarters would remain in Cork.
