The ESB has decided against selling two peat-fired power stations in the midlands in order to pay a €400 million "special dividend" to Government by the end of 2014.

West Offaly Power in Shannonbridge, Co Offaly and Lough Ree Power in Lanesboro, Co Longford were to be sold off as part of a 2012 plan to generate €400 million through the sale of non-strategic generation assets.

The decision to sell the plants was announced by the Government in 2013.

It followed the ESB's successful sale of its 50% shareholding in Marchwood Power Limited (UK) and Bizkaia Energia SL (Spain) for €197 million.

However, the ESB announced today it would not be selling the two peat-fired plants following careful analysis and instead would make up the remainder of the €400 million by borrowing.

It said: "It will be financially more beneficial to both ESB and the Government for ESB to retain ownership of the peat plants and fund the payment of the remaining amount of the special dividend target by drawing down additional debt from ESB's bank facilities."

"It is now ESB's intention that the peat plants and their associated cash flows will be retained, and will be available to the company to support the additional funding requirements arising from payment of the special dividend," the company said.

"The cash flows from the assets will be utilised in a different manner to yield an overall better financial result, but with the substance of the approach being the same as if the assets had been sold," according to the ESB. 

The decision not to sell the plants was formally approved at an ESB board meeting today.