ESB shares look set to hit the grey market next spring in a bid to allow staff at the state power company to cash in on their stakes in a potential prelude to privatisation.

Trading in the market, however, will be limited to members of the company's employee share ownership plan (ESOP), which has held a 5% stake in the ESB since 2001.

The proposal, which has been drawn by the ESOP, is similar to a measure introduced prior to the privatisation of Aer Lingus.

It was approved by the government a month ago and ESOP members are due to start voting on the proposals in two weeks' time.

It is unclear what initial value will be put on the shares, with ESOP documents indicating that the valuation process should start in November if its members approve the move.

It is widely expected that the ESOP will agree to the move as it will resolve the problems experienced by former staff who have left the company since 2001.

Under the ESOP scheme, they are supposed to dispose of their shares within three years of leaving but they have been unable to do so due to the lack of a market for them.

The ESOP has already drawn up plans to borrow up to €500,000 to allow it to purchase shares from these 'forced sellers' in the absence of willing buyers.

The shares would then be sold to newer members of staff who have joined the firm since 2001 and have been unable to buy shares until now.

A Department of Energy spokeswoman said that the market was in accordance with government policy whereby stakes in state firms should only be held by current employees.

She added that the issue of how the grey market would be administered has yet to be decided, but said it would be a matter for the ESB ESOP to determine.