A GOVERNMENT agency has more than £1 million in shares in the leading producer of biomass wood pellets in Northern Ireland.

Invest NI holds £1.2 million worth of shares in Balcas, based in Enniskillen.

Wood pellets are the fuel used by the more than 2,000 operators of boilers purchased under the controversial RHI scheme.

The £1.2 billion scheme, which was launched under the leadership of first minister Arlene Foster, is set to cost Northern Ireland taxpayers £400 million over the next 20 years.

Shares worth £1.5 million were originally purchased in 1994 by the former Department of Economic Development (DED), acting on behalf of the then Industrial Development Board (IDB) government agency, a predecessor to Invest NI.

The Department for the Economy has said the investment made in 1994 was a way of sharing "in the risk attached to a project as opposed to standard grant assistance."

Shares worth £300,000 were redeemed over the years, leaving the agency with a current shareholding of £1.2m.

The IDB and the small business organisation Ledu merged to form Invest NI in 2002.

The Department of Economic Development existed under the period of direct rule and its functions overlapped with that of the present-day Invest NI and Department for the Economy.

It was subsumed into the Department for Enterprise, Trade and Investment upon the return of devolution in 2007.

As one of the largest producers of biomass wood pellets in Britain and Ireland, Balcas has been involved in promoting renewable heat programmes to customers.

Balcas' website states that it has a turnover of around £100 million, and 400 direct employees.

In 2007, it opened a second pellet manufacturing plant in Scotland stating that the "opening of this plant firmly positioned Balcas as the largest wood pellet fuel manufacturer in Great Britain and Ireland."

SHV Holdings, a private Dutch company, is the largest shareholder in Balcas with a controlling stake.

It is understood that Invest NI's stake is a single digit percentage of overall shares, and the agency has limited voting rights.

In 2010 Balcas won a contract to provide wood pellets to five government buildings, including Stormont Stables and Inishkeen House in Enniskillen, the current headquarters of the Forest Service.

However, Balcas lost out to a competitor from the Republic for these contracts when they came up for renewal in 2014.

Following the acquisition of a majority shareholding by SHV last year, five of the original directors resigned.

Established as a saw milling business in 1962 by George Kidney, the company diversified into renewable energy in the past decade.

What Arlene Foster told the Irish News about RHI in October:

A spokeswoman for Balcas said: "Balcas is one of a number of suppliers. The company started supplying biomass wood pellets in 2005, and are marketed as Brites. That was long before the RHI scheme was conceived."

A spokeswoman for the Department for the Economy said: "Shares were taken in Balcas Limited in 1994 by the then Department for Economic Development, acting for IDB.

"Taking shares in a business in this manner was designed to share in the risk attached to a project as opposed to standard grant assistance. When LEDU and IDB were merged to form Invest Northern Ireland, the shares were transferred to Invest NI."

The spokeswoman added: "Invest NI’s shareholding is detailed in their annual report. The agency currently holds 1.2m of shares."