THE GOVERNMENT plans to make use of a €50 billion EU plan to encourage private investment in European infrastructure to boost telecoms, energy and transport networks in Ireland.

Although the “project bonds” proposal from the European Commission is subject to the approval of European governments, the Government believes the new measures can be deployed to improve the State’s broadband, electricity and gas systems.

The plan aims to make it easier to raise long-term private debt for major projects by reviving the stagnant bond market for the financing of new infrastructure.

The proposal aims to provide about €31.7 billion for transport projects throughout Europe, €9.1 billion for energy initiatives and €9.2 billion for telecom systems.

It comes as EU authorities make efforts to widen their campaign against the economic crisis with measures tailored to promote economic growth. This is in addition to the battle against sovereign debt emergency.

Minister for Energy Pat Rabbitte said it was clear the proposal would provide the impetus to complete Europe’s internal market in the energy and communications sectors.

“Energy interconnections across Europe, including cross-border electricity interconnections and reverse-flow gas pipelines, will lead to a fully integrated internal energy market, which will benefit all consumers through improved security of energy supply and increased competition,” the Minister said.

In particular, the Government sees potential for the Republic to benefit from the development of a “northern seas” offshore electricity grid, north-south electricity interconnections in southwestern Europe and north-south gas interconnections in western Europe.

It also sees scope to benefit from the deployment of “smart grids”, crucial for the transmission of renewable energy generated off Ireland’s coasts.

Mr Rabbitte pointed out that the project bonds initiative would be deployed to “catalyse and complement” private investment in broadband networks and other digital service infrastructure.

Ireland’s major road network is largely complete, potentially limiting the benefit from the transportation element of the plan.

However, the commission indicated yesterday that funding would be available to upgrade the Dublin-Belfast rail link as well as transport connections in the ports of Dublin and Cork.

The plan was unveiled in Brussels yesterday by José Manuel Barroso, president of the commission.

“We are closing the missing links in Europe’s infrastructure networks that otherwise would not be built,” he said. “These proposals will help to build the roads, railways, energy grids and pipelines, and broadband networks that are so important to our citizens and businesses.”

The commission’s proposal would see part of the EU budget deployed to provide new capital contributions to European Investment Bank (EIB), an EU institution which already provides long-term loans for big-ticket initiatives.

The new capital contributions – specifically directed at projects which qualify for such support – would provide a “risk cushion” to the EIB to finance these initiatives on the bond market.

The EIB hopes to attract institutional investment from pension funds and insurance companies to back such bonds.

“The project bond initiative would set up a means to reduce the risk for third party investors seeking long-term investment opportunities,” the commission said.