A £15 million (€19 million) extension to the electricity interconnector linking the North with the Republic was announced yesterday by the Minister for Public Enterprise, Ms O'Rourke, and the new Northern Ireland Minister of Enterprise, Trade and Investment, Sir Reg Empey.

However, Sir Reg emphasised that, while the North would co-operate with the Republic when opportunities arose, it would continue to compete with it and other European regions for inward investment. "The reality is that we are competitors . . . It is a very competitive market, but one that we can relish getting into," he said.

The interconnector's capacity will be increased from 280 megawatts (MW) to 400 MW, the equivalent of the output of a medium-sized power station. ESB and Northern Ireland Electricity will jointly fund the 18-month project. In recent years, the ESB has periodically bought excess electricity from Northern Electricity because of demand surges and a tightening of the operating reserve of 600 MW.

Ms O'Rourke said the measure would be "a reassurance to business and domestic consumers" although she had been told by the ESB that it had sufficient power capacity for the next two years.

Sir Reg said the creation of an all-island energy market was recommended in Northern Ireland's draft energy action plan, and it complemented EU energy policy.

The completion of an electricity interconnector with Scotland in 2001 would increase opportunities and complement the existing Scottish gas interconnector.

But Sir Reg said yesterday's meeting had been scheduled under the old regime in the North . "All I am doing today is continuing work that had already been done. The groundwork for this meeting has been laid by my predecessors."

The North's economic performance had been better than some regions in Britain but it had "an enormous amount of catching up to do" with the Republic's. The North would be seeking variations on how economic policies emanating from Westminster were applied, he added.

The Sinn Fein vice chairman, Mr Pat Doherty, who is also the chairman of the Northern Ireland Assembly committee on Enterprise, Trade and Development, welcomed yesterday's meeting, describing it as the "first step" along the road of an all-Ireland energy market which would be welcomed by domestic and commercial consumers alike.