Business lobby IBEC has expressed "grave concern" about projections in a bullish ESRI report on demand for gas.

The report by Prof John FitzGerald has been used by the Department of Public Enterprise in its assessment of a Bord Gais plan to construct a gas interconnector, costing £300 million (€381.2 million), parallel to its existing link with Scotland.

In a statement yesterday, IBEC said: "There is a wide consensus that the central forecasts contained in the current draft are accurate enough. However, at a meeting of the Energy Policy Committee's Gas Working Group and the ESRI today, industry expressed grave concerns around some of the assumptions made in the high growth scenario."

The report predicts a possible shortfall in gas supplies in winter 2002.

It is thought the Department of Public Enterprise has advised the Minister of State for Public Enterprise, Mr Joe Jacob, that the pipeline should be sanctioned on this basis.

Gas from the Corrib field will not be available until mid-2003 and an Anglo-American consortium, Premier Transmission, has said a Belfast-Dublin pipeline it plans will not be ready until late 2003.

Ministers received an aide-memoire on the matter in recent days and it was tabled for discussion at a Cabinet meeting yesterday.

No Government decision to sanction the pipeline will be taken until a memorandum is produced.

It is unclear whether Cabinet members would unanimously support expenditure on the new pipeline.

There is a fear, acknowledged by people familiar with the scene, that construction of the pipeline might lead to over-capacity after 2002.