The flotation of Telecom Eireann, now Eircom, last July led to a substantial loss to the State because the Government's primary objective was the involvement of small shareholders, the ESRI report says.

This meant that the Government did not seek the highest price for the asset, losing part of the firm's value.

"In foregoing part of the value of the company, the national debt remains higher by the amount of the lost revenue," says the report. "Future sales of assets should be designed to realise the maximum price for the State."

The Government was right to privatise Greencore and Irish Life, the report says, and State-owned banks should also be sold. In an apparent reference to the ACC and ICC, the report says: "The State should probably realise the value of its assets in the banking sector."

Restrictive licensing laws in the pub and taxi industries have created an environment greatly lacking in competition, it says.

"Even in spite of the recent successful deregulation in a number of areas, further change has been painfully slow to come about, partly as a result of well organised and powerful lobby groups, and partly through a general lack of ambition shown by policy makers.

"Measures need to be taken to deregulate certain key areas of the economy in order to allow real competition to develop - to make markets `contestable'."

Whereas previous privatisations focused on realising the value of State assets when public finances were severely stressed, the report says it is now of greater economic importance to provide services more efficiently. A lack of competition pushes up the costs and wage levels of businesses.

The report argues against privatising existing State monopolies, such as Aer Rianta and the ESB. "While external regulation can help to modify the damaging effects of a monopoly, regulation is often ineffective, leaving considerable power in the hands of the monopolist. Generally, it is more appropriate that such power should remain in the hands of the State rather than of a small group of private individuals."

Monopolists have far more information than regulators, making it difficult to determine an "appropriate price".

The report says the best way of dealing with this is to "change the rules", forcing monopolies to limit their role to managing the business and buying in "inputs" through a competitive tendering process.

"This makes the accounts of firms much more transparent, greatly facilitating the task of the regulator."

Such an approach could be taken at the ESB, Aer Rianta, Bord Gais and CIE.

In the case of the ESB, the report says: "There is no reason why the management contracts for individual generating stations should not be subject to a tendering process." As an argument against the privatisation of the ESB, it points to the experience of Northern Ireland, where consumers have had to pay a price well above most other EU states following the move of Northern Ireland Electricity - now Viridian - into the private sector.

The report says Aer Rianta should continue to manage airports under State ownership with an external regulator. This runs against a recommendation from the company's own board that 49 per cent of the company be sold off. The Minister for Public Enterprise, Mrs O'Rourke, is currently awaiting her own consultant's report on the issue.

While Aer Rianta should not be privatised, according to the ESRI, it " should be required to buy in all the services it needs through a competitive tendering process. This would put downward pressure on its cost structure, as well as making it transparent. Under such a regime, the regulator and the public, could ascertain whether the charges levied by the airport operator were fair."

On Bord Gais, it says: "The construction and maintenance of transmission and distribution systems could also be provided . . . on a competitive basis by private sector firms."

While the report says a similar approach at CIE could bring benefits, it says responsibility for the success of the transport network must rest with the company. "The experience of the UK suggests that serious damage can be done where the network operator is too weak and contracts for supply of services are inappropriate."

Local authority services are also amenable to such an approach. "In areas such as housing maintenance [local authorities] have shown themselves to be inefficient producers of services." Waste disposal, road repairs and the management of the water infrastructure could be provided by the private sector in a competitive environment.

While many of the suggestions for semi-State companies constituted public-private partnerships (PPPs), the report says PPPs should be employed only where they produce a more efficient, low-cost solution to a pressing infrastructural problem.

"The crucial test is one of efficiency, though issues of risk sharing on major projects also arise."

Citing a report on National Investment Priorities, the ESRI says if an infrastructural project is worth doing, it is worth using taxpayers' money to do it.

"The rate of return is, in such cases, by definition, greater than the cost of finance to the State. However, as with utilities, the State is not necessarily efficient at producing goods and services."