The State's pension reserve fund is one of the backers of a consortium bidding for a €500 million road project.

In what could be the first investment of its kind in the Republic, the National Pension Reserve Fund (NPRF), has joined the Celtic Roads Group, which is bidding for a contract to upgrade a section of the M50 motorway in Dublin. Utility group National Toll Roads (NTR), civil engineers HBG Ascon and Spanish operator Dragados are the other members of the consortium.

The contract is valued at €500 million and will be operated as a public-private partnership (PPP).

The section involved runs north from the Blanchardstown interchange, and is one of three due to be upgraded.

The others are the Galway road to the Red Cow interchange and the Galway road to the Blanchardstown interchange.

The NPRF is part of the National Treasury Management Agency (NTMA). It invests and manages money to fund the State's future pension liabilities. From 2025, it will contribute to the payments made to retired public servants' and those who rely on State pensions.

The Government invests a sum equal to 1 per cent of gross national product (GNP), in the fund every year.

At the end of September, it had more than €10.8 billion in assets under management. The State cannot draw on the money until 2025.

The NPRF has been under pressure to invest some of its resources in PPPs, as the private sector has taken more slowly to them than expected.

The M50 tender is its first venture into investing in developing the State's infrastructure.

Another branch of the NTMA, the National Development Finance Agency, raises loans for State projects.

Celtic Roads is on a shortlist of two. The other bidder is Eurolink, which is made up of Irish civil engineering group, SIAC and Spanish operator Cintra.

Earlier this year, SIAC lost a High Court challenge over the award to Celtic Roads of the contract to build the Western Dundalk Bypass ahead of the Eurolink group.

However, SIAC did lead a consortium that won the PPP contract for the Kilcock-Kinnegad stretch of the Dublin-Galway motorway.

The National Roads Authority (NRA) will ultimately choose the successful tender. The agency says that it intends to do this early in 2006. An Bord Pleanála will hold a public hearing on the proposal on Tuesday, December 14th.

NTR already operates the Eastlink and Westlink tolls on the motorways around Dublin city.

If Celtic Roads is successful, it will operate that stretch of the M50 project when it is completed.

Motorists will have to pay tolls on all PPP road projects, as this is the mechanism through which the private sector investors get a return.

Most of them envisage operating the toll roads for up to 30 years before handing them back to the State.

The majority of road-building projects in the country are not PPPs. Currently, 48 major road projects are in various stages of planning in the State.