Several British transport firms are expected to seek the contract to operate the Luas network in Dublin. Other Europebased groups are also thought to be interested.

The first phase of the competition is under way and initial applications must be submitted by noon on February 9th.

Groups likely to apply include Metrolink, which runs a similar light rail system in Manchester, and Arriva, a bus-and-rail firm with operations also in the Netherlands and Denmark. Arriva has two rail franchises in Britain and will operate Copenhagen's new metro system.

Firms applying to Babtie, the consultants appointed by the Minister for Public Enterprise, Ms O'Rourke, must have at least two years' experience of operating a tram or rail service.

Because Iarnrod Eireann is the Republic's only rail firm, any other Irish group seeking the contract will have to enter a partnership with one already established in the rail business. While Dublin Bus was expected to apply on behalf of CIE, this condition means it may have to do so in partnership with Iarnrod Eireann.

But their parent group, CIE, is not permitted to take part in the process. According to Babtie, this was because CIE was managing the procurement of infrastructure for the Luas system.

Applicants must have operated a passenger service with annual revenues of at least £5 million (€6.4 million) in the past three years. They must also show they can raise enough finance to cover £5 million in start-up costs. In addition, they must show they can acquire a performance bond of £10 million.

A senior British-based transport consultant said the leading groups there were very likely to apply for the contract, which would run for about five years.

Among those he identified as likely applicants were First Group, Stagecoach, National Express and Go Ahead. First Group runs a light rail system in Croydon, while National Express runs similar systems in England's West Midlands and in Melbourne, Australia. Go Ahead operates London's Thameslink system.