The Dublin metro is one of a number of infrastructure projects that may now get the go-ahead following a relaxation of EU rules on state borrowing.The Minister for Transport, Mr Brennan, described the changes - announced yesterday by the European Commission - as "exciting".
A proposal for a €2.4 billion metro line for Dublin is to be brought to Cabinet by Mr Brennan within weeks and yesterday's development is a boost for the project, according to his spokesman.
The new rules may also facilitate road projects, including the upgrading of the M50 ring motorway around Dublin.
The Department of Education's school building programme could also qualify, as may the long-delayed new home for the Cork School of Music.
The State will now be able to allow the private sector finance the projects and spread the cost over periods of up to 20 years, considerably reducing the impact on the Government finances.
The Department of Finance, which has raised objections to the metro project on cost grounds, said last night the rule changes were "welcome", but would not comment in respect of the metro project.
The fundamental issue of value for money still has to be addressed, a Department spokesman said.
Eurostat - the EU Commission's statistical service - has removed one of the biggest constraints on private-sector investment in Government projects. This is the requirement that money borrowed by the private sector to fund sponsored Government projects must be counted as Government debt.
Under the Growth and Stability Pact, which governs the single currency, the Government's net borrowing cannot exceed 3 per cent of Gross Domestic Product. This equates to a cap on borrowing.
The new more relaxed rules apply where the project is financed by private investors who assume a significant element of the risk associated with the project. This could include the metro.
The financing model currently favoured by the Department of Transport - and facilitated by the new rules - is that the private sector should build the metro through a Public-Private Partnership.
The cost of the project will only have to be reflected in the Government accounts once it is up and running, possibly in 2009.
The amount would be limited to between €300 million and €400 million a year over a 15- to 20-year period.
In return, the consortium building the metro will have to bear the risks associated with building it, and also the risk that the metro will not open on time.
Mr Brennan said yesterday that the new clarity surrounding the risk that must be borne by the private sector "should make it easier to attract private investors for big projects like this".
The route of the proposed metro will be overground from Dublin airport to Ballymun before it goes underground to St Stephen's Green via Connolly Station and Tara Street Stations.
The 12km metro is only economically viable as the first stage in a much wider network that could cost in excess of €20 billion.
The Department of Finance has raised objections to the metro project on the basis of cost, preferring a lower cost option, such as a rail link to the airport.
A spokesman for the Department said yesterday that the changes were welcome and that they gave greater clarity as to how the private sector could get involved in infrastructure.
The Government's current five-year, €30 billion capital spending plan includes up to €5 billion from the private sector.
Meanwhile, as the first "live" safety and engineering tests of the Luas between Dundrum and Ranelagh got under way yesterday, the Rail Procurement Agency (RPA) reaffirmed its commitment to open the Sandyford to Dublin line in June, to be followed by the Tallaght to Dublin route in August.
Yesterday's testing, which was observed by an invited group of dignitaries and local politicians, follows a similar ceremony in Dublin city centre in which the RPA celebrated the "last weld" in track-laying.
The RPA indicated yesterday there would be "a few" more ceremonies before the line finally opens to the public.
