Construction will begin today on an $530 million (€434 million) biotechnology plant in Cork, even though the EU has not yet sanctioned tens of millions of grant aid for the project.

The plant, which is being built by the Johnson & Johnson subsidiary Centocor, was announced in July 2004 by the Government as a major coup for IDA Ireland's strategy to attract new biopharmaceutical investments to the Republic.

However, Centocor and IDA Ireland confirmed last night that the necessary approval for a State grant worth tens of millions of euro to the firm to help with construction of the plant has not yet been received from the EU.

This aid cannot be paid to the Centocor until EU approval is received.

A spokesman for the European Commission's competition directorate said last night it was still in the process of analysing whether the Irish government's offer of grant aid to Centocor would distort competition. A decision was expected shortly, he added.

The EU review of State aid for Centocor's proposed investment is the first since Brussels shot down a proposal by the Government to offer the chipmaker Intel grants worth €170 million earlier this year.

The Government formally withdrew its offer of grant aid to Intel earlier this year after it said it had received clear indications from the EU that it would not sanction the grant aid.

The Minister for Enterprise and Employment, Michael Martin publicly criticised the commission for not sanctioning the €170 million grant and called on the EU to change the way it reviews state aid.

Under current EU rules permission for grants can be refused if a company holds a dominant position in the marketplace and an award of state aid would distort competition.

The Government formally submitted a request to Brussels to approve the grant aid to Centocor in March. The commission has twice asked for additional information to help it in its review of the request to award state aid.

However, despite the ongoing review the Minister will today officiate at a ceremony to mark the start of construction work at the Centocor site in Ringaskiddy, Cork.

The ceremony will be attended by two senior Johnson & Johnson executives and the Lord Mayor of Cork.

Mr Christopher Molineaux, senior vice-president of corporate communications at Centocor, said yesterday the firm was not frustrated by the delay in approval for the grant aid promised by the Irish government.

He said Centocor was committed to building the plant at Ringaskiddy, although he stopped short of guaranteeing that work on the plant would continue if the EU decided to refuse permission for the grant.

Centocor's proposed €530 million in Cork would create an estimated 330 jobs over five years, which is the estimated time it will take the plant to go into full production.

The manufacturing facility would use complicated biotechnology processes to make new drugs for a range of ailments.

Centocor products, which are primarily developed through a process known as monoclonal antibody technology, currently treat diseases such as arthritis and inflammatory skin diseases.

Johnson & Johnson is one of the world's biggest healthcare companies employing more than 100,000 people worldwide.