More than €3.5 billion must be spent between now and 2013 if the rail system is to meet the growing demand from passengers, particularly in the Dublin commuter belt, according to an Iarnród Éireann plan.

The company says that large -scale funding, the bulk of which would come from the Exchequer, will be needed to update Dublin commuter, intercity and provincial services.

The company is believed to have told the Department of Transport that, while major development of the railways has taken place in recent years, more investment is needed if the required standards of service and customer care is to be reached. It acknowledges that outdated facilities, delays and overcrowding are sources of ongoing criticism and describes the next decade as a crucial period for addressing these problems.

The ambitious development plan, submitted to the department, says that Irish Rail has limited internal resources and a significant level of external funding is required from the Exchequer and the EU. It says this could be supplemented by property sell-offs, public-private partnerships and leasing arrangements.

The report was compiled following the publication late last year of a Government-sponsored strategic rail review, which said investment of up to €8.5 billion was needed over 20 years in the rail network.

Iarnród Éireann is believed to argue that the company must gear up to deal with expansion in the Dublin commuter belt, which, it points out, now extends 100 kilometres from the city centre. It says the company's objective is to develop the railways so they can cope with increasing demand and become the number one choice for commuters and long-distance travellers, by speeding up journey times and adding more frequent services.

Iarnród Éireann estimates that €2 billion is needed for Dublin commuter services; €1.4 billion is needed for intercity services, with the remainder needed for provincial city services.

In Dublin and surrounding areas, the plan suggests suburban peak services need to grow by 100 per cent. It says new stations need to be built at Adamstown, Fonthill Road, Parkwest, Pelletstown, Porterstown, Leixlip, Baldoyle and Dunleer.

In relation to intercity services, it says all carriages more than 30 years old need to be removed. More frequent services are needed throughout the network, particularly on the Cork/Limerick and Belfast routes. It says an hourly service should be the target for these routes.

In relation to provincial services, it says there should be greater services to Mallow, Cobh and Ennis serving several new stations, including Blarney, Kilbarry, Tivoli and Ballynoe.

In a section on funding, the company says the following actions are needed to fund the plan: passenger volume growth; a commercial fares policy; adequate levels of subvention; and a reduction in the company's cost base.

While the plan favours property sales, its says the income to be gained from these sources is limited.