IDA Ireland was quick to call for a fast-track planning process yesterday when the national electricity grid operator, EirGrid, said the capacity of the system to accommodate new large industrial users of power was limited.

With a spate of job cuts in recent days bringing the number of positions lost this year to 4,700, the organisation said the downturn was "severe" and "worse than expected". Indeed, a spokesman said the situation was likely to worsen as more US companies with Irish operations digested their second-quarter results in the coming weeks.

IDA Ireland said it agreed with EirGrid's analysis that constraints on the electricity system were bad news for industrial developers.

EirGrid is the national grid division of the ESB but is in the process of establishing itself as an independent entity. Because control of the grid gives electricity generators significant advantages, the two are separating to ensure fair competition in a market that is liberalising.

As jobs executives well know, the electricity situation is all the more serious because the organisation has adopted a regionalisation strategy. With many people in the Border, Midlands and Western region deemed to have missed out on the boom, this focus is a cornerstone of Government policy.

Yet IDA Ireland has consistently claimed in recent times that constraints on the electricity system meant it was unable to accommodate a new heavy power user based north-west of a line between Galway, Carrick-on-Shannon and Dundalk.

That meant it was very hard to attract large industrial investment into the region because sophisticated plants needed high volumes of electricity. That is true of key manufacturing sectors driving the Republic's recent growth, such as information technology and pharmaceuticals.

The grid company said rising demand for electricity meant the system in many areas was operating outside internationally accepted standards.

Its latest forecast statement said: "Studies for 2001/2 indicate that there is little or no additional capacity on the grid for significant extra generation or demand with additional reinforcement.

"Current capacity in the transmission system to facilitate large industrial customers is limited and, without substantial investment, this situation will remain."

Reinforcement takes time - and serious upgrading of power lines is subject to the planning process. So even if the system is undergoing a £2.1 billion (€2.7 billion) upgrade, the process is slow. Electricity networks require separate leave agreements and planning permissions in each of the counties passed through.

But the ESB challenged EirGrid's assumptions.

Mr Dermot Byrne, the ESB's head of networks, said: "The ESB has never failed to provide supply when a firm request was made. We have a history of pulling out all of the stops to meet new requirements."

An ESB spokesman pointed to high-profile projects, such as the Xerox development in Dundalk, which required specific change to the electricity system.

Still, the implication in the EirGrid report was that such change would be more and more difficult to achieve before 2003.

Regarding the development of competition in the market, only one significant competitor will challenge the ESB's dominance of the power generation business any time soon. That company, Viridian, is the former monopoly in Northern Ireland, a market in which the ESB plans to expand its presence.

EirGrid's power system planning manager, Ms AdΘle Sleator, yesterday described the addition of a 400 megawatt power station to the Irish system as akin to throwing a stone in a bucket of water. In a larger system like that in Britain, the impact of such a development is like throwing a stone in a bath of water.

In essence, this means new electricity projects have to plan the location of their plant carefully. EirGrid's advice was that the south-west was the best option, as projects elsewhere would have restricted access, requiring new lines and sub-stations.

With the constraints in mind, the irony is it was EirGrid that was responsible for developing the current network, long before the boom times began.