The Government has decided that the new €250 million electricity interconnector between Ireland and Wales will be retained in public ownership.

Two years ago a consortium including Treasury Holdings, Viridian and Airtricity expressed an interest in building and operating the infrastructure. Irish energy infrastructure specialist Shanahan Engineering also entered the race to build the inter-connector.

The Government wants the interconnector built as soon as possible and at the latest by 2012. It will be the first piece of electricity infrastructure not owned by ESB.

It would allow the Republic to import electricity from Britain but, in theory, it should also allow the export of power to Britain. Because British electricity benefits from greater economies of scale, it tends to be cheaper than that produced in the Republic.

Whoever ends up operating or owning the interconnector will be able to charge electricity companies to transport electricity across it.

But Minister for Communications Noel Dempsey, in a letter to the energy regulator, has decided that private-sector ownership is not acceptable. Instead, the infrastructure will come under the ownership of EirGrid, the national grid company, which up until recently was part of the ESB group.

EirGrid will now be asked to carry out technical work on subsea routes for the link, which will run between Wales and the Republic. A developer is likely to be hired to construct the infrastructure.