A year ago, owning your own piece of Ireland Inc seemed like a great idea. The booming economy meant more people had more money to put away, but plunging interest rates meant there was little sense in stashing the surplus cash in bank deposit accounts.

Instead, the public began looking for other homes for its money. Investment in managed funds soared. But it was the privatisation and flotation of Telecom Eireann, now Eircom, that really highlighted the willingness of the average punter to invest in stocks and shares.

More than half a million people invested in Eircom and gleefully watched the share price surge in the early days following flotation. The poor performance of the shares since then has dampened enthusiasm for investing in single stocks and raised some doubts about the privatisation prospects of other State companies.

So far, only Aer Lingus has received clearance for take-off. In December, the Cabinet agreed to sell the State's entire 95 per cent shareholding in the airline, a move which could raise up to £600 million (€762 million) for the Exchequer. The airline also needs to raise a minimum of £150 million for fleet replacement.

An initial public offering (IPO) is not likely until later this year or early 2001 and will only proceed if market conditions at the time are right, a spokesperson for the Department of Public Enterprise said. The future ownership of Aer Rianta, which could be worth £1 billion, is also uncertain. The airports authority needs £300 million for expansion and to replace income lost following the abolition of duty-free.

It favours floating 49 per cent of the company to raise the necessary funds but the Minister for Public Enterprise, Ms O'Rourke, who is reviewing a report on Aer Rianta's future, is believed to favour a smaller flotation, probably in the region of 30 per cent of the company's equity.

A decision to privatise other State-owned companies such as the ESB, Bord Gais or Coillte is farther down the track.

Planning for the merger and flotation of ACCBank and TSB Bank continues, although the proposed May 2000 float date appears now to be in question.

Market sources are sceptical that the merged bank could be successfully floated given the current lack of investor interest in the small-cap and financial sectors, and many believe that a trade sale would be a more realistic option.

Aer Lingus and Aer Rianta may also run into difficulties. "I don't think either will be an easy sell, particularly Aer Rianta, which lost a lot of its revenue with the abolition of duty-free," one corporate finance adviser said.

"Also, a company capitalised at €200E400 million (£158£315 million) is a difficult sell at the minute because the demand from institutions is for large investments and because a lot of Irish institutions are re-balancing their portfolios away from the Irish market. Aer Lingus is large enough and we believe there will be a demand, but it will be a harder sell to the retail market because of what happened with Eircom."

So with potential investors less than enthusiastic, does the drift towards privatisation of semi-state companies need a rethink? The semi-state sector was developed in the Republic to fill two broad needs: to build an infrastructure and provide services such as electricity, public transport and telecommunications in which the private sector of the day could not or would not invest; and to create jobs in a state burdened by unemployment and emigration.

Its record in both areas has generally been good but the economic environment has radically changed since the semi-states were established. EU-mandated deregulation has opened many former State monopolies, such as telecommunications and airlines, to competition and more deregulation is on the way.

In February, for instance, 28 per cent of the electricity market will be opened to competition. Large companies will be able to choose their electricity supplier and won't have to rely on the ESB for power.

To compete in these open markets, State companies need funding to streamline their operations, replace old equipment and develop new markets.

Under EU competition rules, governments can no longer provide State aid. State companies unable to fund expansion and development from their own resources can either seek a strategic partner, raise funds through an IPO or sell off part of their operations to a third party.

Privatisation brings benefits beyond simply raising cash. It gives management more autonomy in running and developing the company, outside government control. It can provide a hefty injection of funds into State coffers. And, in theory at least, it forces companies to become more competitive and efficient, which, in turn, should lead to lower prices and better service for consumers.

On the other hand, governments have a public service obligation to their citizens, which private companies are under no obligation to match. Would a private utility operator, for example, provide service to sparsely populated regions in the west of Ireland or to economically-disadvantaged groups if it were not economically viable to do so?

"There is no need for wholesale privatisation in this country," says Mr Des Geraghty, president of SIPTU. "We would have a preference, where the State is willing to invest in the companies, for them to retain ownership. Where they are not willing to do that, or where there are reasons why they cannot, we would like them to keep a significant stake in the public interest, allow employees to have a stake and maybe have some other entity take a stake."

Trade union opposition to privatisations has lessened in light of the Government's willingness to cede a 15 per cent stake in Eircom to its employees, and the expectation that similar deals will be struck in other privatisations.

A spokesperson for Ms O'Rourke said she had no blueprint for privatisations and that each State company would be treated on its own merits. What remains unclear, however, is whether the full ramifications of privatisation have been thought through.