The Republic could lose a multi-million pound e-commerce investment because of its inadequate telecoms and electricity infrastructure, a senior director of software applications developer Oracle has told The Irish Times.

Mr Dermot O'Kelly, managing director of Oracle Ireland, said doubts about the Republic's infrastructure may persuade the corporation to locate a centre for online software distribution elsewhere.

"If you strangle the data centres by not giving them gas or connectivity they will go elsewhere," he said. "Ireland has good advantages for us but, if we can't do it here, we will go elsewhere."

Mr O'Kelly said he was concerned that the Government was promoting only regional investments at a time when the broadband infrastructure could not support major e-commerce investments.

"There are no Government grants outside Dublin, but I can't run my business from anywhere else," he said.

Mr O'Kelly is due to meet the Tanaiste, Ms Harney, and representatives of IDA Ireland shortly to discuss these issues.

It is believed Oracle will establish a European hub for distributing its software online to Europe within two years, and the Republic is in a strong position to win the investment.

Oracle Corporation employs more than 1,000 people at its European headquarters, which is based in Dublin. A decision by Oracle to locate its European e-commerce activities outside the State would be a major blow to the Government's e-commerce ambitions.

Oracle has been promoted as a flagship project win by IDA Ireland.

Mr O'Kelly's comments come just a week after a Government report warned of a flight of hightech capital from the State unless action was taken to address critical infrastructure issues.

This report warns that many areas of the country face high risks of unplanned power outages because of transmission system weakness and generating capacity constraints.

There is also a serious deficit in the network in the Border/ midlands/ western region, says the report.

"The north-west region is in a weak position; the network in the west region is weak; and there is no 220 kV transmission west of Galway to the Flagford line or in the Donegal region," it says.

The report highlights that many areas of the country are only served by 110kV lines, which can carry less electricity capacity than 220kV or 400kV lines (see map).

The report warns that if certain transmission investments are not undertaken, industries particularly reliant on quality power supply may begin to avoid certain regions. "This includes ICT [Information Communication Technology] projects generally, and specifically data centres," says the report.

An analysis of the planned locations for 22 Internet data centres for the Republic shows just three will be outside the Dublin region.

The report also highlights that the prospect of encouraging data centres to locate in regions is complicated by a requirement to secure broadband connectivity from at least three different telecoms operators.

Several companies have complained that the cost of obtaining broadband connectivity in regional areas is prohibitive for large data centre-type investments.

However, the Government recently allocated #60 million (£47 million) in grants to fund regional broadband initiatives, which should ease this problem within two years.