The Government could significantly address the State's infrastructural needs if it adopted new forms of partnerships between the public and private sectors, AIB Capital Markets has said.

Public/private partnerships occur when public sector organisations and private sector investors combine to finance, construct and operate infrastructural projects, such as roads or transport. The bank has proposed a system of "shadow tolls" to deal with the "pressing roads problem around the State".

The system involves private consortiums building and maintaining large road projects, but charging the Government for their operation based on the volume of users.

According to the bank, suitable projects for the shadow toll system would be the Drogheda bypass, the Southern Cross, the Western bypass and the Dublin port tunnel. Mr Robert Gallagher, head of the special finance unit at AIB Capital Markets, said that schools, third-level colleges, hospitals, prisons and the LUAS light rail project could also be considered under the system.

He said the direct tolling of users would not be economic and tolls would have to be "outrageously exorbitant" to cover the full cost of individual roads.

He said the main benefit of a shadow toll system for the Government was that the risk in building roads and other projects was carried by the private sector and there were significant cost savings.

In addition, public/private projects were normally finished earlier and the Government did not have to pay for the project up front, instead the contract ran over an extended period, normally 30 years.

Mr Gallagher said the case for private/public partnerships was particularly strong currently as EU funding, used to finance many large road projects in recent years, would be significantly reduced in the future.

Mr Gallagher said private sector interests needed a return of about 14-15 per cent to commit themselves to infrastructural projects.