The Irish Independent reports that reform of the public sector is the single most important task needing to be addressed by any new government, according to ISME, the small business group.

The Irish Independent also reports that new figures reveal that motorists may be facing a fuel crisis because the number of service stations has dropped dramatically from 2,457 in 1996 to under 1,227 today.

The Irish Times reports that the National Roads Authority (NRA) has said it is powerless to include night-time and Sunday working on the upgrade of the M50 motorway in Dublin, because such work is forbidden under the terms of its planning permission.

Construction activity will be limited to the hours between 7am and 7pm from Monday to Saturday, the authority said.

The restriction is largely because of the noise levels at nearby housing, which are governed by international standards and which were incorporated in the environmental impact assessment and approved by Bord Pleanála.

But the NRA said work on the first phase of the upgrade - the addition of a third lane and the redesign of the junctions to free-flow or near-free-flow status - was going well.

Spokesman for the authority Seán O'Neill said a major report would likely be made this week in relation to progress on the route.

The Irish Times understands the report relates to arrangements for the completion of work in the central median of the motorway between the Ballymount and N4 junctions.

Following the completion, construction work will move to the extreme left-hand carriageways, while traffic - currently about 90,000 vehicles a day from a high of about 100,000 before the works started - will move to the new central section.

Keeping the traffic moving while the upgrade is under way was described by Mr O'Neill as "similar to carrying out open heart surgery on a man while he is on his way to work".

The switch in traffic lanes will also allow the contractor Siac Ferrovial to get the reconstruction of the Ballymount and Red Cow junctions under way in earnest and to progress the free-flow arrangements on the N4 junction.

It is also expected that a major publicity campaign will be launched to advise motorists of the repositioning of traffic lanes.

Mr O'Neill said yesterday that the authority was anxious to get the work completed as quickly as possible but had to take account of the now urban nature of the location, and of the amenity of those living in nearby houses.

When completed by mid-2008, each side of the motorway between the Ballymount and N4 junctions will have three main lanes and an "auxiliary" lane between junctions. The junctions will also have been upgraded to free-flow or near-free-flow status.

Phase two comprises the widening of the remainder of the M50, other than the West-Link section between the Lucan and Blanchardstown junctions, and the upgrade of the other interchanges between the airport and Sandyford.

Phase three is the widening of the West-Link section between the Lucan and Blanchardstown junctions.

The Irish Times also reports that a number of senior managers have left the Jurys Inn operation in advance of the budget chain of hotels being sold by JDH Acquisitions for up to €1 billion.

It is understood that Stephen McNally, who headed the inns business in Ireland and the UK, is leaving the company.

Staff were informed of his decision in recent weeks.

According to an informed source, Mr McNally, who assumed the role only last year, was expected to remain with the company after a sale of the inns division was completed. It is not clear if Mr McNally has lined up another role.

In October, JDH split the Jurys Doyle operation into two divisions: one for its four- and five-star hotels and the other for its three-star chain of inns. This was in preparation for a sale of the highly-profitable inns business.

Others to leave the business in recent times include Con Ring, who had responsibility for the inns in the southern part of Britain, and Conal O'Neill, who managed the inns in the northern half of the country.

Mr Ring is now co-owner of the Gore Hotel in Kensington, London. O'Neill, meanwhile, has moved to Lyrath Estate near Kilkenny city, which is owned by Xavier McAuliffe.

The general managers of the inns in Christchurch, Dublin; Galway; Belfast; Islington in London; and Newcastle are also believed to have left recently.

In addition, the general managers of the Jurys Doyle hotels in Bristol and one of its properties in Washington DC are also thought to have departed the group in recent months.

These departures have raised questions about the strength of the management team at the inns division as it is prepared for sale by JDH, whose main shareholders are Bernie Gallagher, daughter of hotelier PV Doyle, and her husband John.

A source close to the company confirmed the departures but said they were part of a recent restructuring of the inns business in advance of its sale. The current management team was well regarded and would remain with the inns business after the sale, the source said.

JDH is seeking expressions of interest for the inns business, which comprises seven hotels in Ireland and 13 in Britain. An information memorandum was recently circulated to a number of parties in Ireland and the UK.

The sale is being handled by investment bank Merrill Lynch. A number of leading hotel groups and private equity players are expected to run the rule over the business.

It is understood that the inns business recorded earnings before interest, tax, depreciation and amortisation of about €65 million in 2006, a strong double-digit increase on the previous year.

This performance would have been helped by the opening of a new property in Milton Keynes in the UK and full-year contributions from inns at Southampton and Nottingham. Three new inns are on the drawing board for Britain.

The Irish Examiner reports that Irish Continental Group will pick up the tab for the management buy-out if One51 and the Doyle Group take control of the ferry operator.

Irish Continental have agreed to reimburse the management buy-out, led by chief executive Eamonn Rothwell, if a higher offer emerges, the offer document by the management team states.

With One51, the former IAWS co-op, and Cork’s Doyle Group set to conduct due diligence on Irish Continental within days, it is almost certain that Mr Rothwell’s €18.50 a share offer will fail.

ICG, as is standard in takeover scenarios, agreed to pay the cost of Mr Rothwell and his various advisers for any expenses incurred as part of the takeover, up to 1% of the value of the offer, if a company bid emerged and the independent directors of the company to withdrew their recommendation of the offer. ICG will pay costs up to a maximum of €4.3 million.

Irish Continental shareholders were due to meet on Thursday for an extraordinary general meeting to approve the offer by Mr Rothwell. That meeting will be adjourned so that the independent directors of ICG can consider an offer from One51 and the Doyle Group.

Last week they indicated that they were prepared to offer at least €20 a share for the company.

One51 spent heavily last Thursday upping its stake in the company and is expected to confirm to the stock exchange this morning that it bought 9% of ICG at prices up to €20.25. One51 and Doyles have now spent more than €100m buying into ICG.

If they do make a formal bid for the company, under takeover rules they are bound to offer all shareholders the highest price it paid.

It is not known whether Mr Rothwell, whose bid is being financed by AIB, is prepared to come back to the table with a higher offer.

One problem for Mr Rothwell is that One51 and the Doyle Group now own more than 17% of ICG share’s, making it very difficult for any other bidder to take the company private.

While the One51/Doyle Group are now favourites to take over Irish Continental, it is still unclear what their plans for the company might be. Though the Doyle’s have been in business for more than 100 years they have not got extensive experience of running a passenger ferry operation the size of Irish Ferries. One51’s link to the marine industry is its 50% stake in Greenore Port in Co Louth.

It is also not known who is financing One51 and the Doyles. Even with the combined assets of both firms, an offer for ICG will still require substantial debt.

The Financial Times reports that US companies are bracing themselves for a sharp fall in profit growth this year, amid rising fears that corporate America’s woes will exacerbate the expected economic slowdown.

Wall Street analysts and economists are warning that the end to a record run of profit increases along with already anaemic business investment by US companies could have serious repercussions on the domestic economy.

Any slackening in the pace of earnings growth could also unsettle equity markets as corporate profits have been one of the key drivers behind the prolonged resilience of US stocks.

“The situation is fairly precarious,” said David Rosenberg, chief North American economist at Merrill Lynch. “The typical chief executive sees a slowing economy and acts accordingly.”

Mr Rosenberg, one of the most bearish analysts on Wall Street, last week reduced his forecasts for US economic growth in the first quarter of this year to 1.8 per cent from 2.2 per cent. The US economy grew at 2.5 per cent in the last quarter of 2006, according to the latest official figures.

Companies in the benchmark S&P 500 index have been increasing year-on-year profits at a double digit rate every quarter for more than four years. However, the record streak is about to come to an abrupt end, with Wall Street analysts forecasting an increase of just 5.1 per cent for the first quarter of this year, according to Reuters Estimates.

Companies in basic materials, energy and cyclical consumer goods are expected to bear the brunt of the slowdown, due to falling prices and lower demand for their goods.

Experts say lower profit growth is to be expected given the slowdown in the economy. Some argue that soft earnings growth need not translate into soft stock markets because valuations will be supported by the recent record levels of share buybacks and merger activity. Solid economic growth in the rest of the world should also help the earnings of US companies with overseas operations. “Will weaker growth erode equity markets returns? The short answer is ‘no’,” wrote UBS economist Larry Hatheway in a recent note to clients.

Nevertheless, economists and policymakers remain puzzled by the persistent weakness in business spending, with companies seemingly reluctant to plough their historically high profits back into capital expenditure.

The FT reports that Brussels has launched a drive to close loopholes in a two-year-old European savings law, which has been sidestepped by offshore tax avoiders.

Laszlo Kovacs, EU tax commissioner, has begun consulting the savings industry on a range of measures to tighten up the savings directive, which is riddled with exemptions.

The directive, introduced in July 2005, is meant to flush out tax evaders and require them to pay tax to their home country on earnings from savings held in third countries. Non-EU countries such as Switzerland and Liechtenstein also agreed to apply a withholding tax.

But early evidence is that the directive is failing to bite. Switzerland, the world's biggest offshore financial centre, raised only €100m (£68m) in the first six months of the law's operation.

Meanwhile Mr Kovacs is worried that some savers have moved to Hong Kong and Singapore - not covered by the directive - and he is trying to arrange reciprocal deals with them.

One Commission official said the current directive provided a good basis for future work. "There is a degree of disappointment with the way it has worked so far, but optimism that it will succeed when the loopholes are closed."

Mr Kovacs has to report on the operation of the directive by June 2008, but some EU officials say he could make proposals before that date to close some of the more obvious loopholes. He argues that member states wanted the directive to operate efficiently.

Whether he can persuade EU member states and third countries to give their unanimous agreement is questionable: diplomats say big offshore financial centres like Switzerland, Luxembourg and Austria only agreed to the directive precisely because it contained so many loopholes.

A Commission working document, presented to industry experts last month and seen by the Financial Times, proposes blocking the main loopholes by extending the directive's reach to include companies and trusts.

It also floats the idea of blocking the deliberate routing of interest payments through branches of banks located in jurisdictions not covered by the directive, whose reach also includes several Caribbean islands, the Channel Islands and the Isle of Man.

The working paper suggests that the tougher definition of "beneficial ownership" used for anti-money laundering obligations should be adopted for the savings directive. This would bring discretionary trusts and companies into its scope.

It suggests imposing a new obligation on EU banks to report - or withhold - interest payments made through non-EU branches.

Banks are currently able to assist valued customers intent on avoiding the directive by paying interest through other jurisdictions, while providing access to the untaxed income through a credit card.

The paper questions the exclusion of innovative financial products, such as structured products or derivatives. It suggests the principle of "substance over form" might be applied to consider whether the products could be considered as generating interest payments.

It suggests reconsidering whether interest-generating securities "wrapped" within life insurance, pension or annuity contracts should be exempt from the directive.

The New York Times reports that some of the problems afflicting mortgages sold to borrowers with weak, or subprime, credit increasingly appear to be cropping up in loans made to homeowners who were thought to be less risky.

The latest sign of possible further deterioration in the credit market came yesterday as American Home Mortgage, a lender based in Melville, N.Y., said that it would earn less and pay out a smaller dividend because it was being asked to buy back and write down the value of certain loans.

Those loans are known as Alternative A, or Alt-A, and were made to borrowers with decent credit. Shares in the company tumbled 15.2 percent, to close at $21.92.

The announcement followed a disclosure last week by M&T Bank, a regional bank based in Buffalo, that it would write down Alt-A loans and no longer sell them because bids for the mortgages came in lower than it had expected.

Since the subprime mortgage market began deteriorating late last year, investors and analysts have kept a close watch on Alt-A loans, worrying that problems in higher-grade loans would prove to be a greater threat to the housing market and the economy.

Alt-A loans are made to borrowers with credit ratings that fall between prime and subprime, or to homeowners who have prime credit but are seeking a somewhat riskier loan.

Such loans made up about 10 percent of all mortgages outstanding at the end of 2006 and made up about 18 percent of home loans written last year, according to Moody’s Economy.com.

Together, subprime and Alt-A loans account for about 21 percent of loans outstanding and 39 percent of mortgages made in 2006.

The delinquency rate for Alt-A mortgages remains much lower than the rate for subprime mortgages, but it has been rising. In February, 2.6 percent of Alt-A loans were delinquent by 60 or more days, up from 1.22 percent a year before, according to FirstAmerican LoanPerformance. By comparison, 12.44 percent of subprime loans were delinquent by more than two months, up from 7.84 percent.

Reports that Wall Street, which made millions of dollars securitizing mortgages in recent years, is becoming more wary of Alt-A by putting loans back to lenders or by bidding less for them could be an indication that default rates will worsen before they improve.

The problems in subprime mortgages started late last year when big investment banks started returning delinquent loans to lenders. Many of those lenders have since filed for bankruptcy protection.

“The credit markets were showering the mortgage market with capital, and now that’s just evaporating,” said Mark Zandi, chief economist at Moody’s Economy.com. “The capital markets are going to exacerbate the problem, seemingly.”

Until recently, mortgage companies had been able to sell loans to Wall Street banks and other investors for a premium that was big enough to cover their costs of making the loans and to make a tidy profit. The banks would then package the loans into pools to be sold as bonds to hedge funds, insurance companies and other investors.

“Now you are selling at par or lower in some instances,” said Thomas M. McCarthy, a managing director at Carlton Group, a real estate investment firm that brokers the sale of mortgages. “It really throws the business upside down.”

For American Home Mortgage, the lower prices investors are willing to pay for Alt-A loans will mean that the company will earn from 40 cents to 60 cents a share in the first quarter. Analysts had expected it to earn $1.06 a share, according to a survey by Bloomberg News.

Beginning in the second quarter, the company, which is structured as a real estate investment trust, will reduce the dividend for its common shares to 70 cents a share, down from $1.12 in the first quarter. The company also said it would write down $484 million in mortgage securities it owns because of the lower prices at which the bonds were now trading.

Until recently, Alt-A loans were considered by many investors to be only slightly more risky than prime mortgages, and losses in bonds backed by the mortgages were small and rare, said Zach Gast, an analyst at the Center for Financial Research and Analysis.

“This is a definite sign that at least in the secondary market the subprime issues are spilling over,” he said.

Default rates have been worst for loans written in 2006, as many mortgage companies loosened lending standards by allowing more borrowers to make no down payments and not verifying that borrowers indeed earned what they claimed they did in mortgage applications. The companies relaxed the rules in an effort to bolster business at a time when interest rates were rising and the housing boom was fading.

Alt-A loans are also vulnerable to the deterioration in formerly hot housing markets along the coasts and in the Southwest, because they were often used by investors who were buying properties with the intention of quickly reselling them at a profit.

“Alt-A seems to be located regionally in spots where the market is having a great deal of difficulty, particularly in Las Vegas, Arizona and Florida,” Mr. Zandi said. So far, however, the problems in the housing and mortgage businesses appear to have had only a modest overall impact on the broader economy.

Still, Mr. Zandi says the true test will come in the next two to three months during the peak of the spring home selling season. He notes that employment in the construction sector, which had grown at a rapid pace during the housing boom, has leveled off in recent months but has not fallen significantly even as construction spending has tumbled.

The NYT also reports that with President Hugo Chávez setting a May 1 deadline for an ambitious plan to wrest control of several major oil projects from American and European companies, a showdown is looming here over access to some of the most coveted energy resources outside the Middle East.

Moving beyond empty threats to cut off all oil exports to the United States, officials have recently stepped up the pressure on the oil companies operating here, warning that they might sell American refineries meant to process Venezuelan crude oil even as they seek new outlets in China and elsewhere around the world.

“Chávez is playing a game of chicken with the largest oil companies in the world,” said Pietro Pitts, an oil analyst who publishes LatinPetroleum, an industry magazine based here. “And for the moment he is winning.”

But this confrontation could easily end up with everyone losing.

The biggest energy companies could be squeezed out of the most promising oil patch in the Western Hemisphere. But Venezuela risks undermining the engine behind Mr. Chávez’s socialist-inspired revolution by hampering its ability to transform the nation’s newly valuable heavy oil into riches for years to come.

As Mr. Chávez asserts much greater control over Venezuela’s oil industry, his national oil company, Petróleos de Venezuela, is already showing signs of stress. Management has become increasingly politicized, and money for maintenance and development is being diverted to pay for a surge in public spending.

During the last several decades, control of global oil reserves has steadily passed from private companies to national oil companies like Petróleos de Venezuela. According to a new Rice University study, 77 percent of the world’s 1.148 trillion barrels of proven reserves is in the hands of the national companies; 14 of the top 20 oil-producing companies are state-controlled.

The implications are potentially stark for the United States, which imports 60 percent of its oil. State companies tend to be far less efficient and innovative, and far more politicized. No place captures the shift in power to nationalist governments like Venezuela.

“We are on a collision course with Chávez over oil,” said Michael J. Economides, an oil consultant in Houston who wrote an influential essay comparing Mr. Chávez’s populist appeal in Latin America with the pan-Arabism of Col. Muammar el-Qaddafi of Libya two decades ago. “Chávez poses a much bigger threat to America’s energy security than Saddam Hussein ever did.”

Consider the quandary facing Exxon Mobil after its chairman, Rex W. Tillerson, recently suggested that Exxon might be forced to abandon a major Venezuelan oil project because of its growing troubles with Mr. Chávez.

The energy world took notice. So did Mr. Chávez’s government.

Only a day later, Venezuelan agents raided Exxon’s offices here in the San Ignacio towers, a bastion for this country’s business elite. The government said that the raid was part of a tax investigation, but energy analysts said the exchange of threat and counterthreat was all too clear.

Politics and ideology are driving the confrontation here as Mr. Chávez seeks to limit American influence around the world, starting in Venezuela’s oil fields. Mr. Chávez views the Bush administration as a threat, in part because it indirectly supported a coup that briefly removed him from power five years ago. Yet the United States remains Venezuela’s largest customer.

Mr. Chávez recently decreed that Venezuela would take control of heavy oil fields in the Orinoco Belt, a region southeast of Caracas of so much potential that some experts say it could give the country more reserves than Saudi Arabia. The United States Geological Survey describes the area as the “largest single hydrocarbon accumulation in the world,” making it highly coveted despite Mr. Chávez’s erratic policies.

By setting a May 1 deadline for what some foreign oil executives consider an expropriation, the Venezuelan leader risks losing Exxon, ConocoPhillips and other companies, which are loath to put their employees and billions of dollars in assets under Venezuelan management.

A departure of expertise and investment could weaken an oil industry already unsettled by being transformed into Mr. Chávez’s most crucial tool for carrying out his reconfiguration of Venezuelan society.

Mr. Chávez has raised taxes on foreign oil companies and forced other oil ventures to come under his government’s control. And he has purged more than 17,000 employees from Petróleos de Venezuela after a debilitating strike about four years ago.

The talks have bogged down over how much the oil companies’ stakes in four big Orinoco projects are worth, whether Venezuela’s cash-short oil company would pay for the assets in oil instead of cash and, most important, who would manage the reduced operations of the foreign oil companies.

Still prevented from producing oil in places like Saudi Arabia and Mexico, the companies desperately want to hold on to their Venezuelan reserves. Companies like Exxon, whose Venezuelan assets were nationalized in the 1970s and returned to it in the 1990s, know the pitfalls of operating here and figure that Mr. Chávez will not be around forever.

With oil prices at high levels, oil-rich countries as varied as Angola, Norway and Russia are also waiting to see how the talks unfold. Governments in Kazakhstan and Nigeria are trying to negotiate better terms with foreign oil companies as well. But none are doing so with Mr. Chávez’s revolutionary flourish.

“It is a defining moment,” said Christopher Ruppel, a geopolitical risk analyst at John S. Herold Inc., the energy consulting firm.

Last week, Rafael Ramírez, Venezuela’s energy minister, sent a chilling signal to the oil companies, saying Venezuela might sell refineries in Texas and Louisiana that process crude from Exxon’s Venezuelan oil fields. Analysts say Venezuela could be setting the stage to produce much less oil in ventures with American oil companies for export to the United States.

The oil companies decline to talk publicly about the negotiations, but people in the industry say Exxon and ConocoPhillips, two of the largest American companies in Venezuela, are digging in their heels. The companies, however, lack a united front: Chevron is expected to accept Mr. Chávez’s terms, since it is also negotiating access to a large natural gas project in Venezuela.

“If the majors want to negotiate a settlement, they have to be able to let Chávez save face and look like he has won this with his people,” said Michael S. Goldberg, head of the international dispute resolution group at Baker Botts, a law firm in Houston that represents many of the major oil companies around the world.

For decades, Venezuela has been a leading supplier of oil to American refineries, a resilient economic relationship that remains intact despite deteriorating political ties. Venezuela is the fourth-largest supplier of oil to the United States, accounting for more than 10 percent of American oil imports.

Once Venezuela’s heavy oil is counted, its reserves may surpass those of Saudi Arabia or Canada, though the oil will be worthless without ventures to extract it. American oil producers are drawn here by Venezuela’s 80 billion barrels of proven oil reserves, among the largest outside the Middle East.

But Mr. Chávez is chipping away at those ties by forming ventures with state oil companies from China, Iran, India and Brazil. Venezuelan exports of oil and refined products to the United States fell 8.2 percent to a 12-year low in 2006 of about 1.3 million barrels a day, according to the Energy Information Administration.

Meanwhile, Mr. Chávez has accepted higher shipping costs to reach China, expanding exports tenfold to about 160,000 barrels a day since 2004.

“If the United States wants to diversify its oil supplies for reasons of national security, then Venezuela should be allowed to diversify its customer base for the same reason,” said Mazhar al-Shereidah, an Iraqi-born petroleum economist who is one of Venezuela’s leading energy experts.

But even under the best of circumstances, China’s retooling of its refineries to handle Venezuela’s sour, or high-sulfur, crude oil could take five to seven years. And it is not clear whether Mr. Chávez’s new foreign energy partners are prepared to invest heavily until they are confident they can trust him.

In a country where many facets of life are politicized, output levels are no exception. Venezuela says it produces 3.3 million barrels a day, but OPEC officials say production is closer to 2.5 million, 1 million barrels less than in 1999 when Mr. Chávez’s presidency began.

No one sees an immediate crisis at Petróleos de Venezuela. But its windfall from high oil prices masks the devilish complexity and rising costs of producing heavy oil.

Meanwhile, the company acknowledged last month that spending on “social development” almost doubled in 2006, to $13.3 billion, while its spending on exploration badly trailed its global peers. And Petróleos de Venezuela’s work force has ballooned to 89,450, up 29 percent since 2001 even as production declined.

Independent analysts are alarmed by a troubling increase in explosions and refining accidents during the last two years, which authorities brush off as sabotage. Mr. Ramírez, the energy minister, declined repeated requests for an interview.

With heavily subsidized domestic oil consumption surging, the government spends an estimated $9 billion to keep gasoline prices under 20 cents a gallon. Moreover, Mr. Chávez uses Petróleos de Venezuela to finance other nationalizations, like its $739 million purchase of an electric utility in Caracas from the AES Corporation.

Petróleos de Venezuela’s cash is said to be running short as Mr. Chávez uses its revenue to cement political alliances with Bolivia, Cuba and Nicaragua. The company has borrowed more than $11 billion since the start of the year, a rapid debt buildup that reflects a wager by Mr. Chávez that oil prices will remain high indefinitely.