THE Government has been put under pressure to introduce water charges from next January – and progress on reforming the sector has been described as "slow".
The European Commission says that "landmark decisions" are needed if Ireland is to meet its commitments under the bailout programme.
But there is confusion as to when charges will be introduced.
An EU assessment of Ireland's progress says the Government has committed to introducing charges from January 1 next. But the Department of the Environment says no decision has been taken, and rejects suggestions that reform was slow.
A condition of the bailout programme is that charges are introduced from 2014, but it is widely expected they will be delayed until after the local elections in the summer of 2014 because of fears that voters will mount a backlash against the two government parties.
"We do not accept the statement that the water sector reform has been slow," a department spokesman added.
"A detailed strategy for the reform of water services provision has been developed by the department in consultation with key stakeholders and the implementation of that strategy is well under way. A Bill to provide for the establishment of Irish Water within the Bord Gais Group is currently being considered by Seanad Eireann."
The water charges will be introduced "not earlier" than January 1 next year.
The EU technical assessment says that while plans to transform the ownership and operation of the water sector have been "firmed up", reform has "so far been slow".
The new company, Irish Water, will become self-funding over time, meaning it will fund development of new treatment plants and other infrastructure which is expected to save the State some €1.2bn a year.
"Yet, concrete steps have been taken slowly," EU officials say. "Among other things, progress towards the installation of water meters has lagged.
"The full rollout of meters is likely to take years and extend well beyond the scheduled date for the introduction of charges, which will create additional difficulties regarding the pricing mechanism.
"Landmark decisions are needed in the coming months to achieve the commitment of introducing water charges for households by the end of the programme period."
The technical assessment adds that a number of "key decisions" will have to be taken rapidly, including a decision on how households will be charged for water.
It adds that the amount of government support needed to fund water services will depend on the revenues that can be collected through charges.