Minister for Public Expenditure and Reform Brendan Howlin announced Wednesday in Dublin that Bord Gais Energy -- the trading, assets and retail division of Bord Gais -- will be sold.
It has been valued at $1.3 billion-$1.9 billion.
The move is in keeping with Dublin's agreement with the European Union-International Monetary Fund-European Central Bank "troika" managing the $90 billion bailout of country's economy to sell off state-owned assets.
The Bord Gais distribution and transmission systems, however, will remain in public hands as a way to protect Ireland's energy supply security, Howlin said.
He added negotiations with the troika have resulted in an agreement allowing some sale proceeds to go to job creation, the Irish business new Web site BreakingNews.ie reported.
"When we came into government, the position was that no money from the disposal of assets could be spent on anything except reducing our debts," he said. "This is a substantial change to the troika's previous position and will help promote recovery in the economy."
The breakup of Bord Gais is meant to increase competition in the energy market and bring down prices for consumers, he added.
Also to be privatized over the next two years are "non-strategic" power generation capacity held by the state-owned ESB electric utility and the government's remaining 25 percent interest in Aer Lingus, but only if its share price rises.
Opposition party critics assailed the moves as a "fire sale" of precious public property meant to benefit the political standing of the ruling Fine Gael-Labor Party coalition government.
Fianna Fail party leader Micheal Martin accused Enda Kenny, Ireland's taoiseach, of "misleading" people about the asset sale, while Sinn Fein's Gerry Adams blasted it as short-term thinking, Irish broadcaster RTE reported.
A warning on the sale was issued by the business group IBEC, which told The Irish Times the government should instead continue talks with the troika to "maximize" the percentage of the sale proceeds that can be reinvested in job creation.
"There will be no shortage of interest in investment opportunities in Irish assets," said IBEC Director General Danny McCoy. "The government must ensure that valuable assets are not sold too cheaply to raise cash quickly."
But Kenny insisted that's not the case.
"The objective and the target of the government is to have a limit here of reaching ($4 billion) of disposal of state assets at the appropriate time, at the best opportune price," he said.
Dublin is still deciding which of ESB's five hydropower and seven thermal power stations will be sold. The decisions will be revealed in a report to be delivered next month.
BreakingNews.ie reported the utility is negotiating with the government to determine which of the plants are "non-strategic."
ESB's biggest generators are Poolbeg in Dublin, Moneypoint in County Clare and Aghada in County Cork, the Web site said.