The Department of Finance estimated in February that the cost of the Ecosphere project was estimated at "well in excess of £170 million". According to a note sent to Mr McCreevy by a senior official in the Department, the construction sector's high inflation rate meant that the cost had grown from the £130 million estimate given when the idea was first mooted by Mr Desmond in 1996.

The official wrote that the State was obliged to fund the project's entire cost through a combination of tax foregone and direct investment, leasing costs and buy back obligations. "For the private sector consortium, the investment would represent a guaranteed return with no risk involved," the official wrote.

The proposal from Mr Desmond envisaged an investment of £130 million by a private consortium, who would then claim capital allowance on the full investment. At a tax rate of 44 per cent, this would make for taxes forgone of £57.2 million.

The consortium would lease the building to an operating company owned by the State for 14 years, with the company paying £1.3 million per annum in rent.

The Exchequer and the consortium would between them set up a £63 million fund to be placed on deposit for 14 years at 5.25 per cent, tax free. Mr Desmond indicated he would underwrite the private sector's half of the fund. Over 14 years the fund would accumulate to £130 million and it would then be used by the State to buy out the investors at the original cost price of £130 million. The £31.5 million contributed to the fund by the investors would also qualify for tax breaks.