The move means that the project may have to be scrapped if the negotiations collapse, as Indaver and Dong are the only significant players left in Irish incineration.

Indaver's project manager, Jackie Keaney, said the company was concentrating on developing its incinerators in Cork and Meath, despite reports last week that it had shelved its plans for the Irish incineration market.

"We have no plans to become involved in the Poolbeg project. To be honest, we're working flat out on our two projects and we wouldn't have the spare resources to take on a third, " she said.

However, Dublin city council said it remained confident the project would proceed.

"At the moment, negotiations with Dong are ongoing and progressing satisfactorily. There is no deadline for their completion at this stage, " said a spokeswoman.

She added that the council would seek another partner for the project if talks with Dong failed.

The current difficulties between the council and Dong are believed to be a result of Dong's takeover of Elsam, the council's original partner for the incinerator, in 2006.

Industry sources have said Dong is less interested in operating incinerators than Elsam and has sought to bring in American incineration specialist Covanta to operate the Poolbeg project.

It has also sought significant changes to its contract, which have been resisted by the council.

A spokeswoman for Dong said the company would not comment on the specifics of the project or the agreement between itself and the council while talks were ongoing.