The budget will not include a liability for the probable €200m cost of recapitalising the VHI, putting a question mark over the government's proposed schedule to sell the private insurer of more than one million health customers, the Sunday Tribune has learned.

The news threatens to re-ignite the ire of the European Commission, which is suing the state for failing to deal with the private health market here fairly, and will excite complaints from Aviva and Quinn Health. In May, health minister Mary Harney promised to recapitalise the VHI by the end of next year to bolster the insurer's buffer reserves which in turn would lead to a sale of the insurer. Now the schedule is in serious doubt because the appointment of market advisers on key industry issues is still at an early stage and will not be completed in time for the preparation of the 2011 budget this December.

The Sunday Tribune has learned that the VHI's pension deficit, which was in the red by almost €39m at the end of last year, will not be covered by any government capitalisation injection into the insurer.

A Department of Finance spokesman said it would not comment on any budgetary matters at this stage.

A spokeswoman for Aviva said the insurer would be "deeply concerned" about the government's commitment to recapitalise the VHI by 1 January 2012 if there was no provision for such funding within the budgetary process. "There is a real danger the 2012 deadline will also be breached," she said.