The consortium behind the €400 billion project have reportedly told the government the public private partnership scheme will need a further cash injection - if it is to go ahead.
The Léargas consortium allegedly insisted the prison plans would need radically scaled back, if the project were to continue within the original budget.
The government was reportedly told the current agreement "is simply not feasible".
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The Irish recession is said to have hindered the funding for the building, with Léargas telling the Department of Justice over 25 banks have already reverted on credit agreements.
The remaining banks have demanded a higher rate for loans associated with the scheme, according to reports.
Final contracts are yet to be signed between the consortium and the state a year after the team - including Bernard McNamara, Barclays Private Equity and GSL - was appointed.
As part of the provisional agreement, Léargas will design, finance and build the prison and then receive fixed payments from the government through an equity release scheme, stretching over a 25-year period.
The consortium, due to the increased difficulty in attaining credit, has suggested higher payments, over a longer period.
The state is yet to respond to the developer's request, however, according to reports, the scaling back of the scheme appears unlikely.
(PR/JM)
