CIE believes the cost overrun for a new signalling system will be less than the £24 million estimated by the French contractor.
Company sources say a forthcoming independent review of the situation is likely to put the additional cost to the taxpayer at between £10 and £17 million.
CIE provided incorrect or incomplete specifications to Sassit, the company contracted to install an electronic signalling system to replace the semaphore signals used on older inter-city lines for more than 100 years.
The new Mini-CTC system is to be installed on lines from Dublin to Galway, Sligo and Waterford, and the Mallow to Tralee line. A computerised signalling system is already operating on the Dublin to Cork and Dublin to Belfast lines. Sassit sought £16 million to do the job in 1996. But, following its takeover by another French company, Alsthom, the specifications were re-examined and found to be either incomplete or incorrect.
Alsthom notified CIE last autumn that the new price for the system would be at least £40 million. CIE has hired PricewaterhouseCoopers to carry out a full review of the contract.
"We don't believe that PricewaterhouseCoopers will indicate anything as high as £40 million," a company spokesman said. The spokesman declined to estimate the final bill, but company sources put the figure at between £25 and £33 million.
The spokesman said the company was concerned about the overrun. But it pointed to its record on upgrading services such as the Dublin to Belfast line, which were completed on time and within budget.
"We have considerably strengthened our project management resources and we are putting project management teams in place to deal with new investments," he said. "Adequate resources will be provided to ensure that full and complete specifications are provided to all contractors for future investment."