The Exchequer has lost out by about €18 million due to yesterday's settlement with insurers of the former United Meat Packers plant in Ballaghaderreen, Co Roscommon. The cost could rise.

Frozen intervention beef valued by the EU at the time at €25 million was destroyed in a fire at the plant in January 1992. The cause of the fire has never been established, though it is believed to have been started by a naked flame.

Yesterday the Minister for Agriculture, Mr Walsh, said a €22 million settlement had been agreed with the consortium of insurance companies and brokers that was being sued by the State on the issue. The insurance companies had been denying they were insuring the risk at the time.

The dispute over liability was one of the longest-running litigations in the agricultural sector. It involved 16 independent High Court actions and 70 insurers and brokers here and abroad.

Mr Walsh said the settlement was agreed on legal advice from solicitors, counsel and the Attorney General and following consideration of the matter by the Cabinet. He was pleased that a "very satisfactory" outcome had been reached to a long-running and complex legal dispute.

The Department paid €25 million to the EU in 1993 to compensate it for the loss of the intervention beef. It took out a loan to make the payment and €12 million has since been paid in interest on the loan. The loan will now be settled using the €22 million received as part of the settlement. The €3 million shortfall will be funded by the Exchequer. The Department also has to pay its own legal costs from the affair - €3 million - which added to the €12 million interest payment and the €3 million shortfall brings the total cost to the Exchequer to €18 million. The insurers will bear their costs.

A spokesman for the Department said a loan was taken out to settle the debt with the EU because it was not clear at the time who would have to pay the debt.

The frozen beef destroyed in the fire was valued at €25 million in 1992. Two years later, however, the EU increased its valuation of the meat destroyed by €11 million. The State has not accepted this valuation and negotiations between the two sides on the matter are now likely to become "live" again following the settlement, according to the spokesman. Any new figure agreed would result in an extra liability for the State. "If we lose we've got to pay," the spokesman said.

The broker through whom the insurance on the beef was placed was Mr Mike Murphy, of the Mike Murphy Insurance Group, Trinity Street, Dublin. He in turn placed the insurance with non-Irish insurers through DB Agencies SA of Paris and Monaco.

Yesterday, Mr Murphy said his company did not have to contribute to the €22 million settlement, which is being met by the insurers, but that the case had involved his company "every day for the past 10 years".