Gardai suspect the bomb intercepted by two Traffic Branch officers outside Letterkenny early yesterday morning was being transported to attack the start of the Orange Order's "Long March" in Derry.
Two men, both from Derry, are being questioned by detectives in Letterkenny Garda Station about the discovery of the 300 pounds of explosives in fertiliser bags and two barrels, and sundry bomb-making equipment.
The bomb is the first to have emerged from republican paramilitaries since the Omagh bombing atrocity of August 15th last year, when dissident republicans killed 29 people and injured 300 others in a huge blast-incendiary type bomb.
The haul was discovered after two unarmed Traffic Branch officers from Letterkenny became suspicious of a Ford Escort estate car which was travelling on the road to Derry between Manorcunningham and Newtowncunningham at about 1.30 a.m. It is understood there was no undercover Garda operation in place and the discovery of the bomb was due entirely to the alertness of the two Traffic Branch officers.
The two gardai followed the car and pulled it over. While one officer was questioning the driver, the man in the passenger seat jumped out of the car and ran off across fields. The gardai detained the driver and alerted armed Special Branch officers who were in the area. A second man was detained in fields near Newtowncunningham at lunchtime yesterday.
Donegal detectives were last night trying to ascertain to which republican group the intercepted bomb belonged. However, there are suspicions it might have been the work of the group known as the "Continuity" IRA which has some members in south Donegal and in Derry. It is the only republican group not to have declared a ceasefire.
The two men, who are being held under Section 30 of the Offences Against the State Act, are both in their 20s.
There were concerns last night that the partly-prepared bomb was being transported across the Border to Derry to coincide with the start of the Orange Order's "Long March" to Drumcree.
The incident also comes at a crucial time for the political negotiations in the North as they approach the June 30th devolution deadline set by the British Prime Minister. Senior Garda sources said they believed the bomb, which would have taken only a short time to prime fully, could have been designed to cause political instability in the North.
Garda Chief Supt Denis Fitzpatrick from Letterkenny said: "There is no doubt lives have been saved as a result of this. We have stopped people who were intending to kill or maim people or cause a lot of damage to property."
The bomb was hidden behind a plywood partition. The contents included three 50-kilo bags of fertiliser, one of which was opened, a food blender, a funnel, beer kegs, a sieve, a gas ring and a scanner. Two kilos of a black substance, which may be gunpowder, were also found.
The van is a blue Ford Escort which was recently resprayed. It was originally yellow and its registration number was JUI 5141.