An Post is not like any other semi-state organisation, according to the Minister for Public Enterprise, Ms O'Rourke, who told the Dail she opposed privatisation of "any part" of the postal service.

She also opposed the closure of a number of rural post offices. Ms O'Rourke acknowledged that a Price Waterhouse report, completed some years ago, decided that a certain number should close. "An Post still has hankerings in that regard, but the Government is not in favour of doing so."

However she pointed out that "commercially An Post lives on the edge. It does not make big money - it just breaks even. Something will have to be done to get it into the slipstream of more technology and better working practices. That is the road which is now being embarked on."

The Minister told Mr Ivan Yates, Fine Gael's public enterprise spokesman, who raised the issue, that she opposed giving equity to a strategic partner. "A partner could bring expertise or markets. Once equity is given, influence is brought to bear on the company far beyond the worth of the money provided."

An Post, she said, "is very intimate and widespread and it affects everybody in the country who receives mail or uses the services of the post office."

The Minister pointed out that Britain had "baulked" at privatisation, but noted British newspaper reports that 800 rural post offices in Britain would close.

Ms O'Rourke said the Government has agreed that the company needed to "engage in a radical transformation process" which would involve a strategic alliance with one of the major European operators and agreement to early liberalisation of the postal market.

Negotiations were also given Cabinet approval for an employee share ownership scheme which would be part of the "transformation".

Reiterating the Government's commitment to the retention of the post office network, Ms O'Rourke said she had asked An Post to allocate £5 million from the sale of Postgem/Ireland on Line specifically for the upgrading of the rural sub-post office network.

When the Government received proposals from An Post about options for investment in the sub-post office network, it would "finalise its consideration of the provision of some matching funding".

Mr Yates asked what comfort the Minister could give postal workers about job security, given that a "radical transformation process" would be interpreted by the 8,500 workforce as "wholesale job losses, be they voluntary or otherwise".

Ms O'Rourke said that the talks process between management and unions was only beginning "so how can I lay out anything about numbers? I hope I will not have to do that. They are only beginning that process and radical transformation is needed. It is a case of whether An Post can survive and I believe it can survive."