The Department of Finance has told Aer Rianta to transfer 20 per cent of its 2002 after-tax profits, about € 7 million, to the Government as an annual dividend.

The State airports company is under serious financial pressure, but during talks in recent weeks the Department of Finance insisted the company pay a reasonable dividend. Aer Rianta did not pay a dividend last year.

The Minister for Finance, Mr McCreevy, responding to a report last year from the so-called "three wise men", has insisted that all State companies must contribute a "full commercial dividend" for 2002.

The Department of Finance originally requested more than 20 per cent and in future it will require Aer Rianta to pay a dividend of 25 per cent of after-tax profits.

An Aer Rianta spokesman refused to comment on the dividend issue, simply saying that such matters were for the board of the company to consider.

A Department of Finance spokesman said last year's report, published by the Independent Estimates Review Committee or the "three wise men", set out the framework for dividend policy.

It is understood the Department of Finance is particularly anxious to draw at least 20 per cent of profits from all State companies because of the tight budgetary position it finds itself in for 2003.

Aer Rianta is facing major financial problems. The Commission for Airport Regulation has capped the amount of capital expenditure the company is allowed to undertake. The Commission has also curbed the charges Aer Rianta is allowed to levy at its three airports.

Added to that the Minister for Transport Mr Brennan remains a firm supporter of a new private terminal at Dublin Airport and intends to break up Aer Rianta companies into three independent units.

A recent report by the ratings agency Standard & Poor's predicted that Aer Rianta's financial position would "continue to deteriorate in the next three years".

The annual report and accounts of Aer Rianta are expected to be published within weeks and profits are expected to be broadly in line with 2001, when the company posted after- tax profits of about 35 million (although this figure was drastically reduced when an exceptional restructuring charge of €23.2 million was factored in).