The Minister for Public Enterprise, Ms O'Rourke, has told CI╔ not to abandon elements of its rail freight business.

Division management at Iarnr≤d ╔ireann has proposed stopping unprofitable freight services, but the Taoiseach, Mr Ahern, told the Dβil yesterday that Ms O'Rourke did not support the plan. She had informed the CI╔ board of that, he added.

A day after the Government allocated more than €400 million to public transport in the Budget, the Labour leader, Mr Ruair∅ Quinn, claimed CI╔'s rail company did not have enough money to continue the freight business.

However, Mr Ahern said the plan was mooted only because the rail company was leaving its site at Spencer Dock in central Dublin.

Freight managers said in the plan that the transportation of palletised cement, palletised fertiliser and pulpwood was "totally unviable".

They said the freight division was expected to lose £4 million (€5.1 million) on revenues of £44.4 million this year.

After a contribution to central and group costs, the deficit is expected to grow to £6.7 million.

Mr Ahern said: "The Minister has informed the company. . . that she does not support its pulling out of rail freight or substantially reducing its contribution in this area as, among other things, it would add more heavy traffic to the streets."

He added: "The site used by Iarnr≤d ╔ireann at the docks is to be developed in February and it will have to relocate. That is the reason that this has arisen."

The company was not short of land to develop for such purposes, Mr Quinn said.

Mr Ahern responded: "That is the problem. It does have a lot of land. I often wonder why it does not sell some of it but that is a matter for the board of the company.

"This issue arises because it wants to use the site in Spencer Dock for other purposes."

Mr Quinn said only 10 per cent of freight was transported by rail. If CI╔ withdrew freight, it would put further pressure on what he described as the "worst road infrastructure in Europe".