UK to propose part-sale of Royal Mail this week-union

LONDON Feb 23 (Reuters) - The British government is expected to introduce controversial legislation this week to part-privatise Royal Mail, the state-owned postal service, a labour union said on Monday.

"We've been briefed by a senior government source that a bill is going to the (House of) Lords on Thursday," said a spokeswoman for the Communications Workers' Union (CWU), which represents postal workers and opposes the government's proposal to sell part of Royal Mail.

A spokeswoman for the business ministry could not confirm it. "The date hasn't been determined," she said.

Business minister Peter Mandelson, who is a member of the House of Lords, said last December that the state-owned postal operator Royal Mail should be part-privatised and he welcomed an approach by Dutch logistics company TNT TNT.AS to take a minority stake in the company.

A Royal Mail spokesman could not confirm when the legislation would be introduced.

The move to part-privatise Royal Mail is fiercely opposed by many members of Prime Minister Gordon Brown's own Labour Party.

Some 139 legislators -- more than a fifth of all members of the Commons, the lower house of parliament -- have signed a motion rejecting the plan.

Many see post offices as providing a key public service and want to safeguard Royal Mail's pledge to deliver mail to everyone, even in remote rural areas.

Opponents questioned why the government was introducing the measure at a time when Brown is battling recession and a financial crisis and Labour lags the opposition Conservatives in the polls.

"This is going to get a rough ride in the Commons and given our weakened political position it is the last thing we need. He (Mandelson) does risk splitting the party right down the middle," Labour legislator John Grogan, a leading opponent of the legislation, told Reuters.

Mandelson, presenting the results of an independent review, said in December that the operations arm of the Royal Mail -- though not its Post Office retail outlets -- needed to be partly privatised in order to remain commercially viable.

A CWU spokeswoman voiced concern about the proposal's impact on prices, on Royal Mail's obligation to provide a postal service to everyone and the impact on jobs.

Labour has a working majority of just 63 in the lower house of parliament so might need support from the Conservatives to get the legislation through.

Royal Mail said in January it was on track to almost double its full-year profit after making an operating profit of 255 million pounds ($371 million) for the nine months to Christmas.

However, Royal Mail's market share has been hit by greater competition from other companies delivering post and the boom in e-mail. Another problem is its pension scheme which has a 4 billion-pound deficit. ($1=.6869 pounds) (Editing by Greg Mahlich)