News of the imminent demise of Opera Northern Ireland as we know it has been received with a certain amount of shock, but little surprise. ONI had long been perceived to teeter on the edge of financial ruin. The box office for the company's spring season of Hansel And Gretel was disastrous, an ironic blow given that the production was among the best of recent years. The subsequent loss of artistic director Stephen Barlow in a dispute over artistic autonomy diminished confidence further. Understandably, the independent opera review group set up by the Arts Council of Northern Ireland in March was widely felt to be a harbinger of worse news.

The report (which can be obtained from ACNI) recommends that ONI's annual funding of Stg£410,000 be terminated at the end of this month. The planned production of The Magic Flute will go ahead (it opens on Saturday 19th) but thereafter the company will no longer function as a provider of full-scale opera. In the course of their work, the members of the review group clearly met few individuals prepared to speak up strongly in support of ONI, which, for some years, has been widely perceived to have some sort of protected status as a client of ACNI. Paradoxically, for a company that had so little of the weight of public opinion on its side and appears to have stirred up no great cherishing warmth from the community it served, its education and outreach work is singled out for praise in the report and is recommended for preservation.

As things stand, ACNI has accepted the recommendation to wind down ONI and is engaged in a consultative process with representatives of ONI and Castleward Opera (the would-be Glyndebourne of the North) in setting out the new direction to be taken. The report's yet-to-be adopted recommendations in this regard are truly ground-breaking - an interim period served most likely by UK companies, Opera North or Welsh National Opera, before the establishment of an all-Ireland opera company. Who could have predicted that the strongest thrust in this direction would come out of Belfast? And that it would come at a time when the cross-Border political situation would so clearly favour such a novel co-operative enterprise?

It's an aspiration that has been in the air for many a year, and there's no gainsaying the fact that for an island with a population of five million, it has logic on its side. The response of some of the key players in Dublin is worth recording. Opera Ireland's David Collopy has welcomed the proposal as "a major step forward in the provision of opera in Ireland both North and South". Opera Ireland, he says, "will be pleased to engage in any discussions which help bring about the creation of such an entity". The Arts Council's director, Patricia Quinn, said "I'm very sorry to see the passing of ONI. I remember some of its productions vividly. On the other hand, as a policy maker working in the arts, where there always have been such strong cross-Border links, I welcome this development on three grounds. Firstly, in relation to the formation of a new company, secondly in relation to the consolidation of OTC's Northern touring, and thirdly, in the retention of the educational skills of ONI, an aspect of their work we would like to explore and develop."

The road may be inviting, but it's strewn with pitfalls. Opera Ireland currently employs a professional chorus; ONI has been using amateurs. Providing a professional chorus in Belfast will be an expensive business. Opera Ireland uses the RTECO, ONI the Ulster Orchestra. If the company is to be successful, its production runs will have to lengthen; performances in Cork and Derry are foreseeable. Will RTE tolerate the further exclusion of concert work from the musical diet of the RTECO? Or will the desirable but costly nettle of establishing a contract orchestra specifically for the periods of the opera runs finally be grasped? And how will the poor, unfortunate Ulster Orchestra be recompensed for any loss of work in even the interim period?

Then there's the matter of designing productions to work effectively on the radically different stages of the Grand Opera House in Belfast and the Gaiety Theatre in Dublin. If a significantly expanding opera company is in the offing, shouldn't the Gaiety Theatre be taken into public ownership for short-term security, and shouldn't the longer-term project of an opera house (in the docklands or wherever) be pushed back up the political agenda?

Added to all of this there's the fact that either or both of the arts councils may have difficulty keeping their nerve or preserving their integrity in such virgin territory. The Dublin Arts Council has long played a game of under-funding music and opera on the basis of the poor mouth and RTE's generosity in funding two orchestras. Scotland and Wales, where the BBC is equally generous, now make very interesting parallel cases. Both have long-established national opera companies with very busy touring itineraries. The Arts Council has clearly some way to go to reach the funding level of Scotland (where the National Lottery has brought funding to over Stg£50m). But, with more than £40m between them, the councils in Dublin and Belfast are currently well enough endowed to take seriously the establishment of a full-time opera company for the whole of Ireland.