EU turns down shipyards plan

EU Competition Commissioner Neelie Kroes said that the strategy adopted by the Maltese government to privatise loss-making Malta Shipyards was not acceptable under EU law. This decision leaves the government with no option but to go back to the drawing board and submit a new plan by the end of the year. Kroes also shot down the agreement reached between government and the General Workers’ Union, saying that “this might help but was not enough”.

She was speaking at the airport after a lightning visit to Malta. The EU commissioner also ruled out the government?s proposal to write off ?100 million in losses before the shipyard is privatised. “I disagree in principle as state aid is forbidden but I will be expecting a new business plan,” she added.

Finance Minister Tonio Fenech had hoped that the Commission would give Malta some breathing space as long as negotiations were at a reasonably advanced stage.

This could be mean that if the privatisation plan is not concluded by end of year, the government would have to declare the company bankrupt and make the remaining workforce redundant.

Mr Fenech said government?s objective was to pull out of the shipyards as it sees itself as a regulator not an operator. The Maltese government has so far pumped 800 million Euros into the shipyard. It has also allocated 56 million Euros for early retirement schemes to reduce the shipyard staff from the current 1,600 in an effort to make the enterprise more attractive to potential investors.