Malta to privatize shipyards

Malta is to start the process to privatize the island nation’s shipyards, amid plans for a reduction in the workforce, Maltese Prime Minister Lawrence Gonzi announced yesterday.

Several companies, especially from northern Europe, had expressed interest in buying into the state-controlled Malta Shipyards and the government will be issuing an international call for expressions of interest, but would keep an open mind over whether all, or parts of the shipyards, would be sold.

Talks would be held between the government and the island’s main trade union to negotiate the job cuts including incentives such as early retirement for some dockworkers, Gonzi explained. This announcement is the latest twist in the long and tortuous history of the shipyards in Malta.

Originally conceived as a military naval repair yard, the shipyards turned commercial following a decision taken by the British colonial government in 1959. In 1975 the management of what was then known as Malta Drydocks, was transferred to a management council elected directly by the workers, but profitability was rare. Since 2002 the government has invested 825 million Euros ($1.27 billion) in the shipyards.

A total of 700 million Euros in debt accumulated over the years were also written-off with the reorganization, while 124.4 million Euros were provided to the company in operating aid, training grants and capital subsidies.

Direct state subsidies to the shipyards are due to stop at the end of this year, as agreed in Malta’s EU accession talks.