EU delegation in talks on shipyards' future

A delegation from the Directorate General for Competition of the European Commission yesterday held talks with the government over the future of Malta Shipyards.

A Commission source in Brussels said that the delegation had discussions with the Investments Ministry and with Malta Shipyards representatives.

The main aim of the discussions was to review the current seven-year restructuring plan which has to be completed by the end of next year, when the shipyards will not be allowed any more state subsidies.

"The talks were productive although we cannot state at this stage whether the shipyards will be meeting the plan's targets.

"We made it clear during the talks that the Commission will not allow more state aid to be given to the shipyards from January 1, 2009 as stipulated by the plan," the source said.

Contacted by The Times, Malta Shipyards chairman John Cassar White said he did not take part in the discussions as he is currently abroad. Investments Minister Austin Gatt was not available for comment yesterday.

According to a deal struck during Malta's EU accession negotiations, EU member states accepted that Malta should be allowed to continue giving state aid to its shipyards for a seven-year period ending at the end of next year to make it possible for the 'yards to become viable.

An analysis of the projected amount of subsidies laid down in the official Shipyards Restructuring Programme approved by the shipyards task force in December 2001, and the actual subsidies given so far, showed that following a good start, the programme is derailing. The analysis was based on data supplied to The Times by the Ministry for Investment last February.

Figures show that until the end of 2004, the subsidies given were lower than those projected in the restructuring plan. But in 2005 and last year, subsidies amounted to Lm0.6 and Lm1 million more than anticipated.

According to EU rules, at the end of the restructuring plan, state aid can only be granted to Malta Shipyards to spur the company to undertake additional activities compared to those normally undertaken in the 'yards' day-to-day business.

The types of aid could include regional investment aid, training aid, research and development aid and environmental protection aid. Such aid would support specific projects and can only cover part of the related expense.

The same rules, however, specify that "companies in difficulty cannot benefit from this kind of aid".

This means that if the shipyards do not first return to a healthy bottom line, the receipt of such aid will be not be possible.