Updated: Government to start dockyard privatisation process

The government is to start a process for the privatisation of Malta Shipyards, Prime Minister Lawrence Gonzi announced today.

He made the announcement at a press conference.

Dr Gonzi called for national consensus on the issue. He said that between four and five companies expressed interest in buying into Malta Shipyards every year, the most recent being in April. Most were from North Europe but there had also been interest from companies in Russia, China, Japan and America.

He said the government would issue an international call for expressions of interest but would keep an open mind over whether it should be all or parts of the shipyard which would be sold. Talks would be held with the EU and the GWU.

There was no doubt, however, that the workforce would need to be reduced. Talks would be held between the Finance Ministry and the GWU so that a reduction of the workforce could make the sale of the shipyard more attractive. New early retirement schemes were a possibility.

Communications Minister Austin Gatt said he believed this was the best time to launch the privatisation process, given market conditions, and he believed the country as a whole would back the decision.

The process will be administered by the Privatisation Unit.

The Prime Minister’s announcement is the latest twist in the long and tortuous history of the shipyards in Malta. Originally conceived as a military ship repair yard, the shipyards in Malta turned commercial following a decision taken by the British colonial government in 1959. The shipyard was transferred from the admiralty to the management of Baileys (Malta) Ltd.

Amid losses and industrial unrest the dockyard in 1963 was entrusted to a Council of Administration formed of the British and Maltese government. Swan Hunter managed the shipyard without success for five years and in 1968 the shipyard was nationalised.

In 1975 the management of what was now known as Malta Drydocks was transferred to a management council elected directly by the workers.

Profitability was rare however. As problems mounted the government again assumed direct management of the shipyard in 1997 and in 2003 Malta Drydocks and Malta Shipbuilding were dissolved and replaced by a new company, Malta Shipyards, with its workforce reduced to 1,700 from 2,600. The excess workers were transferred to government departments or local councils.

Since 2002 the government has invested €825 million (Lm354m) in the dockyard.

A total of €700 million (Lm300m) in debts accumulated over the years were also written-off with the reorganisation and €124.4 million (Lm53m) were provided to the company in operating aid, training grants and capital subsidies.

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