Updated: Government may have to absorb €100m dockyard debt

(Adds comments by Tonio Fenech)

The government will in the coming weeks be discussing the dockyard privatisation plans with the European Commission and will be making a case for the commission to accept a plan which would probably see the government absorbing a debt of €100 million accumulated by Malta Shipyards since 2003, the Prime Minister told Parliament this evening.

He said in a statement to the House that in terms of its plans, the government intended selling the assets related to docks 4,5, and 6, machinery and tools, the yacht repair facilities, including those at Manoel island, part of the the facilities at the Marsa yard and the order book. The land and the docks would be rented. Boiler Wharf would be retained as a cruise liner berth, as already explained.

Dr Gonzi said the Privatisation Unit was preparing the necessary documents for an international call for interest to be issued as soon as possible and it was hoped that the privatisation would be concluded by the end of the year.

It was expected that the main criteria for the choice of the best bidder would be: the company which offered to employ the highest number of workers, the company with the best reputation and experience, the company which offered the best commitment for investment, the company which made the best offer and the company which had the best business plan for the future of the shipyard.

In his long statement, Dr Gonzi insisted that the government saw the current international economic scenario as being the best for the dockyard to be sold. The government would have decided to sell the yard whether or not it was making a profit, since it believed that the government’s role should be that of a regulator, not operator, he said.

However, shipping business was growing and so was demand for ship repair facilities. Had the government not believed in a future for the shipyard, it would have closed it down and used the land for other purposes.

Furthermore, in terms of the EU accession agreement, the government could not continue to subsidise the shipyard beyond the end of this year. The people were currently shouldering a burden of €950 million in subsidies to the dockyard, 30 percent of the national debt.

Dr Gonzi said many other models had been tried to make the shipyard viable, but it was clear now that there was no option to privatisation.

Dr Gonzi said the basic parameters which needed to be achieved from the privatisation exercise were that the best solution had to be achieved for the workers; that the operations of the shipyard would be viable immediately and would be based on a capital investment programme; that subsidies ceased immediately the new investors took over and that the country achieved the best return from the sale of the assets, the order book and the rents for the land and the docks.

In his speech the Prime Minister said consultation on the situation at the shipyard had been ongoing in the past few years. He listed the number of meetings held with the GWU and also presentations made to the opposition.

Dr Gonzi augured that all parties would work together on this delicate but inevitable process, so that it could be a success.

Replying to questions, Finance Minister Tonio Fenech said the talks with the GWU were detailed and included the details of the early retirement scheme which the government would be offering. The scheme, he said, would be offered to all the workers. It was clear that the GWU acknowledged that this process must not fail because the government could not continue to subside the shipyard after December 31. The number of workers which could be retained by the shipyard would be determined in the talks with the bidders.

He said the government was offering the total privatisation of the shipyard - while retaining title over the land and docks which would be rented. However it was not ruling out privatisation of the shipyard by activity - such as the yacht facility, on its own.

He said no talks have been held by the government with anyone so far.

Infrastructure Minister Austin Gatt and the Prime Minister asked the Opposition to declare whether or not it agreed with the privatisation of the shipyard. Dr Gonzi said the opposition should say whether it was against, in favour, or whether it would sit on the fence.

Opposition leader Charles Mangion said the opposition was not against privatisation in principle but it did not know the conditions of the prisatisation exercise yet.

We said in principle we not aginst in principle but cannot say in favour of conditions when not know them