Wednesday, 20th August 2008
Brussels queries the government's approach on shipyards
The European Commission is questioning the government's plans to write off Malta Shipyards' losses through public funds so that the new operator can start off with a clean slate when the 'yards are privatised next year.
"Strictly speaking, the striking-off of the company's losses constitutes direct state aid and we are still not sure whether this is legal and according to EU Competition rules," Commission sources have told The Times.
European Competition Commissioner Neelie Kroes will next month hold talks with the government aimed at wrapping up discussions between Brussels and the government over the privatisation.
"The Maltese government has submitted to us all its plans and we have already had a very fruitful series of discussions. However, we need more clarifications and that is why Commissioner Kroes will be coming over. She wants to clear the air and try to reach some kind of agreement on the way forward of this privatisation process," the sources said.
The Times has learnt that Ms Kroes has scheduled two days of meetings in Malta between September 10 and 11 which will focus entirely on the shipyards' privatisation process. The main bilateral meetings will be held with Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech.
Sources in Brussels said that although the Commission is looking positively at the government's decision to privatise the state-owned shipyards, the Commission has concerns over how the government plans to write off the €100 million of losses expected to be registered by the company by the end of this year.
According to a pre-accession agreement between the EU and Malta, further state aid to the ailing company is illegal post-2008.
However, the government is insisting on a one-time concession by the EU in order to be able to fork out these losses through public funds thus providing the new operator with a clean balance sheet.
The EU sources said that one of the alternatives being suggested by Brussels is that the government declares Malta Shipyards bankrupt and starts a process of liquidation.
"This will mean that the eventual new owners/managers of the shipyards would need to register a new company to manage the facility and still start afresh. This will also mean that the government would not need to fork out any money and give out more subsidies. However, the government is still resisting this idea," the EU sources said while explaining that liquidation is the natural and normal way of wrapping up commercial companies when these are making heavy losses.
Contacted by The Times, Finance Minister Tonio Fenech confirmed the Commission had made the suggestion but said that the government does not agree that it should follow this path.
"At this stage I prefer not to comment further as these are very sensitive discussions," Mr Fenech said citing the upcoming discussions with Commissioner Kroes.
"Although it is true that the government has the option of liquidating the company we are choosing to go along a different path particularly in the interest of the shipyard's current workforce. I hope that the EU also understands our position," he said.
According to company law, if Malta Shipyards Ltd is declared bankrupt by its shareholder (the government) and a liquidation process is started, the government will not need to write off any of the company's losses, thus saving €100 million. At the same time, however, the workers would not be entitled to any retirement schemes as they would be made redundant through normal channels.
Meanwhile, no direct talks took place yesterday between the government and the General Workers Union over the privatisation of the shipyards, a spokesman of the Finance Ministry told The Times.
However, the mediation efforts by a so far unnamed mediator, who stepped in on Monday, continued.
The government and the GWU are at loggerheads over the privatisation process with the former wanting to downsize the company to a workforce of 700 employees from the current 1,600 by offering early retirement schemes. The GWU is insisting on guaranteed employment for those who do not opt for early retirement, something the government has ruled out.
Instead the government has offered to "fine tune" the retirement packages, something it says may be achieved in the talks.
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Comments
Related I wonder?
They surely have the same blind faith in their leader which blinds them to any form of reason or dialogue....
The "Dr.Gonzi will do it no matter syndrome is very similar to the Mintoffjani's blind allegiance to Mintoff in his days....
Are they Mintoffjani in disguise I wonder.....
"Wally wanted to avail himself of the generous severance packages being offered by the company during a period of downsizing. Does this ring a bell, Mr. Vella Zarb?"
I have no Idea what you are on about; I have been comfortably retired for close to five years now, enjoying my sailing, thank you very much!
I am now waiting to see if my reply to John Saliba will ever make it to this virtual page.
There is no doubt (I hope?) that the PCP was, if anything, more British than Britain.
Dr Ganado was uneasy on several counts. His leader Borg Olivier was moving towards a break with Britain and, in Ganado's eyes, was being too passive with Mintoff. Borg Olivier talked about a "Quasi-Dominion Status"; Mintoff wanted a total break, arguing that since they didn't want us equal to them (the rejection of the integration referendum) it would be better for Malta to strike out on our own. Then there was the fear (shared by Ganado) that Mintoff would escalate his challenge to the church establishment, with the attendant (perceived) risk of rising Communism in Malta. The Labour government of the fifties was even openly criticised in churches for buying sugar from the Soviet Union - as if that made any difference to the taste!
The PDN, the 'umbrella' and the dnub il-mejjet were an effort to prevent this happenning. Successful in 1962, it would have been a non-starter had there been an election in 1958.
Lost again are we?
But let's forget the past; the issue is: "Is Joseph going to stay on the fence or is he going to support the Maltese Government". Mind you, we do not need his support. We attained independence with Mintoff objecting to the constitution, we joined the EU with Sant fighting membership tooth and nail. We will persevere and will privatize the shipyards with or without (the future Hon.) Dr. Joseph Muscat's backing..
Your knowledge of this particular subject is legendary...
your insight and wisdom, and the way you analysed this article brings shame to us all...
Prosit....
Ps did you mean balcony?
"the shipyards have been a problem ever since Britain passed the problem to us. So much so that Mintoff ran away from the problem and resigned in 1958." - unquote.
My dear chap, have a few whiskies to drum your sorrows and keep them to yourself.
he will do Better if he comes down from the GALERIJJA and be a practical leader at leat for once .
"the shipyards have been a problem ever since Britain passed the problem to us. So much so that Mintoff ran away from the problem and resigned in 1958."
Are you proposing to rewrite history, sir?
When Mintoff resigned in 1958, it was not a case of running away. Far from it! Since Borg Olivier, quite rightly, refused to form an alternative government under the circumstances that were then extant, governor Laycock should have called for a general election. This would have demonstrated to Britain the backing that the PN and the MLP had between them - both wanted severance from Britain - compared to the pro-British faction composed largely of Mabel Strickland's PCP and Herbert Ganado's (church-backed) party. Fully aware of the inevitable outcome, Laycock promptly suspended the constitution and we were placed under colonial rule until 1962.
I suggest that instead of reading comic books you get yourself a copy of Professor Joe Pirotta's excellent book "Fortress Colony - the final years 1945-1964". Just in case you do not know, Prof Pirotta is not an MLP delegate, apologist, elf, or whatever epithet is commonly bandied about in these comments.
Talk about the pot calling the kettle black?
il qah"" milli jkollha ttik etc etc....
He then reminds Mr.Daley that the issue is the shipyards...but only after a ranting tirade, in which he brings up subjects like the MLP C.O., hunters(lets all forget the written promises a?), and the MLP general secretary....
Eh..In his own words of wisdom...wasn't the issue the shipyards?
As for the holy Jfarrugia...he loves calling Joseph Joe doesn't he?
I wonder if his beloved Gonzi is really Wenz,if the New Edward FA, is still Eddie, his excellency the Archbishop Pawlu...etc...
One can never tell..he does think in strange strange ways....
As for the issue at hand, to be honest, I am foursquare behind the Government on this issue, however, it is rather worrying when one notes that the people responsible for negotiating our EU packet, have been proven repeatedely, that they do not really know what they did negotiate on our behalf.
Spring Hunting, Departure tax, this issue etc. Either an incompetent or misleading bunch aren't they?
I know 16 year olds(get it?) who already have a better grasp of the EU than our enlightened elites....
On the other hand at this stage I agree with the gov not to declare the shipyards bankrupt. But if we go for this option, I think the gov can do a contingency plan to have these people back into workforce immediatly. Maybe a small fraction of the 100m can be used for workforce training as for them to be able to get back in the workforce following liquidation. between sept and dec) One can also create a retirment fund at ETC for workers that were redundant (and giving these to shipyards staff), thus not giving the money through shipyards and avoiding 'official' financial aid and at the same time having into consideration the workers and their families. Obviosly these ideas need more thought...
I thought you were in favour of the Drydocks workers! If the governmetn won't do this then all the 1600 workers at MDC will loose their employment. Who will buy a comapny with a financial loss of 100 million Euros to pay?
Is this what you really want Mr Daley? Mela issa nsejtom il-haddiema msieken????
btw.... are you a maltese citizen after all? and do you have a vote? I wonder.....
Or are you an elf? ;) Your sarcastic tone is so pathetic.... Malta changed!
Who cares what the EU says.
Who cares what we signed for.
We are PN.
We have done this before at the Dry Docks to be viable, but didn’t work.
We are arrogant.
We are non law abiding and therefore we do as we wish, as we have always done.
Sod the democratic processes and regulations.
Judge us by what we do and not what we say, was the saying pre election time!
Lovely - - Lovely!
Taste the difference!
This nation must unite in ensuring that the shipyards workers are shown dignity. Minister Fenech expressed such sentiments by offering retirement schemes instead of retrenchment letters. My question remains. Does Dr. Joseph Muscat support this gesture? Is he prepared to advise the GWU to do the same? Where does he stand? He must accept the responsibility that he carries as leader of Malta's alternative government. He must either support the government on this issue or come with alternative concrete proposals. Does this make sense,Mr. Sultana?
And why should Joe (as you conveniently call him) get off the fence ??
Was Joe the one who negiotiated the EU accession treaty with these conditions ?
Was Joe the one that a few years back was convinced that with 1600 workers the shipyards would be profitable ? (a smokescreen because that was the maximum amount of workers that could keep the yards within the man-hours limit for subsidies, so he kept the others paid by the govt but on other wage accounts)
Was Joe the one that knew of the December 2008 deadline but did not take any action before for the fear of losing the elections ?
NO... Joe had nothing to do with these.... so why should he get off the fence ?? If anything, one person who SHOULD get off the fence is RICHIE .. the one we pay to be our permanent representative in Brussels, who was chief negotiator for the accesion treaty, who spent a lot of money on a building which is still empty ... and yet spends most of the time pulling the strings and directing the orchestra of his Malta based "Much-obliged-yes-man"
May I ask Joseph if he has a problem with this line of thinking? Does he support the government's stand? Does he believe that the government is acting in the best interest of the workers and the nation? Come on speak up, get off the fence.