Prime Minister Lawrence Gonzi said he is not prepared to privatise Malta Shipyards if investor proposals are not viable and the privatisation route is "just an illusion".

"We have decided to go down the privatisation route on the basis that the venture would not remain shaky and dubious. If no viable situation is found, the dockyards would have to close," he told The Times yesterday.

There was no future; no alternative and that was the bottom line, he said, knowing he would have to face a problem in the years ahead if the proposals were not serious and did not allow the dockyard to continue contributing to the economy.

Dr Gonzi said it "seemed" investors had expressed interest but he had not yet seen who they were. "I still need to see that but I am told there is interest," he said.

An international call for expressions of interest in the privatisation of Malta Shipyards closes today.

Dr Gonzi said he was treading carefully because the families of the dockyard workers were very worried and he did not want to panic them even more. They were aware of the scenario and "that is why we have the numbers we have applying for the early retirement schemes".

Over 650 shipyard workers are reported to have applied for early retirement - 250 in just two days - after European Competition Commissioner Neelie Kroes' said last week that the government's intention to write off about €100 million in debts before selling Malta Shipyards violated EU rules.

As to whether he considered the privatisation process an "illusion" at this stage, Dr Gonzi said that with the 1,600-strong dockyard workforce going down the way it was, meaning it would surely hit the ideal figure of 700, then the formula works. Then there is genuine potential for it to succeed. That (reducing the workforce) is the fundamental issue."

Referring to his talks with Ms Kroes, Dr Gonzi said she wanted to know whether the government was really committed to a genuine privatisation, which would be a success. "My answer is clearly yes," he said.

The problem of the accumulated losses still needed to be resolved but Dr Gonzi said he was quite certain it would.

Dr Gonzi was speaking at the fourth Nationalist MEP national conference, which was also tied in with a seminar by the PN's youth movement, at the Grand Hotel Excelsior yesterday.

The dockyard, he said, was one of three challenges facing the country's future - the other two being the environment and illegal immigration, which both needed to be tackled holistically.

"Are we going to remain a country that continues succumbing to these pressures (of illegal immigration), without finding more assistance from the EU?"

Dr Gonzi said the challenge was that Malta's message to the EU would remain strong - the message of a country that expected the value of solidarity from the EU to help it face this crisis with humanity.

The moral strength of Malta's arguments around the EU table would be lost without the humane aspect and they would retain credibility if they were anchored to the country's values.

Dr Gonzi acknowledged that the number of illegal immigrants was "very big" for Malta but that it could have been much worse were it not for repatriation measures undertaken also by the US.

The issue of illegal immigration was also raised by MEPs David Casa and Simon Busuttil, who considered it to be a major challenge for Malta.

Mr Casa questioned whether Frontex was enough, insisting on "crucial" solidarity with a country that could not cope with the problem alone.

"It is not enough for the EU to send over a few ships and some money," he said. "Malta cannot remain a big prison for these people. And the EU has to invest in their countries (of origin) so they would not have to leave," he said, adding that the EU wasted a lot of money and it was time to see how to make better use of it.

Dr Busuttil said the law that was being discussed to increase penalties for those who employed irregular immigrants illegally would also serve as a tool against illegal immigration. The Lisbon Treaty would have given the EU tools to combat illegal immigration, which it does not have today, and which would have been in Malta's interest.

Dr Gonzi said the government would soon be announcing measures for wind energy, which, he said, posed several challenges and would give rise to debate.

He said that, according to figures that had to be verified, Malta's increased employment could be a record among the 27 EU countries, with double their average growth. The record number of gainfully occupied was achieved at a time when numerous factors should have been pointing to its decline, he said.

But despite the country's achievements on these fronts - and the many success stories that were recounted by individuals who had benefitted from EU membership and funds at yesterday's seminar - Dr Gonzi appealed to the Maltese not to get carried away and let anyone distract them from the real and urgent issues.