The European Commission is piling pressure on the government to declare Malta Shipyards bankrupt and liquidate the company before continuing the process of privatisation of all or parts of its assets.
Commission sources told The Times yesterday that the Commission's position did not change following last week's visit to Malta by Commissioner Neelie Kroes and that Brussels still feels that the best formula to be adopted in order to start a new shipyards operation with a clean sleet is liquidation.
"Under normal commercial circumstances, a company that is no longer viable and is registering losses, like Malta Shipyards, is declared bankrupt and put to liquidation. Although we see this as the most logical step forward, we will not impose it on the government as long as the privatisation process does not involve further state aid."
This rigid position by Brussels has been adopted in view of plans by the government, announced earlier this year, to absorb about €100 million in losses that are expected to accumulate by the end of this year when the seven-year restructuring deal agreed with the EU ends. Despite almost €1 billion pumped into Malta Shipyards over the past years, the company remains in the red.
At the meetings in Malta between the government and Ms Kroes, the government reiterated its intention to absorb the accumulated losses of the shipyards before passing over the company to the new operator, The Times was told. The commissioner insisted that could not be done under state aid rules and that a different solution had to be found.
This stand was reiterated yesterday, although in more diplomatic terms, by the commissioner's spokesman who wanted to further clarify the comments Ms Kroes made to the press prior to her departure from Malta.
"Ms Kroes said that the present restructuring plan, launched in October 2001, has failed to restore the viability of the shipyards and, therefore, cannot be the basis for the grant of further state aid," the spokesman said.
He pointed out that the European Commission agrees with privatisation "as long as this does not entail the grant of state aid either to the purchaser(s) or to Malta Shipyards Ltd".
If Malta Shipyards is liquidated, as the Commission is suggesting, the company will be declared bankrupt and all workers remaining on its books will be declared redundant with no right for compensation other than stipulated by law.
A senior government official said yesterday that talks with the Commission were ongoing in order to try to find a more "socially acceptable solution". However, he admitted that the position adopted by the Commission "is not being taken lightly".
"The government wants to ensure that all workers who apply to leave their job at the shipyards will be given a decent compensation and not just what is due to them by law if the company is declared bankrupt. That is why we are insisting to take a different approach from that suggested by the Commission," the official said.
He explained that, so far, the government has not made any formal privatisation plan to Brussels and will only do so when the bidder/s are chosen by the government. "Only at that stage will we know how the new operator(s) plan to manage the shipyards and it will be only then that plans can be given to Brussels for approval."
Meanwhile, Polish shipyard workers are facing the same difficult situation as their Maltese counterparts.
Hundreds of dockers protested outside Ms Kroes's office in Brussels last Tuesday in view of a Commission decision, expected later this year, on the restructuring of three shipyards in Poland.
Polish workers fear that their shipyards in Gdansk, Gdynia and Szczecin will be forced to close down if the European Commission rules that they must repay the state aid given to them illegally over the past years by the Polish government.