The privatisation of the shipyards will eventually lead to the company’s liquidation, a prospect that only came to light yesterday in a report published by the European Commission.
In its spring economic forecast the Commission said one of the reasons why it expected the public deficit to drop in 2009 was because the shipyards will be liquidated.
The Finance Ministry yesterday confirmed the matter insisting that Malta Shipyards was not for sale but its business and assets were.
It pointed out that privatisation “contemplated” the sale of four distinct operations: the shipyard facilities, the shipbuilding Marsa facilities, the super yachts facility and the Manoel Island yacht facility.
A ministry spokesman said the Commission forecast reflected the fact that the government “will not have to suffer any more losses due to shipyard operations”.
“Malta Shipyards Ltd, which is the company currently in operation, is not for sale but its business and assets, by way of a concession, are. This implies that at some point MSL will be wound up, as the new operator will not be required to assume its liabilities,” the spokesman said.
It is unclear whether the company would still be liquidated if the privatisation process fell through.
The issue of liquidation had been a bone of contention between the government and the Commission in September last year.
Brussels had made it clear that the government’s intention to fork out a further €100 million to cover the yard’s losses incurred by the end of 2008 would amount to state aid.
The Commission had said it would prefer Malta Shipyards to be declared bankrupt and liquidated. The issue remained pending with the Commission insisting it would only make a final decision once the final plan for the yard was submitted.
The prospect of liquidation was sidelined by the government at the time since the large workforce on the shipyards’ payroll made it almost impossible to go down that route. Declaring bankruptcy and liquidating the company would have left employees without compensation, creating social and political turmoil.
However, the mere suggestion by EU Commissioner Neelie Kross that the company would have to be declared bankrupt had sent workers scurrying for the early retirement schemes.
Today the shipyards employ just over 50 workers.
The privatisation process was put in doubt in February when MaltaToday had reported that the 14 bids fell far short of the government’s expectations.
Only last week the Prime Minister seemed to confirm the media reports when he indicated on the television programme Bondiplus that he was not satisfied with the offers for the shipyards.
Nonetheless, the ministry yesterday insisted the privatisation process was “still underway”.
Meanwhile, the GWU said its position on the privatisation process had been vindicated by the Prime Minister’s admission that the bids were not attractive enough.
The union said it had insisted that privatisation was not the only route to bring the shipyards back to profitability. “In any case, we had argued for early retirement schemes to be offered after the privatisation process was complete. The government was pig-headed and this led to job losses and the expenditure of more public funds than was necessary,” the GWU said.
ksansone@timesofmalta.com