Crucial talks between the European Commission and the government about the Malta Shipyards' privatisation process will be held in Malta today during a brief visit by European Competition Commissioner Neelie Kroes.

The talks, to be held at Castille with Prime Minister Lawrence Gonzi, will focus on the way the government is handling the privatisation process and on whether its plans are in line with EU rules and undertakings agreed with Malta before its accession to the EU.

In an interview with The Times yesterday prior to her departure to Malta, Ms Kroes insisted that the EU executive wants to have clear answers from the government, particularly on its intention to write-off about €100 million in losses expected to be incurred by the company by the end of this year before the shipyards are privatised.

Ms Kroes said it is worrying that, after an injection of almost €1 billion into the company over the past seven years, Malta Shipyards have still not managed to become viable. Although the Commission agrees in principle on the privatisation of the company, she recalled that Malta was granted an "exceptional derogation" from strict EU state aid rules in order to help its shipyards before Malta's accession. Such agreement has now to be fully respected.