Updated - Adds PN reaction - Deputy Prime Minister Louis Grech, who is responsible for EU affairs, this morning said that the government could not be blamed for an EU decision which would force Malta to reduce financial incentives for industrial investment.
He said the Labour government was faced with a "fait accompli" as the European Commission had adopted the funding guidelines for industry in February 2013.
The PN, however, denied his version of events and said Mr Grech should not try to hide the government's incompetence.
Mr Grech said the first steps had been taken by the commission in 2011 and initially there was not going to be any funding at all for large companies, the minister said.
He said the Labour government managed to persuade Brussels to make big firms eligible for 15 percent funding (on their investment) up to 2017 and down to 10 per cent by 2020.
Mr Grech was reacting to comments by Opposition leader Simon Busuttil that the governemnt was incompetent in not having managed to negotiate a favourable deal with the EU. He also said the government had hidden the EU decision.
Mr Grech denied that the decision was kept hidden saying that it has been public since July last year.
He said the government would step up pressure on the new EU commission even though commissioner Almunia has been insisted said that very little could be done.
This, Mr Grech said, was not an issue of incompetence by the present government. If anything, this was the case for the period between 2011 and 2013, when the PN was in government.
Asked what will happen after 2017, Mr Grech he said that the government had to seek solutions, and the reduction in utility tariffs for industry would help.
"We have to be careful not to breach state aid rule but are ready to explore ideas how to sustain the local industry," he said.
Malta's new regional funding map will be in force between July 1, 2014 and December 31, 2020. It defines the entire territory of Malta as eligible for state aid under this provision.
The maximum level of state aid (so-called "aid intensities") for investment projects carried out by large companies is 15% until 31 December 2017 and 10% between 1 January 2018 and 31 December 2020. These aid intensities can be increased by 10 percentage points for medium-sized enterprises and by 20 percentage points for small enterprises.
Compared to the previous map, the overall aid intensity has dropped by 15 percentage points for the period 2014-2017 and by 20 percentage points for the period 2018-2020, while the population coverage remains identical. This is in line with the overall approach of the Regional Aid Guidelines, which aim at focusing support on the most disadvantaged regions of Europe.
PN REACTION
In a reaction, the Nationalist Party said Mr Grech was confusing issues in an attempt to brush off responsibility for the government's incompetence.
Deputy leader Mario de Marco insisted that the EU decision was taken this month and the Labour government had 14 months within which to try and change matters.
The decision was taken on the basis of regulations which were adopted in June last year and not February 2013, as Mr Grech had claimed.
The government could not hide its incompetence, which was in sharp contrast with what the Nationalist government achieved, including funding of €112 million.