‘Yards aid to stop in 2008

By a staff reporter

2008 will be the Malta shipyards’ moment of reckoning when state aid will have finally come to an end. Following the closure of the EU chapter competition, the shipyards’ fate has been finalised with talks on state aid and subsidies.

Final talks on the sensitive areas of ship-building and ship-repair finally came to an end at the fifteenth meeting of the Accession Conference in Brussels with the closure of the Chapter on competition.

The main bone of contention appears to have been state subsidies to the beleaguered shipyards.

Last week’s conclusions on the Chapter on competition showed the European Commission had accepted and approved the Maltese Task Force plan. The plan includes an investment of Lm414 million in the yards, up to December 2008.

The Lm414 million aid consists of the writing-off of Lm300 million in debts, Lm51.8 million in working capital subsidy, Lm9.9 in investment aid, Lm4.5 in training grants, Lm32 million in competitiveness social costs, Lm17.3 million in aid financing costs and Lm3.8 million in other aid.

The deal however clearly signals that state aid to the ‘yards will come to a stop in December 2008.

Malta Shipbuilding worker director Jesmond Tanti appealed to Government to consult shipyard workers on proposed cuts in the ‘yards workforce by a further 500 over 2003. Mr Tanti said deputy Prime Minister Lawrence Gonzi had said shipyards restructuring would involve a downsizing of the workforce over the next year. This had disheartened many workers", Mr Tanti said.

Mr Tanti said he disagreed with the cuts in workforce: "These workers are only lost to other competitors. Government should have consulted with the workers on the future of the ‘yard.

"We are concerned about our future. Government has to show us its plans. The workers are very demoralised at this news", Mr Tanti said at a news conference at the Marsa ‘yard. He also added the shipbuilding workers would be inviting representatives from the two political parties to discuss the implications of EU accession with employees.

Other states, filed dissenting opinions in a minority report regarding Malta’s package. Certain states said the financial offer and unique concessions had been too generous. The Maltese negotiating team argued the country had never enjoyed the Europa pre-accession funds nor any direct agricultural pre-accession aid.

The European Commission noted that by December 2008, the shipyards should be fully viable and that this would have been accompanied by a sufficient reduction in its capacity. Under this agreement, the government will not be able to pay further state aid after December 2008.

At the Accession Conference, Core Negotiating Group Chairman Mr Richard Cachia Caruana said the negotiations had resolved the issue relating to the Maltese shipyards.

"A transition period has been agreed to allow time for the implementation of a seven-year restructuring plan based on a strategy leading the yards to economic viability. This agreement is of particular importance and significance for us.

"The commitments we have undertaken in this area demonstrate our resolve to implement, in a systematic, proportionate and realistic manner, those measures which are necessary to safeguard and, indeed, enhance the future prospects of this important industry in Malta. We accept the Union’s offer as set out in its Common Position."