Not acceptable

EU objects to Malta dockyard privatisation strategy, from The Guardian:

EU Competition Commissioner Neelie Kroes said on Thursday the strategy adopted by the Maltese government to privatise loss-making Malta Shipyards was not acceptable under EU law. She made her comments after talks in Valletta with Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech.

Kroes did not go into detail but officials said the main outstanding point was a government plan to write-off 100 million euros ($139 million) in losses incurred by Malta Shipyards before the company is transferred to new owners. She said she disagreed with the proposed method in principle but was expecting a new business plan from the government in the coming weeks.

The government intends to privatise Malta Shipyards before the end of the year, otherwise the dockyard would have to be declared bankrupt since no state subsidies are allowed after December 31. The Maltese government has so far pumped 800 million euros into the shipyard.

It has also allocated 56 million euros for early retirement schemes to reduce the shipyard staff from the current 1,600 in an effort to make the enterprise more attractive to potential investors. Kroes said an extension of the subsidies deadline, agreed before Malta joined the EU in 2004, was not acceptable.