Polish shipyard privatization delayed

The June 30 deadline for the privatization of the Gdansk and Szczecin shipyards will not be met, according to Vice Minister of the Treasury Slawomir Urbaniak.
The third privatization delay, like the others, presumably is a reflection largely of continued foot-dragging in negotiations between the shipyards and their unions.
Poland?s failure to meet the June deadline is certain to irritate the EU, which is putting pressure on Warsaw to stop subsidizing the country?s inefficient old shipyards and thus reduce excess ship-making and repair capacity.
Urbaniak told the Polish Press Agency (PAP) that, despite the delay on the Gdansk and Szczecin facilities, all of Poland?s shipyards are essentially ready for privatization. But Polish officials now say they want privatization delayed until fall.
After EU officials inspected Poland?s shipyards this year, its Council of Ministers announced the privatization schedules for three complexes in northern Poland: Stocznia Gdynia S.A., Stocznia Gdansk S.A. and Stocznia Szczecinska Nowa Sp. z o.o.
For years, the shipyards have survived on state support alone. This has led to a distortion in competition that requires urgent action, EU State Commissioner for Competition Neelie Kroes said.
She said two steps need to be taken to restructure the industry. The first is to determine what the shipyards? capacity as a whole ought to be. The second is to privatizate the facilities. The investments that come from privatization will restore the commercial viability of the surviving shipyards.
The European Commission (EC) has demanded that ship production in Poland be reduced. But the Polish government has refused, believing it would bankrupt many shipyards.
The government gave Kroes a proposal for capacity cuts in February 2007. She wants further cuts, however.
Poland has proposed a 30-percent capacity cut at the New Szczecin Shipyard, while the EC has asked for a 50-percent reduction.
Talks with the EC are still under way.
?It will only be possible to sell the shipyard if the potential investor does not know its production capacity,? Urbaniak said.
Meanwhile, opposition parties are trying to make political hay over the shipyard-privatization delays.
?The Polish government has had to ask the EC to waive the deadline for shipyard privatization for the third time,? the Dziennik newspaper quoted Alexsander Grad, a deputy in the Civic Platform Party, as complaining. ?The EU officials may soon lose their patience.?
Politicians blame the shipbuilding sector for the delays in talks with the unions. They say the shipyards aren?t cooperating with each other in the negotiations, presumably fearing they will lose out to their competitors when the smoke clears.
The shipbuilding industry is playing a dangerous game by delaying privatization, however. If the shipyards refuse to make capacity cuts, they will have to return 2.2 bln zloty to the EU budget. That is the amount the EU gave them to help them absorb the cuts.

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