The Croatian government rejected bids for three loss-making, state-owned shipyards on Thursday and pledged to find a solution by July for a key issue it needs to resolve before joining the European Union next year, Reuters reports. Bankruptcy proceedings will be started at one of the smallest, heavily indebted shipyards, Social Democratic Prime Minister Zoran Milanovic told a cabinet session.
Shipbuilding had been a flagship export sector in socialist Yugoslavia but went downhill after Croatia became independent in 1991. Four of its five shipyards are loss-makers kept afloat by hefty state subsidies that are contrary to EU competition rules.
Unless Zagreb sells the docks or makes them viable on their own by the time it joins the bloc on July 1, 2013, it will have to pay back some 2 billion euros ($2.64 billion) of subsidies.
"Croatia's shipbuilding will survive, as a profitable industry playing by different rules and with a somewhat smaller output," he said.
Restructuring of the docks is a sensitive social issue because the industry employs about 10,000 people and supports many small businesses as contractors. Croatia's unemployment has reached a nine-year high of almost 20 percent after three years of recession and stagnation.
On Thursday, the centre-left government which took office in late December agreed to sell one dock, Brodosplit from the southern Adriatic city of Split, to a local private firm.
"This was a good offer and the government will continue to support the restructuring process in Split for the next five years," deputy Prime Minister Radimir Cacic said.
However, it refused to sell Kraljevica and Brodotrogir to another private bidder, a wealthy Croatian businessman. According to local media, he was keen to buy the yard and start a different business there and dropped an offer for the second biggest 3.Maj shipyard at the last moment.
"In Kraljevica, the government has no other solution but to start bankruptcy proceedings but it will do everything it can to make it easier (for workers)," Milanovic said.
The economy ministry will propose a new solution within 90 days for the other two yards.
The Uljanik dock in the northern town of Pula is the only one running at a profit without government aid. Its management will propose a privatisation model in the next 30 days which will include a capital boost and distributing shares to employees.
Poland, which joined the EU in 2004, has faced a similar problem. The European Commission has ordered Warsaw to sell its shipyards or repay more then 2 billion euros of state aid.
Shipbuilding had been a flagship export sector in socialist Yugoslavia but went downhill after Croatia became independent in 1991. Four of its five shipyards are loss-makers kept afloat by hefty state subsidies that are contrary to EU competition rules.
Unless Zagreb sells the docks or makes them viable on their own by the time it joins the bloc on July 1, 2013, it will have to pay back some 2 billion euros ($2.64 billion) of subsidies.
"Croatia's shipbuilding will survive, as a profitable industry playing by different rules and with a somewhat smaller output," he said.
Restructuring of the docks is a sensitive social issue because the industry employs about 10,000 people and supports many small businesses as contractors. Croatia's unemployment has reached a nine-year high of almost 20 percent after three years of recession and stagnation.
On Thursday, the centre-left government which took office in late December agreed to sell one dock, Brodosplit from the southern Adriatic city of Split, to a local private firm.
"This was a good offer and the government will continue to support the restructuring process in Split for the next five years," deputy Prime Minister Radimir Cacic said.
However, it refused to sell Kraljevica and Brodotrogir to another private bidder, a wealthy Croatian businessman. According to local media, he was keen to buy the yard and start a different business there and dropped an offer for the second biggest 3.Maj shipyard at the last moment.
"In Kraljevica, the government has no other solution but to start bankruptcy proceedings but it will do everything it can to make it easier (for workers)," Milanovic said.
The economy ministry will propose a new solution within 90 days for the other two yards.
The Uljanik dock in the northern town of Pula is the only one running at a profit without government aid. Its management will propose a privatisation model in the next 30 days which will include a capital boost and distributing shares to employees.
Poland, which joined the EU in 2004, has faced a similar problem. The European Commission has ordered Warsaw to sell its shipyards or repay more then 2 billion euros of state aid.