THE UK Government is reportedly examining whether a deal to sell Harland & Wolff’s shipyards to Spain’s Navantia will comply with the EU’s state aid rules.
The Labour government, which is currently negotiating a contract for the sale of the Belfast yard and three others in Britain, has sought legal advice on the matter, according to Sky News.
It’s understood Navantia is seeking more money for the £1.6 billion Ministry of Defence contract it won to build three fleet solid support (FSS) for the Royal Navy.
The Navantia-led consortium, which was awarded the contract, included Harland & Wolff, with a significant amount of the work earmarked for Belfast.
The Financial Times has reported the government could end up paying £300m more for the vessels.
The British and Spanish governments have also been engaged in discussions over a potential deal.
State aid rules are designed to prevent governments in member countries from giving businesses unfair advantages, such as subsidies, tax breaks, or loans, that could harm competition within the EU.
While a final decision has not yet been reached on the rescue deal, it’s believed the Treasury is leaning towards backing the sale of the yards to Navantia.
The state-owned shipbuilder is understood to be providing funds to keep Harland & Wolff’s yards running in a week-to-week basis.
The four yards were not part of the insolvency process that saw its London-listed parent entity, Harland & Wolff Group Holdings enter administration in September.
Alongside Belfast, Harland & Wolff also owns the Appledore yard in Devon, Arnish yard on the Isle of Lewis, and Methil in Fife. Between them, the four sites employ around 1,000 people.
The collapse of Harland & Wolff followed its failure to secure the backing of the new Labour government to provide a guarantee on £200m of new borrowing in a bid to refinance its high interest loan with Riverstone.
A report from the administrators at Teneo revealed the New York-based lender is owed £158m.
