ZAGREB, Jan 20 (Reuters) - Croatia said on Thursday a bid for one of its major shipyards had been abandoned, a step which might slow down the pace of European Union entry talks, in which the cutting of subsidies to ailing docks is a key demand.
The government said it would open a new tender for the May 3 shipyard in the northern Adriatic port of Rijeka after Crown Investments of Germany, a subsidiary of Austria's A-Tec Industries, withdrew from the buying process.
"A-Tec informed us this month that it had not resolved its financial woes and could not assess when it could do so. Hence, we proposed a renewed privatisation round which the European Commission accepted," Economy Minister Djuro Popijac was quoted by state news agency Hina as telling the cabinet.
Croatia is in the final stage of EU accession talks, started in 2005, which it hopes to complete by July.
Before that, a major condition is the scrapping of excessive state subsidies to its five ailing shipyards. Another is to reduce corruption and reform judicial processes to make them quicker and more reliable.
The May 3 dock will again be offered for a token price of 1 kuna, but a potential investor will have to submit a viable restructuring programme.
The European Commission is reviewing viability of the plans for privatisation of other Croatian shipyards. Approval from Brussels is vital for completing EU accession talks in one of the most demanding negotiation areas, competition policy.
Popijac said that the new tender round should not slow down the government's goal of completing talks by July.
"Given the interest we already have from some other investors, I believe we will get a good new bidder and that the pace of our EU negotiations will not be jeopardised," he said.
The new invitation for tenders will be open for just 10 days.
Restructuring of docks is a sensitive social issue in Croatia as the industry employs about 11,000 people and supports many small businesses as contractors.
This year the government, struggling to control public expenditure, may have to take over up to 12 billion kuna ($2.19 billion) of loans to the docks which it guaranteed in the past. (Reporting by Igor Ilic; edited by Andrew Roche)