Brussels, 24/02/2006 (Agence Europe) - The European Commission has opened an enquiry into regional investment grants to German shipyards Rolandwerft and VolkswerftStralsund. The grants, totalling 5.8 million euro, are for the modernisation and improvement of existing installations, but the Commission wished to ensure that it is not for new installations in a sector already suffering from chronic overcapacity. Volkswerft is located in Stralsund, in Western Mecklemburg-Pomerania, in an area eligible under Article 87§3-a (standard of living below the EU with high unemployment). Germany intends to provide 22.5% (4.2 million euro) of the estimated 18.7 million euro cost of a project which will allow the yard to built large ships, such as the 65,000 tonne Panamax ships. Rolandwerft is a shipyard in Berne in Lower Saxony and can receive aid under the terms of Article 87§3-c. Germany is seeking to contribute 12% (1.56 million euro) of the total cost of 13 million euro for building a quay and modernising parts of the yard. The framework for aid to shipyards is more restrictive than general rules on regional aid, in that aid can only be allocated for existing installations. The Commission is concerned that the measures will increase the capacity of the two shipyards at a time of gradual decline in demand and that the sector risks increasing overcapacity.