Off to the Races

8^th February 2008
The Malta Independent - Friday Wisdom

So finally the expected happened. A month today we will be choosing a national government for the next legislature.

What was less expected is the sense of trepidation that seems to have gripped the PN. It started with desperate appeals by pro-PN popular columnists seeking to stem defections of disgruntled voters from the PN to AD. It is now flowing directly from the heart of the PN organisation.

Signing off press adverts as gonzipn is clear sign of the unpopularity wrapping the rest of the cabinet. It is the most overt admission by the PN, coupled with the positive billboard campaign centred entirely on the likability of Dr Gonzi, that marginal PN and floating voters are evidently inclined to deny their backing to the PN on the basis of the arrogance and perception of corruption which pervades the workings of most government departments and organisations outside Castille.

It is the nearest the PN could come to signing an apology to the electorate for treating us like idiots in pretending that corruption is alien to the workings of government, that the Lm250 million spent on Mater Dei were all correctly spent, that privatisations were handled in the best interest of the nation and that our experience in the EU is reaching the expectations we legitimately hold.

And if we needed any proof that such implied apology is purely skin deep we were offered on the very same day that the election was called by news which is nothing short of a scandal dressed up as fake achievement.

The Freeport 30-year concession was extended by contract to 65 years against a mere promise of additional investment of e130 million by the operator. It is always dubious when such strategic long-term contracts are signed by a caretaker government which should be only in charge of routine matters of administration until a newly-elected government takes possession.

But it is doubly suspicious and highly unethical for such contracts to be signed as if drinking a glass of water when the original contract was subject to public bidding in a highly advertised privatisation exercise. By whose authority does a caretaker government more than doubles the term of the privatisation concession rather than stick to the original term giving the government the chance to renegotiate the terms in our children’s lifetime? By this extension it will be when our grandchildren become great grandparents that the government will have the chance to renegotiate and this for the mere promise of an investment which over such a long term amounts to less than e2 million per annum.

This is a project in which the nation has invested since its 1981 origin something in the region of e3 billion (three thousand million euro!) at today’s money worth and all we are getting from its privatisation is an operational fee linked to the throughput of business. No capital outlay was paid by the operator for enjoying the super long term right to use these facilities and the revenues government gets from the operator are hardly sufficient to service the interest cost on an international bond that went to finance a very small fraction of the total project outlay.

To add insult to injury, for those who have memory and care to use it, when the Freeport was run as a publicly owned corporation under the first, second and third PN administration until 2003 we were always bombarded with propaganda on how successful the Freeport was operating and what a fantastic contribution it was making to the economy. Many will remember the open days for the public, the ferry loads of people brought free of charge from Gozo for the occasion and the freebies and glossy brochures given to all who dedicated their weekend to pay homage to the brilliant management of Freeport Corporation that was achieving such great success that once the then Prime Minister suggested that we should render tangible the nation’s gratitude by erecting a permanent monument in their honour.

Then somewhere after the 2003 elections the music changed. Suddenly the Freeport was incurring losses, had no funds left to replenish and upgrade its investment assets and we were told that without privatising its operations it had very grim financial prospects. Locked into long term contracts at sub-optimal rates the privatisation process was a mere mis-en-scene for the transfer of the operation to the main users of the Freeport who had contributed to its commercial downfall by contracting cheap rates and blocking out other shipping lines through the preferential treatment it always got from the management of Freeport who seemed keener to defend the interest of their client rather than the organisation they were supposed to lead.

Compare our dismal leverage of the nation’s assets to the brilliant experience of Singapore. Not only its publicly owned Port Authority turned its port into vibrant hub for the region but it became a strong international port networking player taking strategic positions in the operations of other ports round the world.

I well remember that when in 1998 Singapore Port Authority were given the opportunity without commitment by either side to make an operational audit of the Malta Freeport their resultant lack of interest to pursue discussions was primarily based on the difficulty to leverage performance when the capacity was contracted out on a long term basis at uncompetitive rates.

Given this background how can anyone avoid suspecting that the scandalous extension of the Freeport concession from 30 to 65 years by a caretaker government is anything but a final attempt to grab before power passes and in the process hypothecating the operational manoeuvrability of successor governments?