Monday, 23 April 2012
Modern Titanics (4) - Citigate SPV
I have written profusely about this and why I am against such flowery financial engineering.
SPV's make sense if they are used to finance some revenue generating infrastructure project which can be expected to repay itself from the revenues generated over the long term. For example SPV's are used to build a motorway which can be expected to generate toll revenues from its users to make the SPV funding feasible of repayment from such revenues over the long term.
An SPV for Citigate project is a non-starter. Gitgate project is not a revenue generator. So basically this is pure financial engineer to hide the debts off balance sheet and to spend now and leave the problems for successors.
You may refer to an article I wrote in the blog some time go explaining why this is mere Greek style cooking the books.
However there are other Titanic aspects, beyond the financial trickery involved in funding this project, which government seems to be ignoring and which continue to expose how detached government is from popular feelings.
It is pretty evident that government is considering this project as a platform to base its re-election prospects upon. The hope is that in spite of the loss of parliamentary majority, government can limp on until this project is ready for launching to present it to the electorate as a signature for government's credentials. Prime Minister Gonzi had done something similar in 2008 through the opening up of Mater Dei Hospital.
Now look at these two pictures.
Which of these pictures warms your heart?
Which of these picture connects the electorate to its government?
When visiting a brand new shiny Mater Dei Hospital in the context of a universally free health service the feeling is one of pride, of thankfulness and gratitude about the ability of government to offer its citizens a better and more professional health service. It worked for Gonzi in 2008 - it helped the PN to snatch victory from the jaws of defeat, even if by the slimmest of margins.
Now when the people will visit a luxurious just completed Citgate project before the next elections, what vibrations would it create in their mind and heart?
It bet my bottom dollar it would be one of anger and resentfulness, cursing the government for building for 'themselves' a luxurious edifice at a great expense and denying the people from one of the few open spaces in Valletta and for giving such trophy project priority over the needs of the people in having cheaper energy and better infrastructure.
Not only the financing of this project is Titanic but also its political motives.