The only €2 million bid for Selmun Palace Hotel and the temporary grant of the castle that adjoins it has been turned down because it does not meet the government’s expectations, The Times has learnt.

No decision has been taken on the next step so far. The government may either issue another call for bids with the same conditions or else set fresh specifications in the hope of attracting a more generous offer for the property.

The sole bid for €2,012,556, came from a notary and his wife from Żabbar, who own wedding reception halls.

The hotel is owned by Selmun Palace Hotel Company Ltd, a subsidiary of Air Malta.

The airline, which last week announced losses of €31 million for the last financial year, decided to sell non-core operations and focus solely on the airline business.

Selmun Castle, originally built by the Knights of St John in 1783, is being offered on a temporary emphyteusis for 99 years against a ground rent of €70,000 a year. The castle houses some of the hotel suites as well as being the venue of weddings and other functions.

Designed by Domenico Cachia in 1619, Selmun Palace is often perceived as the baroque version of Verdala Palace. It was the most important property of the Monte Di Redenzione, a pious foundation set up in 1607 for the redemption of Christian slaves in the Barbary States.

The tower was leased to Air Malta for a period of 99 years, on condition that the company had to restore and preserve the tower and guarantee free access to the public.