Cabinet to weigh in on revised db Group deal

Cabinet is set to weigh in on a revised concession deal with db Group that will see over €4 million in ground rent deferred to the end of the company’s 99-year concession at St George’s Bay real estate.

Sources said the agreement, which had faced internal resistance from former lands minister Stefan Zrinzo Azzopardi, was initially set to be far more favourable to the company.

The current draft deal, if approved, would “compensate” db Group for delays to the Pembroke mega-project stemming from an overturned Planning Authority (PA) permit, sources told Times of Malta.

db Group has blamed these delays and the resultant financial losses on the government and, just last month, the company renewed a threat to pursue damages in court for the delays.

The original planning permit was cancelled in 2019 after a court found one of the PA’s board members had a conflict of interest. Works on the project only began in 2023, once db Group obtained a new executable permit from the PA.

If approved by cabinet, the draft deal will mean that €4.4 million in ground rent payable to the government will be deferred and paid at the end of their concession agreement. The amount the company ends up paying, in the 22nd century, will be adjusted for inflation.

Questions sent to the government remained unanswered and Times of Malta does not have a copy of the draft agreement. No official announcement about the negotiations with db has been made by the government.

A spokesperson for db group confirmed that they are requesting a postponement of payments.

“Given that a number of events occurred, such as the revocation of the planning permit, which caused a material delay in the execution of the project, a contract postponement of four years has been requested,” the spokesperson said.

They added that the deal will not result in any reductions or savings in what db owes to the government.

The group, led by its chairperson Silvio Debono, has long been trying to “revise” the millions in ground rent payable to the government for its real estate development on public land in St George’s Bay.

Zrinzo Azzopardi, who is understood to have been reluctant to sign off on the new deal, was relieved of the Lands portfolio in May, with Culture Minister Owen Bonnici taking over the portfolio.

Questions sent to the now EU funds minister remained unanswered.

The db-Lands Department deal comes as db Group are applying to add six and seven more floors to the two towers that are currently under construction.

If approved, the total floor area of the towers will go from 21,000 square metres to 29,000 square metres.

Under the current contract, the amount that db pays to the government in ground rent depends on the square meterage of the site.

The company spokesperson said the ground rent payable will be dependent on the total floor area of the project. They pointed to clause 7.1 of the concession deed.

“Due to eventual variations in the approved net floor space area, and in view of the pending application for additional floors, the ground rent payable will be recalculated once again, as per the aforementioned clause in the original deed. Though this can only be done if, and once, a permit is issued,” they said.

Sources said the initial talks envisioned bigger savings for db Group over the way the ground rent is calculated.

The City Centre project has long been a political hot potato, with thousands of objections filed by the public at planning stage and even opposition from Pembroke’s former Labour mayor.

This is not the first time that negotiations between the government and db Group have been held behind closed doors, with little information being given to parliament.

In 2020, a report by the auditor general, a public spending watchdog, noted how documentation about the company’s negotiations with the government was hard to come by.

Instead, the auditor general had to rely on records provided by a private company that had been advising the government on the deal.

“In this office’s opinion, reliance on third-party documentation for a process that was to be entirely administered by a government entity is unjustified, and severely curtails any subsequent process of review,” the auditor general had said.