Editorial: When the price is right

Nationalisation has a price.

In the case of the Manoel Island’s rescission, the state’s intervention was motivated by a fortuitous popular campaign and, no doubt, some pending financial obligations by MIDI plc to its bondholders.

Returning this unrealised private concession to the public has come with a price tag: €47.3 million, which, after reimbursement of VAT, is a net payment of €43 million.

The government rightfully boasts of having struck a deal. MIDI wanted €78 million for the value of works on Manoel Island, which included the restoration of Fort Manoel and the building of an electricity distribution centre. Instead, the taxpayer pays half, in a deal that also returns Fort Tigné from MIDI, when it was previously set to be sold for €2.5 million to mega-developer Joseph Portelli.

Irrespective of the cost, the end-result is a rare victory for citizens and the activists who mounted one of the most successful civic and environmental campaigns.

That the stars aligned – political gains for an administration in election mode and reduced business appetite from the private consortium – was a political opportunity seized.

At the same time, there will be disappointment from those who perceive the rescission to be a kind of ‘bailout’ for MIDI plc, the consortium which benefited from a massive Tigné Point giveaway back in the 1990s. It would stand to reason that when private speculation on public assets fails, this should not be ultimately underwritten by the taxpayer.

The moral of the story is that the Tigné and Manoel Island concessions have become unwelcome models of private investment on state property, wherein mega-developers secure public land at giveaway prices in return for committed real estate and retail development and job creation.

More than the model, it’s the elasticity of the briefs that riles the public.

A rigged planning system allows developers, MIDI included, to change the goalposts of the original development briefs as time drags on; new demands for feasible – read, profitable – development are taken to the state, which then loosens any initial restrictions, as happened in the case of the one-time SmartCity development, predictably turned into real estate and retail when job creation KPIs were thrown out of the window.

All this creates a market that is replete with scepticism on rule-making. In the public’s mind, the corporate backing of political parties and candidates is what finances the largesse of the Planning Authority on extended building heights and massing. Ad hoc bailouts, as in the case of the 2014 Café Premier rescission, are suspiciously tailor-made to short-circuit land use bureaucracy. Perhaps with some spare change left to donate to one’s charity of choice.

And what might be the risk of other bond issuers engineering some sort of charade to relinquish their state concessions, in return for a taxpayers’ discount to pay off any debt obligations? If developers start pricing in the prospect of ‘reselling’ their unfinished projects to the state, the risk is that they start leveraging delays and financial pressures to angle for such bailouts.

This is precisely the kind of outcome that fuels public cynicism about these land concessions: when arrangements succeed, the profits accrue to private investors; when they don’t, the state absorbs the consequences.

Public land is the country’s shared heritage and collective wealth, and Manoel Island is among the most valuable sites in Malta.

Malta needs a clearer framework for how public land concessions are structured. Promises of investment must come with enforceable obligations and real consequences if commitments are not met.

Otherwise, the risk is clear: the public continues to pay dearly for private speculation.