Government faces potential €70m bill in Manoel Island contract exit
Figure might change as MIDI tallies up its costs on the project
Cancelling the Manoel Island contract could cost the government around €70m, according to an approximate figure that emerged during last week’s meeting between MIDI and the prime minister.
Sources close to the ongoing negotiations told Times of Malta that this figure is based on initial estimates of how much the consortium has spent on Manoel Island to date.
However, the figure could change as the two parties finish tallying MIDI’s expenses over the coming weeks. It is unclear when discussions will resume, although they are expected to do so soon.
The government’s next move could be “in the form of a counteroffer in euros, or some other form of compensation,” one government source told Times of Malta.
Handing MIDI the White Rocks complex as compensation, an idea that has been floated in industry circles, is not currently on the cards, they said.
MIDI declined to comment when contacted, telling Times of Malta that “the discussions being held with the government are confidential and, therefore, we will not comment on speculative statements”.
The government and MIDI are in discussions to rescind the 99-year concession granted in 2000, with the former planning to turn Manoel Island into a public park.
While MIDI has opened a door to the possibility of returning the land, they are believed to be looking to recoup the money they’ve spent on the site over the past 25 years.
This would include several expenses, from the cash premium MIDI paid when awarded the contract, to 25 years’ worth of ground rent and restoration works on the site’s heritage buildings, such as the €14m the consortium says it spent on restoring Fort Manoel.
A recent Times of Malta fact-check estimated that MIDI could have spent somewhere in the region of €65m on Manoel Island to date, although this figure does not include several expenses that the group are likely to have incurred.
While discussions are under way, both parties have also taken to legal channels to argue their case.
The government last week filed a judicial protest calling on MIDI to pay penalties for allegedly breaching the concession’s agreed timeframes. MIDI vehemently rebutted the claims in its own judicial reply filed days later, describing the government’s claims as “unfounded” and pointing to several clauses in the agreement which it claims grant it an automatic extension.
Nevertheless, discussions between the two sides appear to have opened on a good note.
Prime Minister Robert Abela was in high spirits last Thursday after a first meeting with MIDI representatives, saying there was a reasonable basis for an agreement over the deal.
He said MIDI put forward a proposal that the government is considering.
“It is a proposal that may offer a basis which can potentially lead to an out-of-court settlement,” he said.
MIDI also appeared to share that view, telling shareholders last Thursday that an amicable resolution would benefit the company more than a protracted legal dispute.
Ultimately, shareholders were told the project was doomed to fail without the necessary government and political support.
MIDI chair Mark Portelli added that it would be “naïve” to think otherwise and forge ahead.