Parliament backs €43 million MIDI agreement for Manoel Island return

Parliament unanimously approved the €43 million deal for the government to reclaim Manoel Island and Fort Tigné from MIDI on Tuesday afternoon.

The deal had also been unanimously backed in a parliamentary committee meeting just minutes earlier.

On Tuesday afternoon, Culture Minister Owen Bonnici and Lands Authority CEO Robert Vella told parliament’s National Audit Office Accounts Committee that negotiations with MIDI focused on reimbursing expenses that had been verified and paid and that were directly linked to Manoel Island.

Bonnici said the government had immediately excluded the prospect of paying for the value of the land itself or MIDI’s potential future earnings from the concession, instead working on a deal to bring all parties to their pre-concession position.

The Lands Authority engaged a consultancy firm, Alecta Advisors, to verify the expenses submitted by the company, he said.

During the committee meeting, opposition MP Darren Carabott asked how the Lands Authority’s verification process was conducted and how this differed from its usual method of engaging three architects to value a piece of land.

“We are not talking about the value of the property itself, like typical land valuation,” Bonnici replied. “We are talking about a partial rescission where the value of the land is counted as zero. We are simply reimbursing expenses carried out, so everyone returns to their position before the year 2000”.

Vella added that the firm engaged was asked to review itemised expenses to ensure that the money requested was spent on Manoel Island, asking for proof of payment in each case.

How did negotiations proceed?

MIDI initially requested a sum of €84 million, which was quickly revised down to €78 million after initial discussions, Bonnici said.

Auditors verified €75.5 million worth of expenses, however the final price continued to drop as negotiations progressed.

Some €12.5 million in interest fees were excluded from the deal, dropping the figure to be reimbursed to €63 million and, later, €58 million, after MIDI agreed to slash a further €5 million from its bill.

Further cuts were made after the Lands Authority proposed to reimburse a percentage of certain expenses, rather than their full amount.

For a start, the authority pushed to reimburse 80% of the concession’s €19 million premium for the Manoel Island site, given that MIDI had used the site for 25 years.

It also negotiated to pay 90% of the €12.4 million spent on restoring historical structures, to account for wear and tear over the years.

The authority also agreed to pay half of the sums requested for MIDI’s office space, design and planning fees, employee salaries and other professional tariffs.

The government will also be reimbursing MIDI €2.5 million for Fort Tigné, believed to be 73% of the expenses incurred to restore the site.

MIDI will also be renouncing its right to administer a marina on Manoel Island. Meanwhile, an agreement signed by MIDI for Enemalta to build a distribution centre on the site will remain in place, taken over by the government.

In total, negotiations resulted in a total bill of €47.3 million, which drops to €42.7 million once MIDI’s VAT repayments are factored into the deal.

The deal will now have to be approved by MIDI shareholders before it comes into force.

In a Facebook post after the vote, Bonnici said the contract would be signed once it is approved by MIDI’s shareholders. 

PN had called for the contract to be published last week, shortly after the agreement was announced.

In a brief statement, the Labour Party praised “the firm position taken by a Labour Government during negotiations,” noting that “only half the verified and justified costs will be paid”.