PM ready to terminate Skanska's contract

The Prime Minister, Dr Gonzi, yesterday refused to say how much his government was willing to pay for the Mater Dei Hospital, as he again harshly criticised Skanska for the hospital's spiralling costs.

Dr Gonzi kept up his hard talk about the controversial hospital project and repeated time and again that his government was not prepared to foot the bill for the mistakes and inefficiencies of others.

The Mater Dei Hospital saga was high on the agenda as journalists present for the monthly media briefing at Castille asked who was responsible for the spiralling costs.

Dr Gonzi has insisted on an explanation and a justification for the hike in the estimate that the construction company had presented to the Foundation for Medical Services for the completion and opening of the hospital.

FMS had entered into a cost, design and build contract with Skanska in February 2000, following lengthy negotiations that started in December 1998. The initial figure quoted of $87 million did not take into consideration costs such as IT, equipment and management fees.

Last week, Dr Gonzi suspended negotiations between the government and Skanska over the costs of the new hospital, saying there were discrepancies between the estimates, the proposals and the values indicated in the original contract awarded to Skanska.

He reiterated that he was prepared to hold a meeting with Skanska's top officials should there be no developments about the matter, adding that he was prepared to terminate the contract in the absence of a satisfactory outcome.

Dr Gonzi revealed that the cost of the roads which had to be built around the hospital were estimated at Lm1.9 million, including Lm270,000 for the internal roads. However, the government was faced with a bill of Lm1.6 million for the internal roads alone.

He said he wanted to bind Skanska to an opening date for the new hospital, failing which the company would have to pay penalties.

"We have to draw a line," he said.

The Prime Minister refused to point fingers at his government or the FMS for failing to monitor the increasing costs. On the contrary, it was the close monitoring of the situation which had exposed the problem, Dr Gonzi said.

Turning to illegal migration, Dr Gonzi insisted that his government was doing its utmost to curb a problem that was costing the country Lm1 million a year.

Dr Gonzi dismissed suggestions that no progress had been registered with Libya, despite the regular contacts, including a meeting with Libyan leader Muammar Gaddafi last week.

A draft agreement for the repatriation of illegal immigrants leaving from Libya has been mapped out, and the two countries agreed they could work together on monitoring and controlling the coasts.

Asked about Libya's dues, Dr Gonzi said that the North African country owed Maltese government entities Lm2.8 million, down from the Lm8.7 million owed last December.

Referring to the issuing of visas for Maltese individuals operating in Libya, Dr Gonzi said that proposals to change procedures have been drawn up - but he would not give further details.

Dr Gonzi highlighted his government's concerns for the increasing price of oil - which has now shot up to $53 a barrel.

The government simply cannot keep absorbing the increases in the price of oil, Dr Gonzi said, adding that this cost could be reflected in the outcome of the upcoming budget.

The Prime Minister said that his government was putting pressure on the EU to grant Malta its sixth seat in the European Parliament once the EU constitution comes into effect, rather than wait until 2009. However, he admitted that some member states had opposed this suggestion.

Dr Gonzi also spoke about the drydocks, the Dar Malta controversy and the public transport situation.