PQ&A

For years on end, the Nationalist Government drugged the public with endless stories of the Freeport's success. Now it turns out to be another fairy tale with a cruel ending: no one in it is going to live happily ever after except the shipping company CMA-CGM which for 30 years has been given total control over our only functional deep sea port. They made a good bargain as they have paid very little to gain control over the Freeport and the losers are going to be our importers, exporters and taxpayers.

Year after year, the PN government concealed the truth about the Freeport's losses and financial hemorrhage. The truth emerged at the privatisation signing ceremony. On that day, the Union Haddiema Maghqudin (UHM) attacked the government (The Times, October 6): "The union (UHM) accused the government of being irresponsible when it painted a rosy picture of the Freeport. Figures released by the Freeport administration yesterday showed a loss of over Lm3 million in the past two years, incurred even though the volume of work had increased, it added."

The Nationalist government repeatedly drummed up the success story by linking it to the increasing number of containers handled by the Freeport. Little did the public imagine that the more containers handled, the less likely was the Freeport to record a profit. Why? Some terminal agreements concluded by the Freeport with shipping lines were not viable for the Freeport but these shipping lines benefited greatly as they got preferential treatment.

Those who were running Malta Freeport and were responsible for the loss of so many millions of liri have got away with it, like those who bled Air Malta dry with Azzurra Air and the RJs. We had former Prime Minister Dr Fenech Adami urging the nation to set up a monument to Marin Hili, under whose chairmanship the Freeport was depicted to have been a major success when it was in fact squandering huge public funds.

Government has since had to admit that Malta Freeport was so depleted of finance that it could not make any new investments in its terminal equipment. We were told that the privatisation took place to fulfil this urgent need. After allowing a couple of friends to bankrupt the public sector, we have pathetic ministers who have the cheek to call those who speak up for the national interest "old-fashioned"!

Government has been going round in circles trying to justify Malta Freeport's privatisation and trying to cover it up as a good deal for Malta! One day we were told, "the venture was not just about money although $421 million is not a figure to be sneezed at". Within a few days, we were told that "the government is expected to make $370 million (Lm128 million) over a 30-year period through the Malta Freeport lease agreement with CMA-CGM, government sources said yesterday." (The Times, October 4).

Government has no choice but to resort to eyewash to conceal from us the fact that Malta is the loser in this deal covering a 30-year period. Take, for example, the sale price for the shares in Malta Freeport Terminal Ltd. The price conceded was at a discount to the company's worth and from which an undisclosed amount was further deducted to cover the losses sustained during the nine months of 2004 (see clause 2.2.1 on page 7).

There are also other adjustments that were to be made from the purchase price of $80 million under clause 2. CMA-CGM received Lm368,258 from Malta Freeport Corp. in accordance with the curt provision in Clause 5.4 that "MFC shall, on completion, pay the company the sum of Lm368,258 in full and final settlement of all amounts owed by MFC to the company."

The purchase price was not a payment on contract of a lump sum of $80 million, but under clause 2.4, payments of $4.448 million were to be effected each year after the said deductions were made. Against all banking practice in Malta and several EU countries, CMA-CGM were given the benefit to lock in at an interest rate of 4% throughout the 30 year term, and with this purchase they didn't just take Terminal 2, but also Terminal 1 and the Freeport administrative buildings, plus exclusivity over the whole of our only deep sea cargo port.

Becoming a new colony

Now if Tom, Dick or Harry takes a mortgage on his house from the bank, he would pay a variable interest rate that would rise over the years. Not only did CMA-CGM not pay the full price on the acquisition of the Freeport Company, but Government also ceded an interest rate that was lower than what it had to pay. Under this agreement, CMA-CGM pays 4% a year, and against such income, the government then is burdened with the payment of interest every year of 6.99% on the foreign loan of €200.7 million on Terminal 2 alone.

So our consolidated fund pays a staggering Lm80 million, depending on the dollar and euro exchange rates, if the agreement were to run for the 30-year period. And this just for Terminal 2, although CMA-CGM were in addition given Terminal 1 and the administration centre. Some deal! Then our coffers take the downside risk in currency fluctuations between the dollar and the euro, and we all know how the dollar is falling against the euro.

Then there is a lease agreement for both terminals and the administration buildings. For the 30-year period, CMA-CGM pay just Lm1,000 a year. For the encroachment of the public space to place tables in the open, a café owner pays a thousand times what CMA-CGM pay for the whole of the Freeport. One has to be so thick-skinned not to blush!

Foreign investment is welcome from all sources, more so from France, but the fundamentals must be mutual and in our best interests. France, such a staunch defender of its own national interests, would be the last country in the world to place its only strategic cargo port in the control of a foreign company. Government has not bound CMA-CGM with any firm obligations to invest in Malta Freeport's facilities, to transform it into a better transshipment hub or domestic port. Any investment in the next 30 years is going to depend exclusively on the interests of CMA-CGM.

We are told that even under the control of CMA-CGM Malta Freeport will indeed provide common user facilities, and in turn that new shipping lines will be queuing up to double its capacity for our economic good. But the 'management agreement' between Portsynergy and Malta Freeport Terminals Ltd, now owned by CMA-CGM, tells a different story.

All through this agreement the terminal operator could be described as a proxy for the French shipping line. Apart from the structural minority held by Portsynergy, it is incessantly tied down to what CMA-CGM decides.

If there was any doubt about how our major port will be used, Clause 3.1 will quickly remove it, as under this clause, Portsynergy are "subject to the policy and supervision of the board of directors of MFTL (now 100% owned by CMA-CGM through its subsidiary Terminal Link) and are to conduct the terminal operations "with a view to achieving the objectives of MFTL; as from time to time laid down by MFTL board of directors" in regard to the organization of "work on the terminal, schedule arrivals and departures of vessels, and maintenance and repairs of the licence assets"; are to "implement MFTL commercial policy as from time to time defined by the board of directors"; "Portsynergy shall handle the contractual negotiations with MFTL existing or future clients on the basis of (a) the tariffs set by the board of directors and (b) MFTL pro forma terminal contract';

The exclusive licence operator granted to CMA-CGM ensures that its interests come first and foremost. Under clause 3.1, "The licensor hereby grants to the licensee for the whole of the licence period the exclusive right and privilege to carry on the business within the (Freeport) Site". As though this was not enough, clause 6.1.3. then provides that "the licensee shall use all reasonable endeavours to attract shipping lines to use the site provided that the best interest of the licensee itself are not, as a result of such endeavours, materially prejudiced."

This is what Government has agreed to - not the interests of our Freeport come first, but those of the licensee, CMA-CGM. Can new shipping lines be blamed where they place their transshipment business when they may view the terminal operator as being a competitor?

What will displease our importers and exporters is that until a few months ago they had a diverse network of shipping services linking our country to the world. They also had bright prospects that these services would be extended because the interests of the Freeport under Maltese ownership and management in bring new shipping lines to Marsaxlokk, merged with their own.

Our traders knocked on the Prime Minister's door when several shipping lines left from our Freeport in June, but got no response. Government has slammed the door in their face, and would have them believe that their business will not be in the grip of one major shipping company that enjoys exclusive control over our major shipping artery for 30 years.

evaristbartolo@hotmail.com