Public lotto, MOBC, to be privatised this year

The Public Lotto Department and Mediterranean Oil Bunkering Company will be privatised by the end of this year, according to Finance and Economic Services Minister John Dalli.

In an interview with The Times, Mr Dalli also spoke about the introduction of the euro, VAT, and the setting up of Malta Enterprise.

The privatisation of the Lotto Department was somewhat overshadowed earlier this year by allegations levelled at a shortlisted Greek bidder, but these were however quickly dismissed by Mr Dalli.

He said the local authorities had investigated the allegations of irregularities by a bidder and found nothing wrong.

"This company we're negotiating with operates all over the world, including the US," he said.

Reports had claimed that Intralot, which forms part of the consortium shortlisted for the privatisation, was involved in irregularities.

A Greek newspaper had reported that the consortium handling the lottery, State Instant Lottery, 60 per cent owned by electronics mogul Socrates Kokkalis's Intralot, was responsible for irregularities regarding the distribution of Xysto winnings, the renewal of the lottery contract in 1998 and the misuse of advertising funds.

Replying to a parliamentary question earlier this year, Mr Dalli had said that 15 companies had shown interest in the privatisation of MOBC.

MOBC, which operates the bunkering terminal at Grand Harbour, supplies vessels directly by pipeline or by its bunkering barges.

With regard to the privatisation of the freeport, Mr Dalli said the government was considering whether to continue negotiating with the existing bidder.

Although he would not give any details about the bidder, Mr Dalli said the conditions were not completely satisfactory for the government.

He said the main problem with regard to the sale of the government's remaining 25 per cent stake in Bank of Valletta was that since this was only a minority shareholding, this sometimes served as a disincentive for potential strategic partners. Still, the government was determined to strike a good deal.

Mr Dalli said the fact that Malta's path towards EU membership was guaranteed would help the government operate better.

Asked about his intentions for income tax, Mr Dalli said the new Nationalist government was committed to again raise income tax ceilings, provided tax collection efficiency prevailed.

"Yes, once this happens, the reduction will take place across the board and on a permanent basis - not for just two months," he promised.

The jibe was directed at opposition leader Alfred Sant who promised a two-month tax holiday should the Labour Party be elected to government.

With regard to the introduction of the euro, Mr Dalli said it was imperative for Malta to continue reducing the deficit to acceptable levels.

"I expect the deficit to be reduced to the Maastricht criteria for joining the eurozone by 2005, so that we can introduce the euro by 2006 or 2007."

All the new acceding countries have to form part of the European Monetary Union. In preparation for this, Malta earlier this year increased the euro's weighting in the currency basket for the Maltese lira to 70 per cent.

When asked, Mr Dalli did not exclude certain VAT adjustments in future, though he kept his cards to his chest.

He said VAT was a flexible tax and any adjustments carried out would be made to reflect better both the enforcement and the economic aspects.

Now that VAT in Malta has "matured", it was time to sit back and see how it was impacting different sectors of society and government finances. However, any decisions would be taken with the social partners, he said.

Did he exclude an increase in VAT?

"I don't exclude anything. We will operate according to the needs of the country. Can I guarantee, for example, that there won't be an increase in health or pension costs? Can I exclude that salaries would remain where they are?"

Mr Dalli said he intended to proceed with the setting up of Malta Enterprise and that a meeting to this effect was scheduled for today. He expected the law setting up of the organisation to be among the first to be given the green light by parliament.

Malta Enterprise will result from the merging of the Malta Development Corporation, Metco and Ipse and will be a major focal point to create units of specialisation in the economy, he said.

"This enterprise will create, facilitate, and maintain investment," Mr Dalli said.