The government is considering roping in the private sector to run the Gozo ferry service between Ċirkewwa and Mġarr as the EU grows impatient over what it views as a lack of observance of competition laws.
The matter was briefly discussed on the fringes of a special cabinet meeting at Villa Francia, the prime minister’s official residence, on October 1.
Sources said Prime Minister Robert Abela discussed the future of the service with a few ministers during a private meeting. However, they said a decision before the end of the year was “unlikely”.
Abela is facing pressure from the European Commission to bring the ferry service contract in line with competition rules after years of extending an outdated arrangement.
The service was run by private companies until the 1970s when the government took it over and set up the Gozo Channel Line in 1979.
Following Malta's accession to the EU, Gozo-Channel has been running the service on the strength of a so-called public service obligation contract, which enables the government to funnel money into it as a form of state aid allowed by the EU for essential services.
However, the PSO contract expired in October 2017 and the government has since been extending it annually rather than issuing a call for bids from private sector companies interested in offering the service.
The sources said some operators had indicated they may be open to providing the service should the right conditions be offered by the government.
The level of state aid funnelled into the service has ballooned from around €1 million annually to some €9 million forecast for the end of this year.
Government sources said Brussels has repeatedly expressed frustration over the situation and recently informally told Malta to bring the situation in line. That happened when the government told the commission of its intention to help the private companies running the fast ferry services linking Gozo to Valletta.
Some operators had already indicated they may be open to running the service should the right conditions be provided by the government
On September 30, the government announced it was offering a two-year, €12 million public service contract to the two fast ferry operators. The privately run companies, Virtu Ferries and Gozo Fast Ferry, say they need the public money to make the operation feasible.
Paul Zahra, a senior finance ministry official, is leading a team of policy advisers at the state aid monitoring board which is considering different options for ferry services.
Sources said that Zahra’s team has received fairly positive feedback from the commission about its proposal to pump millions of euros into the fast ferry connection, although Brussels did say it also expected Malta to deliver a holistic plan for connectivity to Gozo.
This is expected to include a definitive position on the next call for expressions of interest in the running the traditional ferry service.
State of the ferries is a source of concern
Sources privy to the government’s internal discussions also said the efficiency of the current fleet of ferries is a major concern.
Described as “outdated fuel-guzzlers” by government insiders, the first of Gozo Channel’s three vessels was commissioned in 1996.
In 2019 Gozo Channel also leased a 32-year-old Greek-owned ferry, the MV Nikolaos.
The Nationalist Party claimed last week that work is under way to privatise the Gozo Channel ferry service.
Two Nationalist MPs told a press conference they had information indicating that the government was planning to privatise the state-owned company, which operates the ferry crossing.
The government quickly denied any such plans had been drafted.