The House of Representatives yesterday approved a motion to allow an extension of Malta Freeport through land reclamation. The motion also makes possible an extension of the lease of the facility to CMA CGM by 35 years to 65 years.
Public Investments Minister Austin Gatt at the opening of the debate described the Freeport as a success story for Malta. He spoke on how the Freeport had been developed under PN governments and thanked former chairman Marin Hili for his work in the port's growth. Unfortunately, he said, investments did not always go well. The Freeport lost €18 million in its investment in Brindisi, conceived under a Labour government and implemented under a Nationalist one. But it made much higher profits in its investment in Oiltanking.
Dr Gatt said the decision taken in 2004 to privatise the Freeport had been proved to be wise, with the port having seen substantial investment and strong growth in throughput by French group CMA CGM. It was worth recalling that Opposition leader Alfred Sant had been among those who criticised this privatisation process.
He said that CMA CGM in three years had invested €45 million and created 232 new jobs. Throughput rose from 1.2 million containers in 2004 to 1.9 million last year. The Maltese economy also benefited from revenue from rents and other spin-offs.
And now CMA CGM had committed themselves to invest a further €130 million and raise throughput to three million containers. Jobs will rise by a further 500 in five years, subject to penalties if that does not happen. There could be no better certificate of the success of the government's privatisation policy, Dr Gatt said.
He explained that both Freeport terminals will be extended through land reclamation. They will be equipped with new, larger gantry cranes. The fairway will be dredged to handle the biggest container ships currently under construction, carrying some 10,000 containers each. Part of the dredging costs will be met by the government. CMA CGM will also extend the marshalling yards by 133,000 square metres.
Dr Gatt said the lease of Malta Freeport was initially being extended by five years, but if the French group met all its commitments, as he was confident it would, that lease would be extended by a further 30 years.
He said government revenue from rent will be increased as a result of the agreement with CMA CGM.
This success, Dr Gatt said, as well as other foreign investment such as that in the pharmaceutical sector and in financial services, was not coincidental but a credit to a visionary government which had created 10,000 new jobs in four years.
Opposition finance spokesman Charles Mangion said employment growth over the past few years was among the slowest in the EU. The opposition, he said, was backing this motion. So too was Birżebbuġa local council. He insisted, however, that it was Labour governments which started building the Freeport but operations started in earnest after 1987, when the PN was in government.
Dr Mangion said the Freeport extension needed to be seen in the context of sustainable development, the impact on the environment and on the lives of nearby residents. The government had not said anything about this. Would Mepa investigate? Would noise levels rise as a result of the new equipment? Would seawater quality deteriorate in the bay?
Dr Mangion said Mediterranean cargo traffic was expected to increase in the future and CMA CGM were right in seeking to put themselves in a good position to cater for this growth. He was concerned, however, that the text of the proposed agreement with the French group was not fully binding and CMA CGM could opt not to go through with part of the proposed investment.
Furthermore, Dr Mangion said, once dredging was required to facilitate the operator's work, why was the government being bound to spend up to $15 million for the purpose? Surely that should be the responsibility of the operator?
Interjecting, Dr Gatt said 'capital dredging' was already a legal obligation of the Malta Maritime Authority, with the operator responsible for maintenance dredging. It was international practice that the fairway was the responsibility of the port owner since it could be used by all port users. At Marsaxlokk, the fairway could be used for ships going to the Enemalta facility. The fairway will be dredged to just over 17m.
Dr Mangion said there was no doubt this dredging would benefit the Freeport operator.
Turning to the rents, Dr Mangion said the adjustment was downwards for the first 30 years and gain would only come later. But that did not appear to be enough for the government to settle the old Freeport debts.
Furthermore, what had become of revenue from the sale of the freeport's shares in Oiltanking?
Concluding, Dr Mangion said one welcomed this investment but it had to be ensured that the social and environment impacts were also considered. He therefore urged CMA CGM to give importance to corporate social responsibility.
Michael Asciak (PN) said it was good that the opposition was now giving importance to the environment in the context of development - the eco-social market. Up to some time ago, under Labour, there was neither eco, nor market. As for the building of the Freeport infrastructure, Dr Asciak said the PN government had to replace the quays and instal new cranes. The Nationalist MP also pointed out how the government had embellished Birżebbuġa, extending the sandy beach and the promenade. The old oil tanks would also be re-sited.
He said that while the MLP spoke on wanting to attract investment, it was not coming up with ways to improve competitiveness. Indeed, it wanted to increase the number of public holidays.
Concluding the debate, Dr Gatt said the fact that the opposition was voting in favour of this motion marked a u-turn from the position in 2004 and even as recently as 2006, when the opposition was against the privatisation of the Freeport. Such u-turns were becoming frequent, leading one to wonder if the MLP would have a change of heart over the promises it was currently making.
Dr Gatt said quays built by Labour governments had to be rebuilt because their surface was not level (to enable better water drainage) and as a result not more than four containers could be stacked on top of each other. Under Labour the Freeport (then known as Maconte) had only handled 5,000 containers a year. The PN governments rebuilt and extended the quays and throughput grew to 1.2 million before privatisation.
Dr Gatt said the environmental impact studies were part of the development process being handled by Mepa. A number of studies had already been submitted and on that basis Mepa had already granted an outline development permit.
The minister said the government had a revenue of €29 million from the sale of shares in Oiltanking. That revenue went into a sinking fund for the payment of the Freeport debts. Revenue from the rents also went to that fund.
Dr Gatt denied that the text of the agreement did not fully commit CMA CGM to make the agreed investment. The group could opt not to extend part of the Freeport, he said, but it was still being bound to invest €130 million and employ an additional 500 workers in five years. Indeed, should all the planned reclamation take place, notably the reclamation to extend Terminal II, the investment would be much more than €130 million.
Turning to the rent, Dr Gatt said that in view of the extension to 65 years there was a rescheduling. The government would earn more over the first 30 years than in the first agreement, enabling it to improve its debt servicing.
Concluding, Dr Gatt said the new agreement meant a guarantee for the future, for Malta, for the Freeport workers and for local industry, which was benefitting from shipping links to all parts of the world. The future looked good because CMA CGM was one of the leading shipping lines and it was growing fast, commissioning a new ship practically every two weeks. It was important, however, that Malta remained efficient and competitive, given the stiff competition that existed.
The motion was unanimously approved.