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Gozo Channel ‘drowning’ as €13,000-a-day vessel returned to ferry service

Gozo channel ferry
The MV Nikolaos on its arrival in Malta. Photo: Gozo Ministry / George Scerri

Taxpayers will need to again come to the rescue of the ailing Gozo Channel in the coming weeks to prevent its collapse, partly due to the enormous costs needed to maintain its fourth leased ship providing ferry services, The Shift has learned.

The State company that operates the ferry service is suffering massive losses running into millions. In this context, it took a hit with the almost complete lockdown between the two islands due to the virus, and the daily payments the company is making to keep its fourth leased vessel – the MV Nicolaos.

While both Gozo Channel and the Gozo Ministry have refused to say how much the vessel is costing, The Shift is informed that the State company is spending some €13,000 per day for the MV Nikolaos, which includes the crew, but not fuel costs.

This has resulted in an added burden of some €400,000 per month for Gozo Channel, while fares for the crossing remain unchanged.

Introduced last year, following a direct order to a Greek company, the MV Nikolaos was added to the company’s fleet to make the crossing between the two islands more efficient.

While the 33-year old vessel has made a difference in the frequency of the company’s scheduled crossings, particularly during the peak periods – weekends and August – it has come at a cost which the company cannot sustain.

Joe Cordina, a Labour Party candidate who occupies the role of Gozo Channel chairman, recently told a parliamentary committee that the company will not survive without additional subsidies from public funds. Cordina acknowledged that the introduction of the fourth vessel has threatened the company’s financial survival.

So far, both Gozo Channel and the Gozo Ministry, which is politically responsible for the State company, refused to be transparent and provide details about the procurement procedures used to acquire the vessel.

The Ministry also rejected requests made in parliament and through the Freedom of Information Act to publish the contract, citing as a reason “commercial sensitivity”.

The MV Nikolaos was acquired from a small Pireus-based company, known as Onies Grammes Shipping Company, which normally operates ferry crossings between various ports in Corfu and other small Greek islands.

The Gozo Channel is currently receiving State aid, according to a contract which came to an end in 2017. Although EU rules permit Gozo Channel to receive State aid, this must be done according to a Public Service Obligation (PSO) contract, issued through a competitive tender every few years.

The current contract came to an end in 2017, and the government is still using the expired contract to pay subsidies to the monopoly.

New tenders issued since 2017 by Transport Malta had to be cancelled following a series of claims of wrongdoing and possible corruption by the authorities.

During the processes, Gozo Channel had illegally signed an agreement with a newly formed shipping company, Islands Ferry Network, to partner for the tender and offer fast ferry services, together with the ongoing conventional ferry service.

Islands Ferry Network was set up by the Zammit Tabonas – owners of Captain Morgan and donors to the Labour Party – and Magro Brothers, producers of tomato products with no experience in shipping.

This agreement was declared irregular and cancelled by the court, following a challenge by Virtu Ferries.

Asked by The Shift to state why the PSO tender has not been issued again, and whether the current one, which ended in 2017, has been amended, the Transport Ministry remained tight-lipped.

“The necessary preparations are currently undertaken in order to ensure that the tender in question is published in the near future,” a spokesperson for the Ministry said.

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