State aid to Gozo Channel remains a carefully guarded secret

Government officials are refusing to disclose details regarding hundreds of thousands of euros of public funds being funnelled to Gozo Channel to ensure the State ferry service remains afloat.

The Shift approached the Transport Ministry to ask for details after it was informed that the government had ‘quietly’ amended an EU-approved Public Service Obligation contract between the Transport Ministry and Gozo Channel to increase State subsidies.

Transport Minister Ian Borg has turned down a Freedom of Information request to publish a copy of the five-year Public Service Obligation contract which came to an end in 2017, along with the new amendments made earlier this year, possibly in violation of EU rules.

Borg turned down the request, citing commercial concerns.

While declaring that the requested documents are “exempt documents” according to its interpretation of the FOI Act, the ministry added that the publication of these documents will “disclose trade secrets, as the information is of ċcommercial value.”

Gozo Channel, the only operator of a passenger ferry service between Malta and Gozo, is a State monopoly with no competition. According to EU rules, it must compete on a commercial basis for a Public Service Obligation contract, issued by tender every five years, entitling it to State subsidies to operate the essential service.

The government has not yet issued a new tender despite the fact that the last contract ended in 2017.

Instead, it continues to grant heavy subsidies to Gozo Channel, paid for with public funds, even recently updating the  Public Service Obligation that expired in 2017.

In the last three years, the government issued a PSO tender twice. Yet on both occasions, the call was withdrawn after the process was struck down by the courts due to irregularities by Gozo Channel.

A few months ago, The Shift reported Gozo Channel Chairman and Labour candidate Joe Cordina, warning a parliamentary committee that the State company was close to financial collapse unless the government intervened with more subsidies.

Cordina said the sudden dip in the company’s operations, due to the COVID-19 pandemic and extravagant costs related to the leasing of a fourth vessel – the MV Nikolaus – were bankrupting the company.

The Shift reported that the MV Nikolaus was costing Gozo Channel an extra €400,000 per month, excluding fuel costs. The government has so far refused to give any details on the MV Nikolaus contract.

Additionally, in the weeks leading to the 2017 election, Gozo Channel was flooded with new employees, engaged either directly with the company or through the various service providers. This resulted in a massive increase in the company’s payroll.

Gozo Channel has not presented its accounts since 2017.