Ferry service operator benefits from further concessions granted in contested extension

A highly contested three-year extension of a public concession agreed between Transport Malta and Marsamxetto Steamferry Services Ltd further benefits the service provider through ‘compensation’ offered to permit the company to recoup its investment, The Shift can reveal.

Last month, The Shift reported that an eight-year exclusive concession given to Marsamxetto Steamferry Services in 2012 to run ferry passenger services between Sliema, Valletta and Cottonera, was extended by Transport Malta beyond its 2020 expiry date by a further three years without a public call.

The Shift is now informed that the deal reached with the private company – a joint venture between the Zammit Tabonas and the Bianchi Group – goes even further. As ‘compensation’ for the ongoing COVID pandemic, Transport Malta has accepted that Marsamxetto Steamferry Services can reduce their public service by half, and the start of the three-year extension will only occur once passenger numbers return to pre-COVID figures.

This means that the extension granted to the company will likely stretch beyond three years, to an unknown timeframe, ousting competition for a longer period of time. The government agency, which falls under Minister Ian Borg, will depend on company data to determine when pre-COVID figures have been reached.

Maritime industry sources described the concessions made by Transport Malta as “unbelievable” and “scandalous”.

The decision to extend Marsamxetto Steamferry Services’ concession is already being contested by a rival company, Supreme Travel, before the Public Contracts Review Board (PCRB).

Transport Malta is arguing that this further concession was necessary in view of the ongoing COVID pandemic, saying the service is currently not financially feasible. Yet, transport industry sources warned this was a dangerous precedent:

“With the same reasoning, Transport Malta can now stop public bus transport or reduce its frequency as it is also financially unsustainable. But this is what a public concession is all about.”

Asked to comment on the latest agreement with Transport Malta, Marsamxetto Steamferry Services CEO Edward Zammit Tabona said his company did not wish to make any public comment since the matter is now under review by the PCRB.

Compensation claim morphs into concession extension

In 2012, Marsamxetto Steamferry Services was awarded a public tender for an 8-year concession for the ferry service.

On its part, Transport Malta committed to building adequate facilities so the vessels could operate even in bad weather.

Two of four landing places have been completed, although late. The other two are still in construction phase.

According to the 2012 agreement, the concession had to come to an end in 2020, when the service had to be re-opened for competition, according to European public procurement rules.

As the 8-year concession was coming to an end, Marsamxetto Steamferry Services made claims for compensation, arguing that Transport Malta’s failure to construct the necessary facilities meant the company was unable to recoup its investment.

Marsamxetto Steamferry Services threatened Transport Malta with court action but said that it was ready to drop all claims if its exclusive concession was extended by a further 15 years.

The Zammit Tabonas made their demands to James Piscopo – then chairman of Transport Malta and also, at the time, a business partner with the Zammit Tabonas.

Despite the fact that the concession came to an end in October 2020, Transport Malta did not issue a new tender. The Shift had revealed the settlement reached with Marsamxetto Steamferry Services to extend the exclusive concession.