A new Public Service Obligation for the transport of passengers, vehicles and goods between Malta and Gozo – over five years late and with the government feeling the heat from the European Union – is still in the works.

Although the Prime Minister said back in October that plans for a new PSO were being drawn up, Transport Minister Aaron Farrugia on Monday confirmed that “technical preparations are underway, as well as the necessary discussions for the government to publish a call for the PSO.”

Opposition MP Chris Said had asked Farrugia to specify to the House in which month of this year the PSO would be published, but the minister’s answer on the timeline remained decidedly vague.

Gozo Channel’s five-year Public Service Obligation contract drew to an end in October 2017 and the government has since been extending the contract instead of issuing a call for bids on a new PSO from the private sector.

Gozo Channel is a monopoly and as such, according to EU rules, it needs to compete on a commercial basis for the Public Service Obligation contract, which entitles the operator to State subsidies to run what is considered an essential service.

The Commission has held that Gozo Channel’s monopoly breaches EU rules and that the service – now being subsidised at around €5 million a year compared to the original €700,000 – should be allocated on the basis of a time-limited contract open to all interested parties in the European Union.

The PSO is meant to be issued by tender every five years but it has been left adrift since it elapsed in October 2017. Instead, the government continues to inject significant subsidies into the company, quite possibly in gross violation of EU rules.

In 2019, it even updated the Public Service Obligation in 2019 to increase Gozo Channel’s subsidy by €4.3 million – from €700,000 to €5 million.

The government has issued PSO tenders in the past but they have been withdrawn after the  bidding processes were struck down in court over irregularities on the part of Gozo Channel.

But with Prime Minister Robert Abela facing pressure from the European Commission to bring the ferry service contract in line with competition rules after years of extending the outdated contract with Gozo Channel, work on a new PSO, according to the transport minister, is still a work in progress.

After having opened the fast ferry service between the islands to private operators in October, the Prime Minister announced that a PSO for the standard ferry service was in the works but, like Farrugia four months later, he had given no indication of when it would be published.

The Opposition at the time warned, “The monopoly of the Gozo Channel company may soon end after the Prime Minister confirmed plans to fully liberalise the transport of passengers and goods between Malta and Gozo.”

Abela has pledged the eventual tender will not be tailor-made to suit any particular company, saying “this government doesn’t play such games”. He has also confirmed the government-owned Gozo Channel company will be bidding to retain its coveted PSO.