INDIS accused of not enforcing Marsa shipbuilding concession terms

The Manoel Island Yacht Yard has put the industrial parks regulator, INDIS, on notice for not enforcing concession terms at the former Marsa Shipbuilding site, MaltaToday has learnt.

Manoel Island Yacht Yard (MIYY) is understood to have warned INDIS over the way MMH Malta (Mediterranean Maritime Hub) is being allowed to use land it was awarded by government, in breach of concession terms.

MMH’s owners, Paul Abela of Ablecare Oilfield Services, is currently seeking a widening of those terms of concession from INDIS, to take to port the acquisition of a 70% share by Virtu Ferries and LTV Developments, for a much-needed cash injection.

But MIYY believes that – in direct competition with the services it offers – MMH has been providing maintenance services to yachts in breach of the 65-year emphyteutical deed it was granted, apart from hardstanding services, “almost completely to the exclusion of activities related to oil and gas.”

In a pointed letter to INDIS, MIYY said that while the land at the Marsa shipbuilding area had been granted to MMH for oil and gas services, instead the company was marketing itself as a boat park for yachts despite these services not permitted by the original deed.

MIYY told INDIS it was allowing MMH full impunity to breach the deed, despite it being a grant of public land.

It said it wanted INDIS to ensure the respect of the terms of concession, the breach of which was causing significant financial losses and loss of returns on its own investment in the area granted to it within Manoel Island. The Manoel Island concession was granted in a public call for offers back in 2010.

Since 2016, MMH has been running the former Malta shipbuilding site on a 65-year concession under specific terms. The concession was granted for the declared uses of oil rig inspections and repairs, oil pollution response, maritime skills training in collaboration with MCAST, drill ship conversions, offshore logistics basis for crews and vessels, and other related oil and gas industry services.

The permitted uses do not refer to the provision of hardstanding facilities for yachts and yacht maintenance and repair services, nor has the emphyteutical deed ever been amended to widen the permitted uses. Such changes, industry sources told MaltaToday, would raise public procurement concerns.

Delay in share transfer

The 70% share transfer for the operations at MMG was set back six months, pending a change in the conditions of the concession.

Buyers Virtu and LTV are seeking a change in concession terms that will give them a wider berth of services to be offered other than the oil and gas services MMH is bound to provide. The changes must be approved by the government regulators.

But with no agreement on these new terms being settled by an initial 30 June deadline, the prospective share transfer agreement has now been pushed to December 2023. “These conditions include the issuing of all necessary authorisations for the transaction to proceed from the local competent authorities, in line with the guarantor’s obligations arising from a public deed of 1 August, 2016 concerning the transfer by temporary emphyteusis of the site in Grand Harbour, Marsa, today known as the Mediterranean Maritime Hub,” MMH said in a company announcement last week.

“The transaction described above therefore remains subject to the above-mentioned approvals being issued and the fulfilment of the Conditions Precedent.”

MMH, which has to issue bondholders with their annual interest payment, has said the 70% share transfer to Virtu-LTV is required for a €10 million fund transfer to restructure the group’s capital.

Auditors say the capital will allow the group “to meet its financial commitments in the medium term” but warned that given the equity position of the company, “there remains uncertainty should the parties not reach an agreement on final definitive contracts, or... the change in ownership and involvement in the group by the new investors and related capital injection not materialise within a reasonable timeframe.”

The auditors told MMH these events indicated a “material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.”