Austin Gatt tells parliament, Transport Malta chief has no conflict of interest

Austin Gatt was answering a question by Labour MP Joe Mizzi, who picking up on a story by MaltaToday said one of the shareholders of the Manoel Island Yacht Yard Ltd - Mark Portelli - was in fact the chairman of Transport Malta, which regulated the transport sector. In the process, Portelli heads the regulator of industries in which his co-shareholders have interests in.

Gatt said in parliament that Transport Malta did not issue licences for shipyards such as the Manoel Island Yacht Yard, much in the same way "as it did not regulate and licence car mechanics and sprayers" and said there was no conflict of interest.

Portelli is a shareholder in Virtù Steamship, which forms part of Manoel Island Yacht Yard Ltd, which includes Bezzina Ship Repair, Mizzi Holdings, Hili International, and Midi plc – the developers of Tigné Point and Manoel Island

As maritime regulator, few questions have been made of Portelli’s position and whether he opens himself up to a possible conflict in his role as chairman of Transport Malta, and being in business with firms which are involved directly in the marina industry: such as Midi, which has the marina concession at Manoel Island. Portelli was formerly the chairman of the maritime authority before it was absorbed in the super-authority for transport.

The valuation of the Manoel Island yacht yard was entrusted to auditors PricewaterhouseCoopers, who are also consultants to Midi plc on the Tigné Point and Manoel Island projects.

In tagging Manoel Island yacht yard - part of the privatisation of the Malta Shipyards - at a price of €12.5 million, PWC predicted favourable market conditions for the yard due to “the privatisation of the government owned marinas” which would generate more yachting activity.

This was a reference to upcoming marinas inside the Ta' Xbiex bay, with Midi plc itself already a concessionaire of the Manoel island marina. Additionally, in April 2009 the maritime authority - under Portelli - announced the opportunity to expand the existing marina at Ta’ Xbiex (Gzira Gardens), with an additional 100 berths, provided the area is protected by a breakwater Midi plc must develop off Manoel Island, as contemplated in the outline development permit issued by MEPA in their favour. Once the development of the breakwater is completed, the Authority would issue a request for proposals for the privatisation of the Ta’ Xbiex marina.

But PricewaterhouseCoopers tempered its valuation by saying it would not adjust the value of Manoel Island yard to “reflect the potential upside from these developments” because of the uncertainty of timing of the Midi land reclamation project: namely, the breakwater that Midi must construct at Manoel Island before work on a marina at Ta’ Xbiex starts. So PWC tagged the sale of the yacht yard at between €10-€13 million: and the consortium bid with €12.5 million.

The yard is being transferred on a 30-year concession, during which the new company would invest €18.8 million. The company has paid €5.5 million up front apart from bidding with an offer of €12.5 million. They will pay an annual rent of €225,000 a year, to increase by 15% every five years; an additional €265,000 per year for the first 10 years. Another €6 million is to be invested in upgrading the facility.