Updated | Ministry rebuts McGill’s criticism: ‘in the process of replying to all bidders’

The Scottish firm initially interested in making a bid for Malta's public transport operation has scrapped its plans, citing "lack of openness" from the government.

A spokesperson for Transport Minister Joe Mizzi has confirmed that McGill's Bus Service has already informed the government of its intentions to withdraw the bid.

Since the government's call for expression of interests for the operation of the new bus service closes on 7 April, the spokesperson was not in a position to confirm the number of bids received so far.

"The closing date for the submission of offers in response to the EOI is the 7 April. Until then, no information can be divulged regarding potential bidders, since this can possibly jeopardize the process," the spokesperson said.

In comments to the Sunday Herald, McGill's chief executive Ralph Roberts said he had a "gut feeling" that excessive state interference would prevent the firm from running a profitable service.

"Their first option was to have someone take over an effectively nationalised service and assume the assets and liabilities. While they made that clear up front, they didn't say what this amounted to, so we had no idea what the liabilities were, what the assets were, what the revenue was, or the patronage numbers," Roberts told the Sunday Herald.

"I have been waiting three weeks for that [information] and we got to the point where if we are going to put a robust submission together we have gone past the point of no return. There were too many holes, too may gaps in the information."

But in a reaction, the Ministry for Transport said the government said McGill's was not the only one sending questions and it was in the process of replying to all bidders.

"McGill's is one of a number of companies who showing interest in the bid. The Government is in the process of replying to all bidders, not only to McGill's queries. These are being done within the timeframes stipulated in the Expression of Interest," the ministry said.

The ministry confirmed that McGill's, like other bidders who registered their interest in the process, sent requests for clarifications.

Pointing out that all bidders had the right to pull out at any stage of the process, the government said it maintained "its commitment to answer any relevant clarifications by the 24th March 2014, which is the timeframe stipulated in Section 10 of the Expression of Interest".

Roberts, who travelled to Malta on various occasions holding meetings on its prospective bid, said the company had a "gut feeling" and in this case, "it just didn't feel right".

"I've been involved in negotiations all over Europe, and the Maltese government's way is not the way you do negotiations. [Governments should] get all the information that's needed out as soon as possible, to allow companies that are bidding to get as much time as possible to get something together before the March 24 deadline. This is not the way they are working; they have a very different culture and it wasn't sitting well with us," he said.

Roberts added that the company had "heard stories" that it was "difficult to pin down the Maltese government to fulfil their promises".

According to Roberts, the government was "were very eager to get the franchise-holders to deliver their contractual promises. It was a one-way street, in other words."

Malta's public transport service was nationalised in the beginning of 2014 after Arriva transferred its assets to government.

Malta Public Transport Services Ltd absorbed €7.9 million in total debts when it took over Arriva Malta.

The €7.9 million in credit was extended by various Arriva Group subsidiaries. But the losses incurred by the company saw Arriva Malta borrowing lines of credit totalling €10 million from parent company Deutsche Bahn in 2011, then €12 million in 2012, and finally €29.7 million in February 2013 - a total of €52 million.

The 245-page share transfer agreement between Arriva and Malta Public Transport Services was tabled in Parliament earlier this year.

The original subsidy agreed between the previous government and Arriva in 2011 was set at around €6 million per year for the duration of the 10-year contract, however subsidies topped €10 million in 2012.

Moreover, the accounts show that Arriva was forecasting an operating loss of €4.3 million for 2013 but the company actually registered a loss of €18.7 million as of November 2013.

The financial statements tabled in the House of Representatives, submitted on 2 January 2014 by PricewaterhouseCoopers, paint a dismal picture of the state of the public transport operator.

Arriva actually expected to see revenue streams stabilise in 2014, with revenue growing annually by 8.2% in 2015 and 2016, and fuel costs decreasing. But by 2012, it had already amassed €75.6 million in contract losses.

Arriva Malta was granted the concession agreement for the operation of Malta's public transport system in November 2010. On 3 July 2011, the company officially commenced operations.

But during this period, the company face a number of organisational issues which impacted both its operational controls and financial reporting, with the transition to the new bus network demanding the recruitment of some 1,000 staff and over 300 buses. The company entered into a €35 million loan agreement with DB Logistics to purchased 264 buses.

Apart from wildcat strikes on the first day of operations, various changes were made by Transport Malta to the originally awarded bus route system. This led to a new quantification of the size of the bus network and supporting resources.