Privatisation: is it really on track?

Every time he feels cornered, the finance minister has a penchant for trying to come through unscathed. Almost invariably he tries to give the impression that none of his feathers have been ruffled as well as that all his plans seem to be on track.

He does so when the structural deficit overshoots. He does the same when he falls behind in implementing his budget promises. And he has recently adopted the same stance when talking of "his" privatisation programme.

Were it not for the ill-fated Maltapost "experiment" and the MIA privatisation - the contract with the foreign-led consortium is expected to be signed around the 26th of this month - we will have gone for years without Government having implemented any privatisation worthy of note.

The recently published Financial Report for 2001 confirms this by stating that during the past financial year no proceeds were received from privatisation.

In fact Government has failed to implement any of its major privatisation plans since publishing its White Paper "Privatisation: A Strategy for the Future" in November, 1999 - more than two and a half years ago.

Anyone going through the minister's Budget Speech last November would have got the impression that there was due to be a new-found momentum to Government's privatisation plans during this financial year. The Freeport, Bank of Valletta, MOBC, the Public Lotto, Medigrain... They were all expected to materialise in their own way until eventually paving the way for the last remaining "jewel in the crown" - Maltacom.

During a recent radio programme on RTK in which we both participated, when quizzed by the station's anchorman about the feasibility of privatising Malta Drydocks, the minister said that although it was unlikely to attract any buyers because other competitor yards were producing more for a lower price, were such a hypothetical situation to develop, he would be the first to urge prospective buyers to open negotiations straight away.

Which poses the ticklish question: Will this government limit itself to selling the family silver, by disposing of profit-making parastatal enterprises, or will it at some stage also turn its attention to such heavy loss-makers like the Water Services Corporation and Enemalta?

If proof were needed that Government's privatisation plans have turned awry, allow me to quote verbatim from Part 9 of the White Paper which carried the heading "Implementation/action plan":

"The Government has set itself the broad target of implementing the privatisation programme over a five-year timeframe, with completion scheduled for December 2005. The Government is hopeful that it will be able to complete the first tranche of transactions (LAMHCO, BOV, Malta Freeport Corporation [Terminal] and MIA) by the end of 2000."

Apart from the fact that none of these transactions had even been initiated by the pre-set date, even by the time of writing no tangible progress seems to have been registered - with the exception of MIA - regarding any of the mentioned entities.

In LAMHCO's case, it seems that the Libyan Arab Maltese Holding Company dropped out of government plans the moment it was announced in the said White Paper. What went wrong? Did the Libyan authorities resist the idea of seeing the Maltese government sell its equity stake to private foreign or local partners? When I posed this question to the finance minister in Parliament I remained without an answer.

On the BoV, although when replying to a supplementary question in Parliament he gave the impression that Government was experiencing some difficulty in identifying a reputable foreign bank that would be interested in buying such a minority stake as Government might have at present, when the minister replied to a separate PQ of mine on the same subject, only five days later, he gave the impression that negotiations on this "sale" could be at an advanced stage. Time will tell whether we were being taken for a ride or not!

Although reasons have been given for the sudden lagging behind in the privatisation of the Freeport terminal, I do not think that matters were helped either by the disclosure that the Freeport chairman had just bought a stake in another freeport in Italy which could eventually be a direct competitor with our own Freeport. The minister's silence on this matter has created further doubts and suspicions.

What is also puzzling is the varying degree of involvement of the privatisation unit in the various privatisation processes that have developed in recent months. While the Unit seemed to have been deeply involved in the MIA privatisation, I recently learned officially - what I had just heard through the grapevine - that they had been "asked" to take a less prominent role in the would-be Freeport Terminal privatisation. It would be interesting to find out why!

At the time of the White Paper the Ministry of Finance had stated that the privatisation programme had then moved to a more complicated phase, a phase giving rise to a number of issues, which are set out in the paper, that the government wishes to consult with the public.

You can say that again! Not only has the public not been made privy to Government plans, but the leading trade unions were left completely in the dark. Something they complained of publicly on various occasions.

If the Malta government really intends to implement the programme proposed in the White Paper in the best interests of our society and economy it cannot afford to continue giving the impression that everything is being done according to the finance minister's whims.

Mr Brincat is the chief Opposition spokesman on the economy and finance; e-mail: leo.brincat@magnet.mt.