Government to make Lm128m from Freeport lease deal

The government is expected to make $370 million (Lm128 million) over a 30-year-period through the Malta Freeport lease agreement with CMA-CGM, government sources said yesterday.

The agreement is expected to be signed on Tuesday and although the payment averages out to about Lm4.28 million annually, this would be staggered so that CMA-CGM would be paying less initially and would end up paying about Lm10 million later on.

But difficulties with the Union Haddiema Maghqudin in the negotiations over a collective agreement have still to be ironed out today before the signing is made.

It is also not ruled out that shoremen working at the Grand Harbour would try stalling the signing by filing a warrant of prohibitory injunction this morning, the sources said.

Union officials and Freeport management met yesterday and pending issues were discussed. The two most "crucial" issues for the union are the retention of the current shift for engineering staff - those in this shift work four days in and have four days off - and the wage increase that is to be given. The government is proposing a lump sum payment and the union is insisting that this should form part of the wages.

The government concluded its negotiations with CMA-CGM last August and the agreement could have been signed then but the date was postponed twice because the collective agreements with the trade unions had not been finalised.

Investments Minister Austin Gatt said, when contacted yesterday, that CMA had written strong worded letters to the government about the delays.

Industry sources said they would not be at all surprised if the Freeport deal would fall through because of such delays and, were this to happen, "we would have another drydocks on our hands". But Minister Gatt remained optimistic.

"On Tuesday we shall be signing the agreement. The agreement comes at a crucial time for the Freeport. Our Freeport is practically working at full capacity and needs new equipment in order to compete. CMA-CGM will get new machinery for Terminal 1 and as bigger ships will start calling in two years' time, special equipment would be needed and hence capital investment is necessary at this stage," Dr Gatt said.

A joint venture between CMA-CGM and P&O Ports would operate the terminal. Roger Roels, the regional director for Africa and Europe of P&O Ports, will be visiting Malta on Tuesday. Mr Roels has over 25 years managerial experience and served with Sealand Service Inc. until 1999.

On Saturday, Minister Gatt described the agreement reached with the GWU on the port workers as "the first that concretely addresses the problems of productivity and lack of efficiency in jobs that do not have set hours".

Port workers represented by the GWU were previously paid Lm150 a week and 20c per container handled.

The weekly wage has now been done away with and instead they will be receiving a flat rate of Lm4.70 per container for the first 850,000 containers handled by the Freeport and Lm4.60 for the rest.

Union sources said that through the agreement, port workers, whose average income was about Lm22,000 annually, around Lm12,000 of it comes from the Freeport, would be getting at least an additional Lm1,000.

But Freeport sources said the calculation of getting a Lm1,000 increase were incorrect.

"In 2003 the Freeport moved 850,000 containers. The cost associated with moving these containers amounted to Lm3.8 million. If one had to calculate the increases contemplated in the agreement and work on last year's volume, the Freeport would have to pay Lm4 million, that is Lm200,000 more.

"Divided by the number of people on the terminal, which is just over 300, and deducting the pay that 18 new employees have to be roped in, they would be receiving a one-off increase of around Lm120.

"One has to keep in mind that they would also be working more because of the number of lashings they have to do is bigger, that they will be fully flexible and work according to the exigencies of the service and that they no longer have a safety net in terms of a wage. If work diminishes, so will their pay," the sources said.

GWU sources said they approved the agreement as they were confident that CMA would make the Freeport grow in terms of the number of containers handled.

"The Freeport currently makes 10 container moves an hour. At Gioia Tauro, they make a minimum of 22. If CMA raises the number of moves to only 15 an hour, port workers will make 1.5 times what they earned last year," the sources said.

In addition, there are a host of extra payments such as payments for extra lashing at Lm1.45 per container, lashing or unlashing of a heavy lift at Lm40 while emergency work on containers is paid at Lm180 or Lm360 depending if it is a 20-foot or a 40 foot container. Last year, port workers earned a total of Lm34,000 in extra work alone.