New Freeport operators pledge to double capacity

The government yesterday signed a $421 million agreement granting the French CMA CGM group, the fifth largest shipping company in the world, a 30-year concession to operate the Freeport.

CMA CGM has, in turn, entrusted Portsynergy, a joint venture between CMA CGM and P&O Ports, with the management of terminal operations.

Doubts over whether the agreement would be signed yesterday persisted until the very end as talks over a collective agreement for engineering department personnel threatened to remain inconclusive.

Minutes before the signing, however, the Union Haddiema Maghqudin, which had demanded the collective agreement be signed before the lease agreement, finally approved the privatisation process after coming to a deal over the financial package with the new Freeport operators. Talks will continue over other issues.

Farid T. Salem, the CMA group chief executive vice president, who came to Malta for the signing, stressed that the Malta Freeport would remain CMA CGM's most important hub in the centre of the Mediterranean and "a common user terminal providing equal and fair access to all shipping companies at competitive rates".

Mr Salem said CMA CGM will, in the short term, invest between €7 and €12 million to upgrade the current equipment and pave all the available land for additional container storage.

"We intend to practically double the capacity of the terminal, and bring it up to 2.3 million TEU's a year (up from 1.3 million). We also plan to increase the number of gantry cranes to 18, to upgrade the technical structure and to transfer all the consortium's technology to the Malta Freeport," he said.

Mr Salem said he was confident they would attract additional volumes of work and would seek long-term agreements with major shipping lines.

CMA CGM is also looking at the possibility of operating a bunkering facility, he said.

The company has 172 vessels and, by 2007, another 43 ships would be added to its fleet. It is estimated that this year CMA CGM will handle 3.7 million containers, almost a million more than last year. The group's turnover this year is expected to reach €4 billion, with net earnings amounting to €400 million.

Investments Minister Austin Gatt explained that the $421 million would be paid over the 30-year lease period and this included the lease of the terminal, the sale of equipment and increase in duty from sale of fuel, as well as $5 million for the provision of security for the first five years. Over the 30 years, another $30 million are expected to be made from the provision of security.

CMA CGM are solely responsible for all the necessary investment to improve the facilities and equipment and to introduce new machinery on site.

The Freeport Authority would regulate the Freeport operations and local tariffs, Dr Gatt said.

Dr Gatt thanked those involved in the privatisation process, including the General Workers' Union and the Union Haddiema Maghqudin, which he said had approved the privatisation deal only minutes before it was signed.

The UHM had taken the position that it would be unacceptable for the collective agreement not to be signed while the government was still in control. The sticking points were the shift system and the financial package.

In a statement, the UHM scolded the government and declared they had approved the privatisation process after securing an acceptable financial package in negotiations with CMA CGM on Monday night.

"CMA CGM were able to guarantee many aspects that the government had failed to guarantee. Discussions with the French company are set to continue," the UHM said.

The union accused the government of being irresponsible when it painted a rosy picture of the Freeport. Figures released by the Freeport administration yesterday showed a loss of over Lm3 million in the past two years, incurred even though the volume of work had increased, it added.

At a meeting for Freeport workers yesterday, UHM secretary general Gejtu Vella and Joe Grillo, the union's section secretary, told those present that "there is a reality that goes beyond political rhetoric".