Controversial ferry contract extended
Government still discussing new terms with Brussels
Gozo Channel Co. Ltd seems to be heading for choppy waters. Photo: Matthew Mirabelli
Gozo Channel Ltd's six-year exclusivity agreement, which expired on April 21, has been extended until the government completes delicate discussions with Brussels.
The controversial contract - providing Gozo Channel with a monopoly over the ferry service between the two islands - has been condemned by the European Commission since it breaches the EU's strict competition rules.
The agreement, signed just days before Malta joined the EU in 2004 without a call for tender, also stipulated that the company would benefit from an annual subsidy of €3.4 million as part of its Public Service Obligation (PSO).
Malta has been taken to the European Court of Justice over the agreement and the case is expected to be heard shortly.
Despite the legal wrangling with Brussels, the government has still not issued a new call for tender, citing "ongoing negotiations" with the EU for the delay.
In the meantime, the government has decided to engage the current service provider, which currently employs 249 staff, to continue the service on current terms until the new tender is awarded.
According to EU sources, this will mean that Gozo Channel will continue to operate in a non-competitive environment and receive subsidies at least until a new tender is issued, adjudicated and awarded.
In 2007, following the start of infringement procedures, the government had embarked on a process to issue a call for tenders and liberalise the market. However, no tender has ever been issued.
A Transport Ministry spokesman said: "A tender document has been drafted and is currently being discussed with the European Commission since the tender incorporates a public service obligation, the terms of which have to be in line with EU competition policy.
"The tender document will be issued once discussions with the Commission are concluded," the spokesman said, though there is no indication of timeframes.
According to EU rules, the Malta-Gozo ferry service has to be open to competition, but the government is known to be taking a protectionist attitude, especially to protect the jobs involved.
"We are very sensitive on this issue as the ferry service between the two islands is Gozo's lifeline and not just a normal ferry service," the ministry spokesman said.
The government is trying to convince the Commission that the service cannot be operated by more than one company, he said.
However, Brussels has been insisting that the service should be open to full competition where all European companies interested will be able to tender.
EU sources said: "Gozo Channel should not be given any privileges and should compete on an equal footing with all the other commercial companies interested in providing this service. The PSO to be granted by the government is there to guarantee the social dimension of this service."
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marco meli
May 2nd 2010, 19:45
249 employees??? for 3 small ships driven by an electric motor??? Now i understand the hefty prices to cross the channel!!!!! Not to mention the 3.4million from our taxes in subsidy!! And not to mention also the luxiourous cirkewwa terminal, no shelter whatsoever from the elements of hot summer and frrezing winter! Not even a TOILET in sight!! I can't wait to see a new operator! yipeeeee
lgalea
May 3rd 2010, 10:05
Who gave you the idea that they are run by electric motors?
lgalea
May 3rd 2010, 10:07
ps What has the quay and quay toilets got to do with Gozo Channel?
Will what you call a new provider construct the quay and provide the toilets at their own expense?
And if they do, do you think that they will not increase fares to cover their expense?
Your comments are simply made to denigrate anything Maltese meli.
marco meli
May 5th 2010, 11:38
@lgalea
i may assume you have a guaranteed job with the company!
and yes they run on electric motors fed trough a generator. check your facts pls. can do so on the gozo channel web site. regards
lgalea
May 2nd 2010, 10:32
The eu petty dictators know where to shove their opinions. We must do what is better for our own interests and workers. They have already cost us thousands of Maltese workers jobs.
Robert Agius
May 3rd 2010, 12:13
Monopolies are never really good for workers is it... or are the 249 working there more dear to you? or maybe you personal grudge against anything European.