Political controversy raged over the City Gate project yesterday, with the Opposition describing it the Prime Minister’s “narcissistic” venture.
Bring the resolution to a vote in Parliament as early as possible- Opposition leader
Speaking in Valletta with the shell of the building behind him, Opposition leader Joseph Muscat criticised the government’s financial model to foot the project’s €80 million price tag.
He said the finance company set up by the government to raise capital for the project, known as a special purpose vehicle, would siphon off revenue owed to the state.
The SPV, called Malita, will receive income from the lease payments owed by private companies for the land concessions at the airport and the Valletta cruise terminal.
The lease payments are collected by the government but a parliamentary resolution is required to have current and future revenue diverted to the SPV.
Dr Muscat urged the government to bring the resolution to a vote in Parliament as early as possible.
But in a tit for tat, Finance Minister Tonio Fenech defended the financial model. He said it was acceptable in the EU and the European Investment Bank had already accepted to finance half of the City Gate project through a loan of €40 million issued to Malita.
He justified the lease diversion, adding the SPV had to have itsown income to be able to raise itsown finances.
Mr Fenech also confirmed thatthe government had originally alsoconsidered diverting the lease fromthe Midi project in Tigné and Manoel Island but dropped this because of “technical reasons”.
“The Midi project is still ongoing and it would have created complications but the revenue from the other two leases was enough,” he said.
The SPV will recoup the investment on the City Gate project by leasing back the parliament building and the theatre to the government for €5 million a year.
Mr Fenech said a technical presentation on the financial model was made to the Opposition in December in preparation for the parliamentary resolution. No such presentation was made to the Nationalist Party parliamentary group.
But Labour yesterday poured cold water on the project, insisting it would not be an accomplice in the matter.
“While we are not against the concept of a special purpose vehicle to finance certain projects, the creation of one for the City Gate project did not make sense,” Dr Muscat said.