Arriva’s two-and-a-half year stint in Malta, during which it accumulated debts of close to €70 million, came to an end yesterday in an agreement with the government to quit its 10-year contract by mutual consent.

Arriva has been taken over by a government-owned firm that will run the service briefly, during which bus fares will remain unchanged.

A call for expressions of interest in taking over the operation is expected to be issued next week.

Sources said the exact cost to the government of the transition has not yet been determined but would be in the region of €10 million.

Of that, €3 million will go to creditors and the rest will cover a number of projected expenses.

The deal between Arriva, Transport Malta and the Transport Ministry was signed yesterday afternoon behind closed doors in the presence of legal experts from Arriva’s mother company Deutsche Bahn.

Arriva’s original asking price had been €30 million and included taking on the company’s debts, according to Transport Minister Joe Mizzi.

But the final deal was to take over the company in January, with its workforce and assets, while assuming responsibility for just €3 million owed to creditors. The share-transfer agreement was for the nominal price of €1.

The government secured a waiver on all other debts, a Transport Malta spokeswoman told Times of Malta. Arriva said in a statement the decision was taken “after careful consideration”.

“We have considered every alternative with the government and have entered into long and detailed negotiations to try to find a satisfactory outcome for all parties.

“We believe this decision will be in the best interests of all stakeholders and ensure continuation of bus services on Malta and Gozo.”

It said services would carry on “as normal” and Arriva would give operational management advice to the government to ensure a smooth transition for customers and employees.

The service being provided by the Unscheduled Bus Services, to fill the gap in vehicle provision since the withdrawal of bendy buses from the roads, will continue to be provided under the watchful eye of Transport Malta.

Mr Mizzi said that since its start of operations in July 2011, Arriva had racked up €68 million in debt and was heading for a €100 million figure by the end of the year.

Speaking in an interview on TVM’s Dissett last night, he did not guarantee that the present ticket prices would be retained beyond the transition period, saying that he would keep in mind, during discussions with the new operator, that this was a social service.

Company to advise new team

Some weeks ago The Sunday Times of Malta reported Paramount Coaches was interested in taking over Arriva by setting up a local consortium, and Mr Mizzi indicated last night there had been further interest shown by other firms, both local and international.

Arriva’s name will start to be phased out from the buses and promotional material in the coming days. During the transitional period a team from Transport Malta will be seconded to the unnamed government-owned company that will run the service.

The planned route changes that were scheduled to come into force by March have been put on hold to allow for a smooth transition. These would be published with the call for expressions of interest next week, Mr Mizzi said.

Asked about government subsidies, Mr Mizzi said: “Everything comes at a cost but the country paid Arriva €32 million and got a disastrous service. I can’t tell you what subsidies will be paid because discussions still have to start with the new operator.”

He promised the elderly, disabled and students will still enjoy reduced rates and said Arriva had complained to him about ticket fraud and fuel pilferage.

The government said the agreement was aimed at turning the situation around and avoiding the “imminent liquidation of Arriva”, which was making huge losses. With a new operator there would be room for drastic improvements and a fresh start, it said.

The new operator will also be responsible for public transport in Gozo, which, unlike in Malta, had lived up to expectations.

For this reason no major changes would be expected on the sister island as the route network catered well for the demand.

Separately, the Kunsill Studenti Universitarji welcomed news that the current system, including student fares, smart card refunds and university routes, will stay the same until the new operator is chosen.