When the Malta - Gozo ferry service has such a huge patronage and when the running of the trips is normally efficient, most will be justified in believing that things should be going swimmingly for Gozo Channel. But the situation is not exactly as it should be, with the National Audit Office pinpointing yet another case of a public entity mired in shortcomings.
Summing up the situation, the Auditor General said: “The financial sustainability and going concern of Gozo Channel Company Ltd were very critical. A weak control environment prevailed within a number of areas, including several expired contracts, weak budgetary control, inefficient utilisation of personnel, lack of control on overtime and lack of synergy between the management team as well as between the various units within the company.”
The mind boggles at the extent of the shortcomings the NAO reports. Were there no internal controllers to monitor and check what was happening? Who, from the central administration, was supposed to oversee the operation? Is there no accountability at all?
A study of its operations for the period 2010 to 2013, done at the request of the Finance Minister, shows that the situation was far from plain sailing. Since then, it appears that matters have improved as the company has reported a small profit of €59,538 for last year, compared to a loss of €1.7 million in 2012 and €1 million in 2013.
However, with the kind of shortcomings flagged it is no wonder that the financial results were below the projected profits of the public service obligation bid, with adverse variances reported to be of €900,000 in 2011 and €2.2 million in the following year. Gozo Channel earned €30 million in ticketing revenue between 2010 and 2012 but the NAO estimated a potential ticketing revenue loss of €1.5 million.
How was it possible for the company to lose so much from a revenue flow that ought to be have been well regulated? The NAO points to inconsistencies in passenger and vehicle data registered at Ċirkewwa and Mġarr, surely a problem that ought not to be all that difficult to address in this day and age.
According to the Auditor, passenger variances were highest in 2012, standing at the staggering figure of 106,000, while that of vehicles amounted to 21,000 in 2014. This is simply unacceptable and if similar variances are still occurring today, then the government ought to step in and take action to stop any possible abuse, irregularities, mismanagement or whatever may be causing the problem.
Also totally unacceptable is what the NAO describes as the “inability to enter into fuel hedging agreements” and the resort to excessive overtime. The company did not even have a formal overtime authorisation system in place, with the NAO reporting instances of excessive overtime running at 1,000 hours in one year.
The list of shortcomings gives the impression that the company was running out of control. Of immediate particular concern is the warning that, should Gozo Ferries (the company that owns the boats) fail to settle outstanding dues for capital costs amounting to €8 million, “Gozo Channel’s going concern status would be uncertain”.
Both Gozo Channel and its partner in the joint venture, Gozo Ferries, are government owned.
What are the prospects for the settlement of these dues? If the company is not expected to meet its obligations in this regard in time, what are the government’s plans to ensure the continued running of the ferry service between the two islands?