Ablecare Oilfield Services Holdings is paying an annual ground rent for the Mediterranean Maritime Hub on the former Marsa Shipbuilding site of €2,038,224  – which works out to €1 per square metre per month.

“People think we got it for free but we are paying one of the highest ground rents. It was a clean deal. We got no favours,” MMH managing director Paul Abela told The Business Observer.

Ablecare Oilfield Services Holdings won a competitive bid by the government for the 175,000-square-metre site to be used as an oil and gas facility. The concession is for 65 years, and the company is bound to make an investment of around €55 million over the next 10 years.

However, the concession was not made through a parliamentary resolution – even though it was for government land – which means that little was known about the terms. There have been a number of PQs posed about them since then with typically unhelpful and uninformative replies.

Sources familiar with the process said that whether such concessions went through Parliament or not was somewhat of a “grey area”, depending on whether the request for proposals was considered to be a tender or not. In this case, the land was given on emphyteutical lease through Malta Industrial Parks on August 1, 2016, a model used for industrial sites in the past, such as the Lufthansa Technik hangars. However, more controversially, it was also used more recently for the hospital site, meaning that the terms of that contract were not subjected to public scrutiny.

Mr Abela was somewhat defensive about the contract, as is apparent from his replies above, but was perfectly happy to share the key figures, confirming not only the ground rent but also that the upfront payment was €750,000.

“Going through Malta Industrial Parks is quite normal as this is an industrial site. It is the most efficient structure as it places us within the government’s industrial policy – and the associated legal framework,” he said.

Ablecare had already been using a small part of the site prior to the RFP and is now trying to keep it at least partially operational while it brings the site up to scratch.

Tons of debris have been removed from the site: “No one had ever done any housekeeping!” he said. Infrastructural works are going on across the site, with maintenance and refurbishing of Shed 4 already started, and the rest planned for the near future.

A significant part of the initial investment – being financed in part through €15 million in unsecured bonds – will be the dredging of the quay to enable oil rigs to come alongside. This will only start on February 13 as MMH first needed to complete all the associated processes involving the Planning Authority, and Environmental Resources Authority, among others.

Some of the silt is contaminated – although not hazardous or toxic – and will need special handling. In fact, it will be exported to Norway – to one of the very few facilities that accepts this type of waste.

Another major investment will involve the former dock, which is beyond economical repair, although Mr Abela said that it was premature to talk about the company’s plans.

He explained that the site would be “open for businesses” to operate from: “This is a national asset which will be made available to promote Malta’s oil and gas, not necessarily under exclusive ownership for MMH; we want it to be a catalyst and facilitator for operators in the marine industry to have a hub from where to service clients from storage to maintenance etc.,” he said, adding that this approach was behind the renaming to Mediterranean Maritime Hub last January, creating “a white label identity for the facility”.

The other significant change to the site is probably the most visible to passers-by – and will probably prove to be the most popular with the public.

The short-cut through Dock 7 had proved to be very popular with commuters and MMH kept it open – albeit rerouted. The government recently demolished Freedom Press at Addolorata Junction, which lies within the concession.  A permanent bypass is now being constructed on part of the site which will pass at an elevated level behind the sheds, around the perimeter where Freedom Press stood, and back to Albert Town.

This article first appeared in The Business Observer, published with the Times of Malta.