Work is well in hand at Boiler Wharf, in Senglea, which is due to welcome its first cruise liner berthing from July.
The first phase of the project, being funded by the Malta Maritime Authority, will cost €400,000.
The wharf will be used as a spill-over quay by cruise and ferry terminal operator Viset when the Valletta Waterfront is full.
Transport Minister Austin Gatt, who visited the wharf this morning, said this formed part of the government's plan for Cottonera and would provide more incentives to increase tourism in the south.
Dr Gatt said that the entire project was expected to be completed within two to three years and would involve dredging the area to increase its depth from eight to 10 metres. Ferries and water taxis would eventually connect the area to the Valletta Waterfront.
The minister said that a boiler house was being converted into an industrial museum in another phase of the Grand Harbour regeneration project.