While Parliamentary Secretary Jason Azzopardi repeated his claim that the Palumbo contract was a new lease of life for the dockyard, Labour MPs Charles Mangion and Owen Bonnici said it was not in Malta's interests.
Dr Azzopardi said the government believed the 'yard had a future and had found serious companies which were ready to invest in both the dockyard and Manoel Island yachtyard.
The dockyard was no longer to be a political burden on the people but a legitimate economic activity which would be a credit to its workers. The government had found a balance between the interests of the workers and those of the country, opening new opportunities to those who wanted to work in the sector. They would no longer be dependent on the €40 million annual subsidy.
In Manoel Island's case, the consortium would be investing €6 million to turn the facility into a leading Mediterranean yachtyard offering a service of excellence which would also market Malta as a yachting destination. The consortium aimed to increase the utilisation rate from 60 to 70 per cent in the first five years by reducing the length of stay of yachts from the present 80 to 60 days. It aimed to have at least 1,000 yachts a year.
During the first five years of the contract, the new owners planned to increase yacht maintenance and refitting by more than 10 per cent. They would be investing more than €1.1 million in infrastructural works, €1 million in equipment and €100,000 in ICT.
They would be paying an annual ground rent of €225,000, increasing by 15 per cent every five years of the contract's 30-year duration. There would also be an additional annual ground rent of €265,000 for the first 10 years. Dr Azzopardi said the government was not giving any warranty for latent defects, the same as in the Palumbo contract for the dockyard. Any developments made in the two facilities would become the government's at the end of each contract.
The government had negotiated diligently, even in the face of the credit crunch. Not only had it eliminated subsidies, but it had attracted foreign investment.
Palumbo had undertaken to make a capital expenditure of €24 million during the first five years, an additional €5 million for machinery in the tenth year of the operation, more than €3 million a year for staff retrainng, €4 million in the electrical distribution system, €6 million in the IT system and €2.5 million in welding equipment.
Dr Azzopardi maintained that the investor was on the same wavelength as the government: the 'yard must produce the highest level of excellence through the highest quality of work, improved working timeframes and competitivity in rates.
Palumbo had also undertaken that from its second year of operation, it would transfer from its Italian shipyards to Malta conversions and building of tugboats, yachts and catamarans. Maltese workforce training would also take place in Palumbo's Italian shipyards. The company planned to have an apprenticeship scheme together with Mcast, to be co-financed from EU structural funds through the ETC.
Not included in the contract were the bastions surrounding the dockyard, the Enemalta substation and all other existing underground tunnels or structures.
The new 'yard owners would also make an irrevocable bank guarantee of €5 million.
For the opposition, Owen Bonnici expressed his disappointment at the way the contract had been given to Palumbo, and called on the government to review it.
Negotiations had been based on the premise that Malta needed to dispose of the dockyard at all costs. The government had negotiated from a position of weakness.
What was Malta going to benefit from this contract? he asked, adding that the area in question was 220,000 square metres, within which there were the four docks. A mathematical calculation showed that the government's revenue would be €1,600,000 a year - less than the government's revenue from passports, which left the Exchequer with €1,800,000 a year. What was the logic? How had this been calculated?