The Malta Freeport will be receiving an investment injection of €130 million (Lm55.77 million) and the company managing it has committed itself to create 500 new jobs over the next five years.
French company CMA CGM also wants to increase its container handling to three million a year, something described by Investments Minister Austin Gatt as an "ambitious aim".
Dr Gatt said the number of containers handled annually had already gone up from 1.2 million in 2002 to 1.9 million last year.
"We could not have received a better certificate of how successful privatisations can be if they are done carefully and with world-renowned players," he said.
The company, Dr Gatt said during a press conference yesterday, had already invested some €45 million (Lm19.32 million) since it took over the Freeport under a 30-year privatisation deal in October 2004.
The new investment will include the reclamation of land to extend the marshalling yard by 130,000 square metres. Dredging will also take place to increase the water's depth and enable bigger container ships to berth.
Although capital dredging is the government's responsibility, it has capped its expenditure at €15 million (Lm6.44 million), with the rest to be footed by CMA CGM. It is estimated that the total cost for capital dredging will be some €30 million (Lm12.88 million).
The minister said that in view of this investment, the government was extending the 30-year lease by another five, with the company given the option to extend it for another 30 years provided they would have made the promised investment. He added that the lease payment had to be rescheduled and extended.
When it was granted permission to operate the Freeport in 2004, CMA CGM started to pay $421 million over 30 years. If it takes up the extra 30 years extension, the figure will increase by $372 million.
The company has also committed itself to create 500 new jobs over five years, and is liable for penalties if it does not do so.
A Memorandum of Understanding has been signed with the company and yesterday morning Dr Gatt presented a motion in Parliament to extend the lease to the reclaimed land, adding that the final agreement should be signed next month. He said if the agreement is not approved by Parliament, the investment would be lost.
The MLP, he said, was always opposed to privatisation, even when it came to SmartCity and the Freeport.
But the facts had shown which political party had the best policy. While the Nationalist government would stick to this policy and continue to involve the private sector, the MLP would continue to increase taxes and attempt to give subsidies, he maintained.
He expressed satisfaction at the new agreement, saying it showed that the world's third biggest shipping line had faith in the Maltese economy. "We are also showing great competence in the way we are privatising and in the country's economic administration," he said, adding that in the past three years the government had created more than 10,000 new jobs.
He had no doubt that in the coming weeks and months, other companies would show the same faith in the country. The euro changeover was the last financial anchor that the country had needed.
In 2004, when the agreement was signed with CMA CGM to start managing the Freeport, the company was the world's seventh biggest shipping line. Since then it has moved up to third place.
At the time it had been forecast that work at the Freeport would increase drastically - and now it was the fifth biggest in the Mediterranean, Dr Gatt said.