The concession for the national aquarium did not take into account the real value of the land and was granted for almost twice as long as normally recommended, the National Audit Office said on Wednesday.

One of the main concerns raised was that the concession should take into account the value of the land and how much the government could have got for it, saying that the present value was placed by it at €28.5 million, while the Malta Tourism Authority calculated it at just €2.6 million.

It also noted that the capital injected in the project by the three main contributors amounted to around €15.45 million: €6.6 million by the contractor, €7.5 million by the EU and €1.35 million by the government. If the value of the land were factored in, this meant that the contractor only forked out 21 per cent of the €31 million total.

The report also noted that the aquarium itself only took up 7 per cent of the 20,000 square metres, with supporting amenities constituting 26 per cent of the concession area and 67 per cent of the area is being utilised for outdoor recreational space, and in instances to host commercial events.

“Given that this is a rentfree concession and that government is not entitled to any direct revenue generated from this site for a period of 50 years, it raises questions as to whether the contract has appropriately managed to balance the parties’ interests,” the NAO said.

To add insult to injury, the profits were even higher than originally envisaged, creating a “financial imbalance in the returns attributable to government and to the contractor within the project period”.

The NAO noted that this did not worry the Malta Tourism Authority as the government was not after revenue but rather the positive economic benefits to the project’s locality: the need for a national aquarium first emerged in 1993 but the project ultimately materialised 20 years later.

Two bidders qualified for the tender dialogue phase. However, only one bidder, Ebcon-Global JV responded to the call 'Invitation to Dialogue' in January 2010. The contract was signed in 2011 and works got under way that same year. 

Between 2014 and 2017, the number of visitors to the National Aquarium – of which more than two thirds were tourists – significantly surpassed forecasts.

And during 2016, the aquarium employed 98 persons during the winter months, with this number almost doubling in summer.

“National Authorities are to document the basis on which value is attributable to public land identified for transfer to third parties. As land is a highly priced resource, this proposal aims to enhance good governance, particularly through the principles of transparency, accountability and value for money especially when such transfers are not subject to a Parliamentary Resolution,” the NAO said in its recommendations.

The duration of the concession was also criticised, with the NAO saying that the 50-year rent-free concession had been advised by the MTA’s consultants.

“Various international and local sources contend that a 50-year rent-free concession is longer than the norm since it limits the Government’s opportunities to revise the agreement at more frequent intervals. World Bank guidelines outline that a concession is typically for a period of 25 to 30 years (i.e., long enough at least to fully amortise major initial investments),” it said.

“NAO reiterates that there is scope for the government and the private sector to work in tandem on projects of national importance, where the parties share more equitably risks and benefits.”

Attached files

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