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News | Wednesday, 27 May 2009

Finance Ministry rebuts PL claims on Gozo Channel

‘Confidential’ information revealed

David Darmanin
A Finance Ministry spokesperson yesterday afternoon denied claims made by PL MP Charles Mangion in a story we featured last week, wherein a government ploy to hide losses incurred by the state-owned ferry service to Gozo was revealed.
Audited accounts obtained by this newspaper show that two state-owned companies – Gozo Channel Ltd and Gozo Ferries Ltd are used for separate purposes of the ferry operation between Malta and Gozo. Whereas the former company operates the ships used to carry passengers and vehicles from Gozo to Malta and back, the latter leases out the ships to Gozo Channel.
It remains unclear whether or not Gozo Ferries owns the full fleet of ships, once its assets – which stood at just over €14 million in 2006, do not represent the €70 million value of the newest three ships operated by Gozo Channel – namely Malita, Ta’Pinu and Gaudos.
Notwithstanding such low registered assets, depreciation set the company back by over €800,000 in 2006, leading it to an operational loss of €50,507.
Once there is no clear indication of ownership of the entire fleet, or debts amounting anywhere close to their value, PL MP and Public Accounts Committee chairman Charles Mangion was last week asked by Business Today to provide details to the case. In his reply, Mangion said that Gozo Ferries Ltd never paid the Malta Shipyards for the last three ships.
The Finance Ministry last week was also asked whether or not Gozo Ferries Ltd had paid the shipyards for these three vessels, but in an email reply sent to us prior to publication last week, the Ministry spokesperson wrote: “This is confidential information of a commercial company and cannot be divulged.”
But in its rebuttal yesterday, the Ministry said: “Government had paid for these vessels through various direct advances to the company, and by guaranteeing loans from local and foreign banks, which it then undertook to repay back through scheduled repayment programs.”
Questions were sent to identify why this information was confidential last week and no longer confidential this week.
Rebutting Mangion’s claims that Gozo Ferries Ltd never paid the Shipyards, the Ministry described this information as “incorrect”.
Questions were also sent to identify where in Gozo Ferries audits, it is indicated that such ships have been paid, and moreover, where it is indicated that Gozo Ferries actually owns these three vessels.
Although Gozo Ferries Ltd is bound to endure losses due to depreciation and loan repayments, 2004 accounts for the same company show a massive operating income of €10 million in its books.
After side-stepping our questions last week, this week the Ministry confirmed that this €10 million was in fact a government subsidy given to the company just before we joined the EU, when such tactics were still allowed by law.
“You define the figure of €10 million as ‘inexplicable operating revenue’,” the Ministry told Business Today. “Indeed, this has a clear and simple explanation. Vessels purchased by Gozo Ferries were to be eventually repaid by Gozo Channel through regular fees with effect from 1 January 2005 when the charter agreement was put in place.
“Government decided responsibly to assume these dues instead of seeking to recover such funds through the consumer by increasing Gozo Channel’s fares. This would not have been beneficial to the thousands of jobs on our sister island that depend on the local and foreign tourists crossing the channel using the ferry. As a result, this figure appeared as (operating) income on Gozo Ferries’ books,” he added.
Questions were also sent on whether, once the ferry service becomes liberalised, private operators will be given the opportunity to lease Gozo Ferries Ltd ships under the same conditions as Gozo Channel Ltd.
The Finance Ministry said it will send us its replies in time for our next edition on Wednesday.

ddarmanin@mediatoday.com.mt

 

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27 May 2009
ISSUE NO. 584

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