18 February 2004

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Toon this week: The contenders blow their trumpets

When privatisation is not an ugly word
Privatisation is still a relatively ugly word in the Maltese lexicon. The Maltapost example does not instil heaps of faith. However, that privatisation process was captained by former economic affairs minister Josef Bonnici.
Last Monday’s the privatisation agreement between the government was described as unique by the Greek chief executive of INTRALOT, Constantinos Antonopulos, a company that has a turnover of 137 million a year and a profits of 40 million.
Maltco Lotteries Ltd with 27 per cent involvement from four high profile Maltese companies was last Monday awarded a seven-year licence to operate the National Lottery of Malta.
The deal is sealed, but the agreement will still be scrutinised by the Public Affairs Committee.
The Malta operation will be based on a mixed licence model, whereby the state collects an up front fee for the licence, in this case Lm8 million, and also receives and on-ongoing fee from the revenues of the games.
Maltco Lotteries will be making a total investment of approximately Lm13 million over a seven-year period and will create jobs in the information technology and the business sector.
Maltco Lotteries limited has paid an up front fee of Lm5 million on signing and another Lm3 million when they commence their operations within the next six months.
The agreement comes after months of arduous negotiations.
The deal is a feather in the cap of Finance and Economic Affairs Minister John Dalli, who said that during the negotiation period the Maltese government gained a lot of experience. He also underlined that the Maltese government scored consensus and respected the interests of the parties involved - the lotto receivers in particular.
Mr Antonopulos confirmed this, stating that it was a good agreement for all and a learning experience.
He admitted that it was tough negotiating with Mr Dalli and he added that the agreement could serve as a privatisation model for other countries.
The Greek company has made assurances that it does not have any intention of ridding itself of any employees. Indeed, it emphasised that the role of a Maltese complement was essential in running a lottery activity such as the one in question.
The agreement, which will also receive increased revenue from increased profits, is a temporary agreement that allows for amendments and the right for first refusal is not in place.
It also brings in immediate revenue for government, which can go some way to making the government’s red line thinner.
Mr Dalli must be commended for this achievement, more so given his statement that the government’s income would increase when compared to the income that originated from profits from previous lotto revenues.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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