22 June 2005

The Web

A saga called Sea Malta

It was quite unrefined of a Prime Minister for Lawrence Gonzi to insinuate that former Sea Malta Chairperson Marlene Mizzi was in cahoots with the Labour Opposition in the controversy over the privatisation of Sea Malta.
His comments in the letter of acceptance following Marlene Mizzi’s resignation were uncalled for. Gonzi could have accepted her resignation without stooping so low.
The Prime Minister had every right to remove Marlene Mizzi if he felt her role as chairperson of a state-owned company was compromised because of her opposition to Government’s privatisation policy.
Chairpersons are there to implement policies and strategies as outlined by the government of the day. Being uncomfortable with such a situation is enough to warrant resignation or removal.
What Government has done is nothing different from what the Labour Party has been saying it will do if elected to government. Chairpersons who don’t tow government line cannot be allowed to hold on to their posts.
But what was shameful for the Nationalist Party just up to a few months ago now seems to have become acceptable. The only difference is that the Prime Minister chose not to fire Marlene Mizzi, instead preferring the age-old spinning game to try and come out clean from the situation.
Marlene Mizzi was one of the very few chairpersons with business acumen and although her office at Sea Malta became untenable because of her opposition to privatisation, her opinion is worth evaluating.
There is no doubt that Malta’s particular geographic location requires a constant and reliable sea link to mainland Europe. The Federation of Industry has insisted, on more than one occasion, that Sea Malta played a strategic role in sustaining industrial production in Malta over the years.
It is not Government’s business to play a commercial role in the economy and that is why this leader advocates the privatisation of state-owned companies. But privatisation has to be conducted in a transparent and cost-effective way. Booting away state-owned companies for a pittance is not privatisation but almsgiving. It is not Government’s role to act as a benefactor for foreign private commercial interests.
But there is another major concern linked to privatisation. Especially in a small island state like Malta, Government has to give utmost weight to the fact that some state-owned companies or operations are of strategic importance to national development.
Sea Malta was one such company. Government recognises this fact, so much so that it will be paying thousands of liri every year to Sea Malta’s prospective buyer for operating the routes deemed strategic for the island’s economy.
Government will still be forking out a yearly ‘subsidy’ to the private company that will be running Sea Malta and in this context it is wise to ask whether paying a subsidy to a foreign company is better than sustaining a state-owned company?
What happens when the public service obligation imposed on the private company expires and on purely commercial grounds the company decides it does not want to operate on the strategic routes?
These are serious questions because they concern issues at the very heart of Malta’s export base. The island cannot risk jeopardising its sea links to mainland Europe.
Rather than ranting and raving about Sea Malta’s financial black hole, Government could have embarked on a restructuring exercise to streamline the sea company’s operations making it leaner and more efficient.
After a capital injection to boost the company’s asset base, Government could have stipulated the maximum amount of subsidy or bank guarantees it was ready to fork out on a yearly basis. Such subsidies would not be used to sustain wages but will be linked to training, marketing and product development.
In a situation whereby Government is still committing itself to fork out money if Sea Malta is privatised, the alternative could have been more acceptable and risk-free for the commercial community.

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