The signing of the contract will seal four years of negotiation and planning to find a suitable company to run the Freeport.
The process of privatisation began in 2000. The proposal was drafted by the government’s Privatisation Unit and consultants from the World Bank.
The government established three criteria for the sale of the Freeport. These included ensuring that the Freeport would continue to grow, ensuring the best possible benefits to the Maltese economy and ensuring the biggest possible profit from sale.
In May 2001, the Privatisation Unit published a document of sale that attracted the interest of 16 organisations. Eventually, three definite offers were submitted. The government said it was bound to secrecy over the identity of the other companies who had submitted an offer.
Government subsequently postponed the privatisation of the Freeport by a year, the
statement added.
This was because during that time, major changes in the global shipping industry were underway. This particular industry, said the ministry, suffers a lot of highs and lows, to the extent that the rates of transporting merchandise can vary by 25 per cent in a six-month period.
This means that demand is very fragile and the industry can be hit hard by price fluctuations to non-final destination (transit) ports, such as the Freeport, said the Ministry.
One year later, a due diligence inquiry was launched into the offer made by CMA-CGM and a Heads of Agreement was duly signed in October 2003. Final agreement was eventually reached in June 2004 and this accord is to be signed off on Tuesday.
On the day, five documents are to be signed, including the licence document, lease agreement, sale and purchase agreement, security agreement and management agreement.
On Tuesday, the Malta Freeport Corporation will give CMA-CGM a licence for an as yet unspecified fixed term to operate the Freeport. This document will outline the rights and obligations of all parties and will also outline procedure for when agreement is not reached.
The lease agreement will hand over the administrative building, the Freeport proper and the Freeport Centre over to CMA CGM. The Malta Oil Tanking and Medserv building will not feature in this agreement.
The purchase and sale document will describe will explain conditions of payment and price for transactions.
The security document will stipulate what security measures the Malta Freeport Corporation will offer to operators.
As a result of the agreement, the Malta Freeport Corporation will continue to be the regulator of Malta Freeport Terminals Ltd. In addition, prices and levels of service will continue to be regulated. This, in simple terms, means that Malta will continue to use the Freeport for import and export and will be charged prices and given services that are regulated by a local authority.