Malta has proposed a total of €1.629 billion in projects that will compete for financing from an investment plan announced by European Commission head Jean-Claude Juncker.

According to the list published by the EC yesterday, Malta has proposes a total of five projects for consideration:

 

• The construction of a breakwater for Marsamxett harbour including land reclamation and quay development inside both the Grand and Marsamxett harbours - price tag: €140 million over two years;

• The construction of rural airfield in Gozo - price tag: €14 million over one year;

• The construction of a mono rail involving mixed over-ground and underground lines running North-South and West-East intersecting at key traffic junction and feeding at its various stops into other above ground public transport means - price tag: €1.42 billion over eight years;

• Developing infrastructure for procurement, handling, storage and distribution of medicines under public health services - price tag: €15 million over two years;

• And social housing and community centres for adult persons with disability - price tag: €40 million over eight years

These projects will compete for a total of €1.3 trillion in EU funding, according to the list published yesterday by Brussels.

The plan will be run by the European Commission and the European Investment Bank, with projects picked by "independent experts" according to their ability to capture private investor interest.

The EU Task Force on Investment yesterday published the report showing identifying around 2,000 projects across Europe worth some €1.3 trillion of potential investments, out of which over €500 billion worth of projects could potentially be implemented over the next three years. Many of these projects are currently not being realised due to financial, regulatory or other barriers.

Vice-President Jyrki Katainen (photo above), responsible for Jobs, Growth, Investment and Competitiveness, said yesterday: "Today's report shows there are huge investment needs and viable projects that could lift economic growth and open up more job opportunities in Europe. There has been a severe disconnect between the available investment and credible projects on the ground. We are now taking a big step to restore investor confidence and connect the two."

EIB President Werner Hoyer added: "The work of the Task Force demonstrates that there are enough investment projects in Europe. Member States provided a great number of proposals on which we can build upon to create a pipeline of projects and ensure we put money where it can best meet demand. Now we need to assess the projects and select those that are economically viable and can best foster the competitiveness of Europe´s economy. The EIB stands ready to finance those projects on the list, as well as any other, that meet the relevant viability and strategic relevance criteria. It is also urgent to tackle the significant non-financial barriers identified by the Task Force that prevent investment for viable projects from materialising."

The monorail project

By far the main project proposed by the government, the €1.42 monorail project has been on the drawing board for years, if not decades. 

In its report to Brussels, the government says that technical, socio-economic and financial feasibility studies are underway and are expected to be completed by June 2015.

Following that, execution studies will have to be extremely well planned to ensure that the project is sequenced in a way which, in conjunction with other works being executed at traffic junctions under other EU programmes, allows traffic problems to remain manageable during the execution phase.

The project, according to the government, will have broad popular support and it cites a survey carried out in November that shows that traffic/parking has become the top concern for the Maltese.

The barriers

Technical studies to confirm technical viability and budget costs; technical studies to confirm best execution sequencing in phases; regulatory and environmental issues

Financing solutions

According to the government's proposal, the monorail could generate its own revenues if properly executed to deliver what the population is strongly yearning for i.e. a reliable, efficient and environmental friendly means of urban transport.

The government believes that successful implementation of this project will  unlock substantial economic potential as travellers will add at least  30  minutes per day  to productive work or social quality time, which is  currently being wasted  blocked in traffic.

It will stimulate the much desired increase in female labour participation as parents can reliably plan the daily commute of their children to school rather than having to drive them back and forth individually.

Efficient public transport will further enhance the attraction of other productive sectors of the economy especially tourism, manufacturing and services.

This project is capable of being financed on a PPP framework, provided:

• Government will co-finance the investment by conducting all technical, environmental and regulatory studies.
• EU-EIB will co-finance with equity and mezzanine finance
• Private sector will invest enough to bring the government/private/EU-EIB equity/mezzanine funding up to 50% of the project costs.
• Any equity shortfall could be offered to Development Banks, Private Equity Funds and Sovereign Wealth Funds.
• The remaining 50% end project financing will be raised through a mix of traditional financing sources including long term loans from banks and bonds raised on the Malta capital markets which are very liquid.

Time frames

Technical Studies, execution plans  and regulatory/environmental approvals and detailed financial feasibility studies could be completed within a maximum of 18/24 months so that the project will become shovel-ready in the second half of 2016 or early 2017 if financing is in place.

• Some sort of government guarantee / insurance cover will have to be procured for delay in completion and budget overruns.

Execution will be planned in four phases each involving duration of 24 months so that the first phase will be completed by end 2018. It is yet to be established whether some overlap of the phases would be possible bearing in the mind the need to keep traffic flows manageable during the execution stage of the monorail project.

Consideration will be given, according to the government, to using the rails and tunnels of the Malta Railways which was a train service from Valletta to Mdina which started in 1882 and was mothballed in 1931 when private car transport rendered train service superfluous.

The full report can be found at: http://ec.europa.eu/priorities/jobs-growth-investment/plan/docs/project-list_part-1_en.pdf