The Malta Independent 8 March 2021, Monday

TMID Editorial: Government contracts - Do better

Tuesday, 9 February 2021, 07:57 Last update: about 27 days ago

It is common in contracts to include clauses which would safeguard both parties from the other failing to uphold its end of the bargain.

Two particular agreements in Malta are currently the topic of concern – the agreement the government signed with Vitals Global Healthcare over the running of three of Malta’s hospitals, and the Electrogas deal.

Opposition Leader Bernard Grech mentioned one of these contracts on Sunday. “The government made a lot of mistakes and decided to give away Maltese hospitals. To get back our hospitals, to be the leaders of our hospitals, we need to pay at least €100 million.”

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In the case of Electrogas, backing out of the deal comes with a steeper price. The government would need to pay over €417 million for terminating the Electrogas power station deal, the Public Accounts Committee (PAC) had heard. For this price, however, the government would gain control of the power station.

Now, in of itself one would expect private entities to protect their investments or potential investments by including such clauses in their contracts. The question is, however, whether the contracts signed by Joseph Muscat’s government were indeed done in the best interest of the people.

The government, between the years of 2013 to 2019 practically ruined Malta’s name internationally and signed deals which, till this very day, many question whether they were right for the country.

For example, should Malta have signed an agreement with Vitals Global Healthcare, given the lack of experience it had in the medical field? Hind sight proves that it wasn’t a good deal for the government, and indeed officials at the time surely must have known it was not going to be a good fit.

In addition, there are questions being raised as to whether it was a pre-meditated agreement – very serious allegations.

Whether or not the government will pull out of the agreement with Steward Health Care (who took over from VGH) remains to be seen. What is certain is that Steward has more experience at running hospitals.

And then there is the Electrogas deal. There is absolutely no doubt that something needed to be done with Enemalta, and that Malta needed to move away from heavy fuel oil.

The questions surrounding the Electrogas deal are mainly whether the agreement was indeed for the benefit of the Maltese people, given the price at which Enemalta was purchasing energy from them. A report by the Auditor General had found serious shortcomings with regards to the bidding process and the due diligence employed. It also noted that prices for the underwater Sicily-Malta interconnector were cheaper than the gas-fired power station.

The situation regarding 17 Black, and all the other allegations emerged later after the agreement was signed.

At the end of the day, the government must ensure that any contract signed with a private entity is in the best interest of the Maltese people. Muscat’s government does not seem to have done this on a number of occasions. The current and future government must not make the same mistakes. Due diligence must be thorough, all protocols must be followed and, at the end of the day if the companies do not have the required expertise, move on.

 

 

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