Government to offer 30% of City Gate SPV for public participation

Public participation in the special purpose vehicle that will finance the €80 million City Gate project will be limited to 30% of the shareholding in Malita Investments plc, a new government company that will be floated on the stock exchange to raise money for the new parliament and theatre in Valletta.

Finance Minister Tonio Fenech said that private investors' options to invest in the new company will be limited, in a bid to curb the influence certain institutional shareholders might have on the new company.

A parliamentary resolution presented to the National Audit Office parliamentary committee is proposing that the government transfers the leases for the land and buildings of the Malta International Airport and Valletta Cruise Port (Viset) terminals, to a new government-owned company that will sell shares to the public in a bid to finance the €80 million project.

Asked whether even MIA and Viset will be allowed to invest in Malita, Fenech said that while the public limited company will be open to public participation, the size of any private investment will be "limited... we cannot have somebody significant having a large interest in the company."

Malita Investments was incorporated in June 2011, and was even included in the 2012 budgetary estimates under government's investments, with an issued share capital of €15 million. The item received no mention whatsoever in either the Budget speech, or by the Opposition's MPs.

Fenech defended the concept of using a commercial entity to finance capital projects such as City Gate. "City Gate won't be paid for through taxes. It is a sensible way of ensuring that instead of having future generations paying the debt, a clear structure is in place of how this project will be paid through investments. It is an important instrument in the way governments finance such projects across all over the EU," Fenech said.

Fenech said government was hoping to find support on the SPV from the Opposition, whose leader Joseph Muscat has questioned the financing of the City Gate project, and dubbed the idea of government renting the parliament from an SPV as "an unprecedented symbol of 'democracy in debt'."

Apart from receiving the annual rents from MIA and Viset, which are run by private consortia, Malita will also invest in local and foreign stocks and shares as well as issue bonds to the public, raising money for the City Gate project as well as running the project on behalf of government.

Concurrently, the €80 million spend will not appear in the government's books while the revenue from the MIA and Viset leases will be transferred to the company and no longer to the general government revenues.

More: Who will run Malita Investments plc