AUM has not yet defaulted on contractual obligations despite weak start, review shows

The American University of Malta has struggled to attract students but a review of the concession agreement shows it has not yet defaulted on contractual obligations.

Born in controversy, AUM has to complete the full project by April 2025, at the earliest, a review of contractual obligations carried out by MaltaToday shows. It also has until April 2029 to operate its campuses at full capacity with 4,000 students.

The transfer of land by the government to Sadeen Education, the company behind AUM, was formalised in a deed in March 2016 after parliament had approved the concession in December 2015.

AUM were granted a 99-year lease on land in Bormla and Żonqor Point, Marsaskala. However, in a fresh agreement that is expected to be debated in parliament’s National Audit Office Accounts Committee this afternoon, government is proposing granting AUM land at Smart City to develop a university campus instead of the land at Żonqor.

The new agreement will see Sadeen give up the Marsaskala land, which will be returned back to the government. All contractual obligations on the company will continue running.

The Nationalist Party has said government should have taken back the land at Marsaskala without compensating Sadeen with land at Smart City, accusing AUM of failing to live up to its contractual obligations.

However, a review of the deed shows that one of the key milestones is project completion within six years from when all required permits are issued, or after two years from the signing of the deed, which took place in March 2016, whichever happens first. Government can also grant the company a grace period of one year.

This means that the earliest date of completion based on the signing of the deed is 11 April 2025. With the deed being signed on 11 March 2016, the six-year deadline started ticking from March 2018 (two years after the deed), which with an additional one-year grace period will mean completion in April 2025.

Assuming the date of completion is April 2025, AUM then has four years to attract the maximum complement of 4,000 students. This means that full capacity will have to be reached by 11 April 2029.

Sadeen was granted title on land at Bormla’s Dock One area and a much larger tract of land at Żonqor Point in Marsaskala. Controversy engulfed the concession in Żonqor, which incorporated the former national pool complex and a tract of land outside the development boundaries.

Sadeen completed restoration works on part of the site in Bormla and the first student intake was September 2017. An AUM application to develop and restore the rest of the Bormla site, known as the Knights’ Building, was refused and is still pending appeal.

The company also filed an application for the development of the Żonqor campus but pressure had been building not to move forward with that project until the Bormla campus was operating at full capacity. 

READ ALSO: Land swap resolutions will return Żonqor to public, transfer AUM campus to Smart City