Monorail on backburner as Malta remains without EIB financing

Malta is nowhere close to obtaining any of the funds needed for an ambitious monorail project, mooted in submissions to the European Investment Bank’s fund for strategic investments.

A Transport Malta spokesperson confirmed that the billion-euro project that had been presented for financing through the Juncker Investment Plan, was not being actively considered for the time being, and that preparatory studies were yet to be made.

The 79-km project was said to have been spearheaded by Transport Malta, and that technical, socio-economic and financial feasibility studies were underway and expected to be completed by June 2015. Even a start-time for early 2017 was earmarked if financing was in place. 

But Malta remains one of the few member states for which no cash from the ‘Juncker Investment Plan’ has yet been earmarked.

The European Fund for Strategic Investments (EFSI) has so far released €11.2 billion in cash for a multiplier of €82 billion in investments, or 26% of the total €315 billion targeted by the European Commission.

Over 220 transactions in 25 out of 28 member states have been carried out, but Malta, Cyprus and Bulgaria are not among those recipients.

The ministry for European Affairs, which is led by deputy prime minister Louis Grech, has told MaltaToday that the list of projects that had proposed the ambitious monorail project “concerned only potential public sector investments”.

“It was indicative, as detailed technical and financial studies still needed to be conducted. There is nothing hard and fast about the list, which may be amended at any time depending on the outcome of the said studies,” a spokesperson for Grech said.

“The government is very much aware of market failures in Malta, which make it difficult for SMEs to obtain financing through normal banking channels. It is similarly aware that private banks may be averse to riskier projects or to big infrastructural projects that increase their large exposure limits. That is why the Malta Development Bank is being set up to address these market failures.”

Grech announced a development bank to be set up so that EFSI funds can be easily accessible to Maltese companies by “marrying Maltese financing culture” to European Investment Bank requirements.

Around 56% of projects so far approved by EFSI in other member states have been submitted by private companies. The other 44% are almost equally split between PPPs, public projects, and EU-wide funds which will in turn invest in projects, potentially also Maltese projects.

EFSI money is intended to fund projects that are both commercially feasible but could be high-risk or have a long gestation period – a market gap that prevents companies from finding immediate private financing.

“The ministry is promoting the implementation of EFSI but anybody who has commercially-feasible projects that require financing can apply to EFSI directly via its online portal. This includes an advisory hub that can help applicants develop their business case and the documentation required to apply.”

Under the original proposal, Alfred Mifsud’s task force had proposed the monorail as the “ultimate solution” for urban mobility. “This will bring a cataclysmic change to the daily commute, making public transport the preferred means of urban transport, generating efficiency and economic growth as people will spend less time wasted in traffic congestions.”

The proposal included using rails and tunnels of the old train service from Valletta to Mdina which started in 1882 and was mothballed in 1931 when private car transport rendered the train service superfluous.

Malta is the country with the highest population density in the EU, with a population density average of 1,325 persons per sq. km. compared to the EU average 117 persons per sq. km. In the northern harbour area density shoots up to 5,015 persons per sq. km.