Alterra knew of conditions attached to preferred bidder status

By Kurt Sansone

The Alterra Consortium, which lodged a judicial protest in a bid to block the part-privatisation of Malta International Airport, knew all along about government’s intention to re-open negotiations with other bidders if discussions with Alterra faltered. And this is confirmed by a news report appearing on the Alterra Consortium web site.

When Alterra was appointed preferred bidder in December last year, Finance Minister John Dalli was quoted by The Times as saying that despite being appointed preferred bidder it did not mean "that the other two short listed bidders had been completely eliminated." This news report, dated 21 December 2001, can be viewed in the news section of the Alterra Consortium web site.

In the counter protest filed by the Prime Minister, the Finance Minister and the Attorney General on Monday in response to the judicial protest filed by Alterra Consortium, it was revealed that the preferred bidder status was communicated to Alterra on 20 December 2001. The letter, signed by the chairman of the Privatisation Unit, also included various conditions, including government’s intention to open negotiations with other bidders if no conclusion was reached within a specified time period.

Our sister publication MaltaToday on Sunday revealed that the condition imposed by government on the strategic partners not to invest in other airports in the Mediterranean region, may be the source of the controversy that erupted after the MIA winning bidder was announced.

Both Alterra Consortium and the winning bidder, Malta Mediterranean Link (Vienna Airport) were shortlisted for the privatisation of Cyprus’ two airports – Larnaca and Paphos.

The promise of sale agreement signed with MML states that the consortium cannot have an interest or invest in other airports around the Mediterranean, which means that the consortium will eventually drop its bid for the Cyprus airports.

Government sources told our sister publication that it was always government’s intention not to allow MIA’s strategic partner to have other interests in the same region because it would defeat the hub concept earmarked for the Maltese airport. Initially both Alterra and MML refused to withdraw their respective bids for the Cyprus privatisation but eventually MML informed government that it was ready to give up the Cyprus bid if it won the MIA one. The winning consortium, which has Vienna airport as one of its partners, is reported to have given ‘reliable guarantees’ that it would maintain its promise.

The Cyprus bid for the development of the island’s two air terminals is a lucrative contract worth over Lm130 million. Five consortia were shortlisted by the Cypriot government in November last year and the binding bids were scheduled to be submitted in mid-February.

The first phase of the Larnaca airport project will be completed by 2005 giving the terminal a capacity of 7.5 million passengers and making it a stern competitor. On the other hand, the new Paphos airport will be completed a year earlier with a capacity of two million passengers. In 2001 2.8 million passengers passed through MIA.

In its counter protest government called upon Alterra to stop making unfounded allegations, which it claimed were intended to undermine the integrity of the airport privatisation process.

In the judicial protest filed on Friday, Alterra called upon government not to conclude the MIA privatisation contract with any bidder other than themselves. They declared that any contract entered into by government would be null and void.

During a press briefing given soon after Finance Minister John Dalli announced the winning bid, Alterra high-ranking officials said that they were surprised with government’s decision because they were the preferred bidder. Neither the Alterra officials, nor Mr Dalli would state what the impasse between them was and which as a consequence opened the door to the rival bidder.

Government is expected to rake in Lm40 million for the sale of a 40 per cent stake in MIA. The deal will be closed within the next six months.