Fact-check Malta: How much did MIDI pay for Manoel Island?

Last month, as a petition calling for Manoel Island, a small island just off the shore of the highly urbanised town of Gżira, to be turned into a national park gathered steam, Prime MinisterRobert Abela warned that reclaiming the land would cost “hundreds of millions” of taxpayer money.

The island, currently in a state of neglect, has long been earmarked for the development of luxury high-end apartments, after the land was given to a private consortium named MIDI back in 2000. However works have yet to start, with campaigners calling for the deal to be scrapped altogether.

Abela reiterated his point days later, telling Times of Malta on 3 June that this ballpark figure emerges from the value of the 95,000 square metres of developable land on the site, as well as the project’s promised public spaces.

The government could have to compensate the developers for this amount, Abela said, ruling out the prospect entirely and instead vowing to review the concession agreement for any breaches.

However, the project’s finances have befuddled many, including PN MP Rebekah Borg who speaking in parliament on Monday 2 June, called for more transparency on the contract’s financial terms.

To understand the project’s labyrinthine finances, we have to go back to its beginning.

‘A national dream’ mired in delays

The Manoel Island saga is now well into its third decade, with MIDI first selected as the preferred bidder to develop the island (and nearby Tigné Point) in 1993.

Six years of negotiations would pass before the government formally handed over the land in 1999.

The deal was passed with remarkably little resistance at the time.

Then PN environment minister Francis Zammit Dimech, who led negotiations, described the project as a “national dream,” while the then-Labour opposition’s only objection to the project was a clause in the contract exempting MIDI from paying stamp duty on the land transfer.

The concession was barely seen as worthy of a parliamentary debate, only making it to the plenary because the stamp duty issue meant it couldn’t be green-lighted by a parliamentary audit committee.

The muted resistance to the project was voiced by environmental NGOs Din l-Art Ħelwa, Friends of the Earth and Nature Trust Malta who, in a joint statement, claimed the project smacked of speculation.

“Do these people realise that the place at present is a dump?” MIDI chair Albert Mizzi promptly rebutted.

The deal was eventually wrapped up and the concession agreement signed in June 2000, effectively handing MIDI control over the land for a period of 99 years.

But the project, which MIDI chair Albert Mizzi initially said would be completed within “seven to 10 years,” has been mired in delays, stretching beyond its planned March 2023 deadline.

MIDI have argued that a host of factors outside their control, from unexpected archaeological finds to pandemic lockdowns, have stalled the project for years.

Environmental activists, on the other hand, have accused MIDI of breaching the concession’s terms and calling on the government to renegotiate the deal and turn Manoel Island into a national park.

After initially resisting activists’ calls, both Abela and opposition leader Bernard Grech have since relented, with the former describing the public’s gain from the concession as “laughable” and the latter saying the country must do “everything possible” to turn Manoel Island into a national park.

How much would it cost to reclaim Manoel Island?

In reality, this question is nearly impossible to answer, as the final sum would likely be subject to secret negotiations between the government and MIDI.

If we were to use Abela’s metric, adopting the average value of land in the area (a little over €3,000 per square metre, according to a recent analysis by KPMG) and multiplying it by the area, he would certainly be right, with the bill running over €300m for the island’s built footprint alone.

But this is a moot point, with Abela having ruled out compensation altogether.

Nevertheless, analysing the concession agreement and several public statements sheds some light on how much MIDI are likely to have spent on the project so far, between winning the concession, ground rent fees and restoration works.

How much did MIDI pay to win the concession?

Press reports at the time offered up varying figures, frequently citing anything between Lm120m and Lm140m (roughly between €280m and €326m).

But those figures appear to include 99 years’ worth of annual ground rent payments, the vast majority of which have yet to be paid.

The deal’s contract shows that MIDI was granted the concession for both Manoel Island and Tigné Point against a total premium of Lm39.5m (roughly €92.2m).

This total included Lm25.6m (€59.6m) in interest-free cash instalments to be paid between 2000 and 2023, and a further Lm14m (almost €21m) in in-kind payments for infrastructural and restoration works on the several heritage buildings dotted along the two sites.

In written replies to Times of Malta, MIDI pointed to similar, albeit marginally different, figures.

“The premium payable to government for the concession totals €92.2m (Lm39.57m) of which €57.8m is payable in cash and the balance of €34.4m represents a credit in respect of infrastructural and restoration works,” a MIDI spokesperson said.

This credit is “the maximum amount MIDI can claim against the obligations as detailed in the deed,” the spokesperson added.

Premium covers both sites

However, this total premium of Lm39.5m (€92.2m) covers both sites in the concession, not just Manoel Island.

The contract splits this premium across the two sites, with Lm21.32m (roughly €49.7m) allocated for Manoel Island and the remaining Lm18.25m (€42.5m) for Tigné Point.

This includes the portion of the premium allocated towards in-kind payments for restoration and infrastructural works, some of which have yet to be carried out.

But we will get to that later.

What about ground rent?

Aside from the premium, MIDI is also obliged to pay an annual ground rent, with the yearly fee increasing gradually over the years.

The contract shows that during the first 25 years of the concession, MIDI was charged a yearly ground rent of Lm480,000 (just over €1.1m).

The yearly ground rent fee was set to almost double to Lm840,000 (almost €2m) as of 1 April 2025, before increasing again in 2050.

Again, this ground rent covers both Tigné Point and Manoel Island, however an attachment to the contract reveals that the ground rent for Manoel Island alone is calculated at Lm256,811 (just under €600,000) per year, set to almost double in 2025.

The contract includes other clauses either waiving or reducing ground rent fees between 2000 and 2013, although it is unclear how these discounts are split between Manoel Island and Tigné Point.

In any case, MIDI’s total bill for ground rent fees for Manoel Island over the past 25 years totals roughly €15m, although the discounts mean that this could have been brought down to somewhere near the €10m mark.

It is unclear whether the company has obtained any further discounts on this in recent years.

In the company’s 2022 annual report, MIDI chair Alec Mizzi told shareholders that the company was in “discussions with government” over possible remedies to make up for the project’s built footprint being reduced in a revised Manoel Island masterplan.

And what about restoration and infrastructural works?

While the costs for the concession premium and ground rent are both outlined in the contract, those of restoration and infrastructural works are a little hazier.

The contract sets out how much credit MIDI can claim for this work, but the company insists that the amounts it has shelled out for works “are far greater than the values attributed in the deed”. For instance, a spokesperson said, the cost of restoring Fort Tigné was more than double the allocation listed in the contract.

And it is also unclear exactly which works on Manoel Island have been carried out to date and which are pending.

A company spokesperson told Times of Malta that while all works on Tigné Point have been completed, only some of those promised for Manoel Island have been carried out so far, listing the restoration of Fort Manoel and the installation of an Enemalta distribution centre, as two examples.

The total cost of these works is not known, but MIDI claims restoration works on Fort Manoel alone cost €13.9m, ten times the amount allocated towards the fort’s restoration in the contract.

Enough with the accounting, how much does it amount to?

Tallying up the cost of the Manoel Island portion of the concession (€49.7m) and 25 years’ worth of ground rent (€15m, if we ignore the discounts) suggests that the deal has cost MIDI somewhere in the region of €64.7m to date.

Adding MIDI’s self-disclosed expenditure on the Fort Manoel restoration brings this up to roughly €78.6m.

The true figure is likely to vary slightly.

Discounts on ground rent could bring the total down, while undisclosed costs for other infrastructural and restoration works could bring it back up.

And while this total includes some in-kind premiums for works that are yet to be carried out, it is also likely to exclude other expenses that may have cropped up over the years, such as staff and consultancy costs.

Verdict

The concession agreement shows that the premium for Manoel Island was valued at €49.7m.

It also reveals that the ground rent for the Manoel Island portion of the concession was set at a little under €600,000 per year, although it waived or discounted ground rent fees for the first 13 years of the contract.

This suggests that MIDI is likely to have paid anywhere between €10m and €15m in ground rent over the past 25 years.

The company says it also spent an undisclosed amount on restoration and infrastructural works, including €13.9m on the restoration of Fort Manoel.

This would mean that the contract set the value of Manoel Island at roughly €65m, although MIDI says it spent at least an additional €14m on restoration works to date.