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Government in discussions with EU regarding extension of Gozo Channel’s exclusivity agreement

Date: 10/06/2010

Gozo Channel Ltd's six-year exclusivity agreement, which expired on April 21, has been extended until the government completes delicate discussions with Brussels. The agreement, signed just days before Malta joined the EU in 2004 without a call for tender, also stipulated that the company would benefit from an annual subsidy of €3.4 million as part of its Public Service Obligation (PSO).

Malta has been taken to the European Court of Justice over the agreement and the case is expected to be heard shortly. In the meantime, the government has decided to engage the current service provider, which currently employs 249 staff, to continue the service on current terms until the new tender is awarded. According to EU sources, this will mean that Gozo Channel will continue to operate in a non-competitive environment and receive subsidies at least until a new tender is issued, adjudicated and awarded.

EU rules state that the Malta-Gozo ferry service has to be open to competition, but the government is known to be taking a protectionist attitude, especially to protect the jobs involved. Nonetheless, Brussels has been insisting that the service should be open to full competition where all European companies interested will be able to tender.

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