Gozo Channel issues impractical tender to justify new multi-million direct order

The Greek owners of the MV Nikolaos, which is being leased by Gozo Channel as its fourth ferry, have declined to bid on what appears to have been a deliberately impractical new tender for the Malta-Gozo ferry service.

In so doing, they have positioned themselves to be able to continue leasing the vessel out to the state company for at least another two years.

Gozo Channel issued its new tender for the lease of a passenger ferry last month, but the fact that the new service would have to be up and running within the space of a mere two months, as per the tender’s stipulations, was considered as being highly impracticable for anyone but the incumbent holders of the contract.

The MV Nikolaos is being leased from a small Piraeus-based company, Ionies Grammes Shipping Company, which operates ferry crossings between various ports in Corfu and other small Greek islands.

The 35-year-old Ro-Ro passenger ship has been serving as Gozo Channel’s fourth vessel since 2019 at some €13,000 a day. But with the owner’s original direct order expiring next week, they are now forcing the government’s hand in a bid for a fresh multi-million-euro direct order at even steeper rates than those stipulated in the call for tenders that no one answered.

Knowing the government had issued the tender so late in the day, in a suspected deliberate ploy for a new direct order to be awarded to the incumbent operators, the ferry’s Greek owners declined to make an offer and effectively forced the government to keep them on board, but on their terms.

Such terms include the owners’ ability to dictate the new lease’s price tag, which is expected to be larger than the €3.5 million a year initially offered by the tender.

That tender, issued last November, has been described as “a joke” by sources close to Gozo Channel.

They note how Gozo Channel had not even specified the required maximum age limit of the vessel because it knew the MV Nikolaos was 35 years old and, as such, would be easy to beat along those lines in the tendering process.

Knowing full well that no one would be prepared to bid on a service that was to start in under two months’ time, the Greeks are said to have played their cards well by not bidding on the tender. That is because they knew there would be no interest and the government would have no option but to retain them.

While Gozo Channel has been chartering the MV Nikolaos since 2019 through a multi-million-euro direct order that was in breach of EU procurement rules, it issued a tender last month for the lease of a ‘fourth passenger vessel’ – a mere eight weeks before the current contract expires.

The European Commission, which is meant to approve all subsidies given with respect to Public Service Obligations, had been pushing for the tender for three years and has even threatened the government that it would begin infringement proceedings over the issue.

But by publishing the tender as late in the day as possible, no potential bidders were enticed to make an offer. Gozo Channel will now have to issue a new direct order for the incumbent Greek shipping company with the argument to the European Commission that it had tried but the tender had been unsuccessful.

While introducing a fourth vessel to Gozo Channel’s fleet has made the service more efficient at peak times such as in August and on public holidays, government sources have admitted Gozo Channel cannot afford the luxury of having a fourth ferry year-round.

With Gozo Channel already in dire financial straits, the government has had to inject millions of euros from the public coffers into the company to keep it afloat after mismanagement and sleaze plagued the company for years.

The 2011 PSO agreement, which had the European Commission’s blessing, elapsed in 2017, but a new tender was never issued. It is not known why the Commission has not taken any concrete measures against the government over this breach of EU rules.

In the meantime, the government is now justifying its requests to give the company more subsidies since it now says, it is unable to provide a satisfactory service without a fourth vessel.