Zonqor AUM swap is ploy to save failed project

Prime Minister Robert Abela’s announcement that the government will take back Zonqor and grant the American University of Malta (AUM) alternative public land at Smart City may be a ploy to save the beleaguered Jordanian project from bankruptcy.

The Shift’s analysis of the land deed signed in 2016 between the government and the Sadeen Group reveals that many of the contractual obligations have not been met by the investors, and the agreement is now in default.

Rather than dissolving the contract, Prime Minister Robert Abela has announced his intention to give Sadeen a new piece of public land for development, essentially using public assets to rescue the failing investment of a private company.

In claiming to be giving back public land which was given away in 2016 by his own government,  Abela is attempting to present the proposed swap as a political achievement by his administration.

The 2015 deed obligations

Sadeen Education Investments Limited was given two large tracts of public land in 2015 — some 13,000 square metres in Bormla and 31,000 square metres in Zonqor, Marsascala — to develop a €115 million university campus.

The environmentally sensitive land at Zonqor would host some 1,000 students, mainly in dormitories, with plans to build restaurants, bars and other leisure facilities including swimming pools and a sports centre.

According to the deed, the AUM was contractually obligated to start operations in October 2016 and to “complete the project within a maximum of 73 months from the issue of all the required permits by all competent authorities or after the lapse of 24 months from the commencement date (11th March 2016).”

The deed also specified that the AUM had to generate some 300 new jobs and “attract approximately 4,000 students by the fourth year from the date of completion, with an annual intake of approximately 1000 students.”

Instead, the AUM has registered €15 million in losses up to 2020.

Six years later

The AUM immediately breached its contract by beginning operations in September 2017, a year later than agreed. It also failed to attract a significant number of students during its first years of operation.

According to projections the AUM presented to the government in its business plan, the university promised to have 1,920 students enrolled by 2022. By its fifth full academic year, the AUM has just 120 students, most of them on scholarships funded by the same investors in order to increase enrolment numbers.

Project developments were also part of the contract. The Marsascala development should be nearing completion, but Sadeen hasn’t even presented a full application to the Planning Authority. While outline plans were presented by Architect Ray Demicoli in 2017, the screening process stopped suddenly in 2018 and nothing has been done since.

According to the PA, Sadeen’s development application is incomplete and cannot be considered a development application according to current rules.

Observers note that the land swap now being promoted by Robert Abela is being pushed by Sadeen in order to obtain more favourable conditions by investing in a smaller project to recoup their losses.

A new parliamentary resolution will be needed after the general election in order for MPs to vote on the Smart City land grab.