Energy plan still clouded by uncertainty

One of the more consistent characteristics of the Labour government’s energy plans is that they seem to get more complicated the more the Energy Minister tries to explain them.

Interviewed by PBS’s Reno Bugeja this week, Konrad Mizzi put up a valiant effort to convince the public that his government’s long-term vision would be delivered according to plan… even if he was forced to concede that the original plans – i.e., the ones presented to the electorate just before the last election – have had to be significantly revised.

In so doing, Mizzi appeared to lay to rest several of the doubts and misgivings so far raised by this ambitious project. He finally conceded that the project was several months behind schedule… adding that he was ‘ready to shoulder full political responsibility’ for the delay.

Exactly what this means in practice is however unclear. Prime Minister Joseph Muscat is on record stating that he would resign if the project was not completed in two years. He later modified that to mean he would resign if the aims of the project were not achieved by any other means, or within any other timeframe. 

It remains to be seen whether any subsequent change of plan will not be also matched by a similar change in political commitment. Either way, both Muscat and Mizzi can comfortably disregard earlier resignation promises, as it is clear from other areas of government that ministerial resignations are not on the agenda at the moment. 

All the same, Mizzi’s tone now seems to suggest cognisance that the general public may be entitled feel a little disillusioned, given his government’s promises. This in itself marks a change in attitude, and may suggest the sobering influence that comes with actually being in government – and therefore having to face and bear responsibility for the country’s challenges and problems – rather than simply aspiring to be in government, as was the case when those promises were made.

On a positive note, Mizzi also finally revealed a new official deadline for the completion of the Delimara project. Originally scheduled for March 2015, the deadline has now been pushed forward to June. He also promised to table the contract with Shanghai Electric Power in parliament. Both are welcome, albeit belated, twists to an ongoing saga which has hitherto raised more questions than answers.

But while Mizzi may have seemed convincing in his self-assurance on TVM, the fact remains that many of the original questions still remain unanswered. 

Giving details of the ongoing negotiations with SEP, Mizzi said the Chinese company will invest some €320 million in exchange for a 33 per cent stake in Enemalta, taking over the rudder of the 150MW BWSC plant at Delimara and convert it to gas. This cash injection, we were told, would also be used to slash Enemalta’s debt by 50% and partly finance the €130 million in excise taxes the company owed the government. 

So far, so good. But this, on its own, does not answer the most crucial question of them all: how government intends to finance a 25% reduction in utility rates for businesses, on top of the reduction already effected to domestic rates.

Initially, the idea was to offset the cost against savings made by the new terminal – which we now know will not be complete in time.

Mizzi’s answer to this conundrum was that the reduction for businesses still would be possible, because Enemalta’s seven-year business plan also included a five-year commitment to buy electricity from ElectroGas at a fixed price. Yet the terms of this agreement, reached on 22 November, remain shrouded in secrecy. Unlike the promise with regard to the SEP contract, government has made no commitment to release this contract to the public domain. 

There may even be valid reasons for this, but seeing as how much of the government’s promised tariff reduction now depends on this contract, one cannot help suspecting that the hidden document is being cited to deflect, rather than answer, questions regarding the financing of government’s energy policy.

Naturally, the reduction in tariffs is also an electoral pledge, and Muscat’s government may feel committed to upholding it, even if the original plans are no longer feasible. But the timing of the proposed reduction, which coincides with the March 2015 local council elections, suggest that government may have other motives to keep this promise. 

The proposed decrease in energy prices after all forms a major bulwark in Labour’s long-term political strategy. Nothing wrong with this, provided it does not impact the state of the country’s finances. And following on from a budget that proved very difficult to criticise precisely because of its generosity with the taxpayer’s money, this may also suggest that government may be biting off more than it can chew.

It is for this reason that the public needs greater reassurance that this reduction is, in fact, doable in the present economic climate. Mizzi may well be sincere in arguing that the costs are all covered by his constantly changing energy vision… but only full disclosure of all the relevant documentation will finally put the ghost of doubt to rest.