Adds Labour Party statement at 1:32pm
Damage sustained by a steam turbine has delayed the hand-over of the Delimara power station extension by up to six months, Finance Minister Tonio Fenech announced, in one of the first admissions on teething problems afflicting the BWSC diesel engine that was the cause of controversy back in 2010.
He said that this means that the Marsa power station will have to be brought back into action to cover the loss of power generation incurred by the Delimara malfunction.
Fenech added that given how the Delimara power plant extension is still under BSWC's responsibility, Enemalta will be seeking to apply the full contractual penalties to recoup losses incurred by the turbine damage.
Fenech said that, because of the damage, it seems "very unlikely" that BSWC will be in a position to respect the contractual November 7 deadline for the handing-over of the plant.
If this deadline is not respected, Fenech said, Enemalta will be able to apply contractual penalties for the delay, which amount to €1.6 million for each week that BSWC delays the final handing-over.
Aside from that, Fenech said that Enemalta will also be seeking to apply the full liquidation penalties to cover the costs stemming from the turbine damage.
He said that such costs would cover the activation and running of the Marsa power plant, the higher cost of fuel to operate the Marsa plant, and also emission penalties.
Fenech specified that the costs incurred by the loss of operation of the Delimara plant will be over and above the €1.6 per week deadline penalty.
Pressed by the media, Fenech also confirmed that it does not seem likely that Malta will be in a position to respect Malta's emission targets for 2012.
He argued that the emission targets were based on the assumption that the Delimara power station would be in operation during the latter months of 2012.
Fenech added that, despite the contractual agreement permits Enemalta to take over the functioning portion of the plan, Enemalta is refusing to do so until BSWC completes testing of the entire plant.
This means, Fenech said, that Enemalta will refuse to take-over the plant before BSWC repairs the damage and completes testing, and added that it has Government's "full support" in the matter.
Fenech said it is currently unknown when repairs will be complete, and added that he steam turbine is currently being transported to BSWC's facilities in the UK, where the damaged will be assessed.
Fenech said that Enemalta will now be entering "a delicate situation with BSWC as it will be discussing the contractual penalties despite being in a situation where it will be collaborating with the contractor for the completion of works."
Fenech also confirmed the possibility of litigation between Enemalta and BSWC, as Enemalta will be negotiating with the contractor in a bid to recoup as much of its losses and damages stemming from the turbine damage as possible.
Enermalta Chairman Louis Giordimaina assured the media that "Marsa is ready for activation" and added that Enemalta will be seeking "all penalties we can on BSWC" and that there will be "no shortcuts."
Explaining the fault, Enemalta division manager Martin Attard-Montalto said the turbine suffered damage when a filter either burst or became unseated. He stressed that this was not due to a design flaw in the turbine system.
He said that Enemalta was towards the end of its 30-day Reliability testing phase in the run up to the plant's hand-over to Enemalta.
He also stressed that this was not the first time that the testing programme was suspended and necessary repairs carried out.
He stressed that given how Enemalta is not yet in charge of the plant, "BSWC is still responsible for the plant and will have to make good for the damages."
Attard-Montalto said that aside from the steam turbine damage, the rest of the plant is still fully-functional.
He also explained that the steam turbine converts the 'lost' heat energy from the plant's eight diesel engines into electricity, generating 13 MegaWatts and improving the plant's overall efficiency by 5%, to 47%.
Meanwhile the Labour Party said that the extensive damage to the BWSC plant at Delimara shows the total failure of Prime Minister Lawrence Gonzi's energy policy.
Labour hit out at Gonzi who "not only chose a plant that operates on Heavy Fuel Oil (HFO) but also a power plant that might put at risk the health of Maltese families and failed before even being operative."
The Labour statement added that this has led the country to pay for a power plant which does not function and the depend on the Marsa power plant which was supposed to be de-commissioned years ago. "This is another scandal which is being paid for by Maltese families, financially and health wise."
The Opposition added that the government has already paid €157 million to BWSC for a plant that has broken down before it started operating and said that Enemalta only decided to come clean about the extensive damage to the Delimara plant after Labour MP Joe Mizzi revealed what happened in parliament.
It pointed out that in order to award the contract to BWSC, the government changed its energy policy from one based on gas to HFO and also changed the tendering process and the local environmental law.
"Even the Auditor General had said that the tender should have been suspended and re-issued," Labour said.
The statement added that a new Labour government would hold investigations and hold the persons behind the decisions responsible for this scandal.