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The bigger picture | Tonio Fenech

Finance Minister Tonio Fenech gets 10 out of 10 for presenting an argument. But does he have enough firepower to demolish Labour’s proposals for a cheaper energy source?

saviour_balzan
Saviour Balzan
14 January 2013, 12:00am
Finance Minister Tonio Fenech. Pic: Ray Attard/MediaToday.
Finance Minister Tonio Fenech. Pic: Ray Attard/MediaToday.


The first week of the election campaign has been dominated by energy issues.

On Tuesday, the Labour Party finally unveiled its much-anticipated plans to reduce the cost of energy by 25%. The PN's response was not immediate - but on Thursday Finance Minister Tonio Fenech poured cold water on Labour's optimism, in a press conference that challenged all the precepts upon which Labour's calculations were made.

I approach Fenech with my first question: if nothing else has come out of this debate or confrontation, is it a fact that we finally seem to be agreeing on a common energy policy? Both parties now seem to favour gas over oil, and the proposals seem to differ only in the finer details of fuel purchase and delivery...

Fenech however insists that the energy strategy for this country was already set years ago. In fact he cannot even understand why one is talking of an energy policy to begin with.

"We commissioned the Delimara plant and EU is ready to commission funds for a gas pipeline," he said.

So there is a possibility of EU money for the gas pipeline. Isn't this against he rules?

"This is something which is extraordinary, true. EU policy does not permit financing of energy infrastructure. Malta was the exception because our energy utility is owned and run by the State.

"They issued a strategy to allow for the rest of the EU to be connected by gas pipelines. Other countries will have to pay for the infrastructure, but we negotiated that as an island we had a unique situation.

"The EU accepted this and said that there would be financing for Malta and Cyprus. I cannot disclose how much is earmarked for Malta because we are still at the negotiations stage."

Tonio Fenech said that he had published all the studies on gas; but throughout it was seen as not feasible. That is why the government had opted for HFO.

"You must know that there are two options, the first option is a simple gas pipeline between Malta and Italy, and the second option would be a terminal unlike the Labour proposal - a very big investment - a terminal that would supply Malta and Italy as well as the mainland. There was even interest from the Qatari government but we have to see the feasibility studies."

Ironically, he adds that the same report by the PL consultant "made it quite clear that the price of gas from a pipeline would be far cheaper".

I ask Fenech to be more specific in his critique of the Labour proposal.

"The time period proposed by Labour is unrealistic," he begins. "Now it is clear that they will not even issue a call for tenders."

Fenech hinted that there was probably an agreement with someone.

"Today we have clear rules for procurement. It is untrue that one can go for a direct order..."

I point out that Fenech's assertion about procurement is rather rich, considering the millions in direct orders that are regularly dished out by the present administration.

But I ask again: why has the PN government decided to come up with its proposals after the Labour blueprint for energy?

"If you visit our website, you can see that we have made it very clear that the present HFO plant can easily be changed to gas..."

Precisely: so in the last 25 years the PN had backtracked over its vision for energy...

Fenech disagrees: "We are committed to a long-term programme unlike that of Labour which is short term. We only need an additional 50 MW, yet Labour want to provide an additional 200 MW. We would be throwing away our money."

How can the minister rubbish Labour's proposals, when there have been so many recent power cuts? Doesn't this point towards a failure of the government's energy strategy?

"And we will still suffer with a new power station. The issue here is not of enough energy but rather of distribution. When a cable develops a problem, we will have tripping and there is a safety mechanism in place which simply switches off the power station. If we think that there is an infallible system out there, it is untrue. PL is saying that we are tripping because of lack of energy. It is a sad argument."

Fenech admits that the PL proposal on solar energy is not controversial, but he plays down the PN's former 'big' plans on wind energy.

"I think we needed to have studies and because of climatological reasons the viability was not on. We are responsible and have to make the right choices... and let us not forget that alternative energy is more expensive. But we also have obligations to use renewable energy. Gas and oil are scarce resources."

I ask him about the fixed price that the Labour proposal is making.

"I cannot understand how PL can guarantee a fixed price when there are reports that show that gas prices cannot be kept stable."

He reiterates: "The 10 year fixed price is impossible. This can be seen in the outline given by the World Bank; the PL report ignored this comment. The PL approach will lead to a very high cost. This will lead to a disaster."

Here he makes a comparison with other models that have been suggested locally.

"One of the reasons why the Norwegian Sargas was cheap was that the plant would always be working and they had this idea of exporting extra energy to Italy.

"These projects look simple but when the project starts, so do the complications. Labour is forgetting that the project has to have an Environment Impact Assessment..."

Did he still insist that the idea of a gas storage facility was a bomb?

"I insist on the bomb. We have other similar assets, but they are not next door to the power station.

"PL's shadow economy minister Karmenu Vella said that the Freeport was built on rubble, but these aren't containers we're talking about now, but gas tanks as wide as 23m."

He also sticks to his guns on the timeframes proposed by Labour, which he insists are unrealistic.

"It was deputy leader for the Labour party Louis Grech who said that the Air Malta hangar took 18 months to complete. Now we are being led to believe this project will take one year. Piling of concrete takes time and then you have build the gas tanks."

The minister argues that it would take the Labour Party five years minimum to implement the project.

"And this fortifies the argument for a gas pipeline."

He reminds me that: "Europe has shown great interest of having cheaper gas by introducing a massive network to ensure that prices are the same... and what does Labour do? It chooses a solution that would lead to isolation."

He admits that the Labour Party have identified the issue of electricity and water tariffs as major concerns, but he underlines that people are not stupid.

"They will acknowledge how well we have done in the economy, education, health, but not on water and electricity. I concede that the bills which were introduced were not conducive to increasing our popularity. The stark reality was there was a hike in oil prices. And yes, I agree that Enemalta could have been managed better. But it is not the core problem..."

Would he agree that the technicians at Enemalta were simply not excited by gas?

"I do not think so. I think they have always realistic. Engineers are always in love with engines, and gas needs engines too. Yet gas has safety issue and we all know that pipeline is definitely much safer."

I turn to the flavour of the campaign itself. The first week has been intense, yes, but with a relatively decent level of discussion, at least so far. The political parties have been concentrating on issues, not mud-slinging. But the campaign has another seven weeks to go. 

I ask him: is it not too long a campaign? Will the parties move on to other issues?

"Obviously the PN will be launching its own energy strategy for Malta. We felt the need to do this, as we realise that our energy strategy is not well understood."

Communication, it appears, is a perennial problem for the Nationalist party.

"Our commitment is to provide the cheapest possible energy and all actions to provide infrastructure and to attract that cheapest source of energy.

"We are unlike Labour, which is trying to predict the prices.  To say that you are going to reduce costs, when the project is not ready, is crazy. "We have a clear strategy: it will prove that we have provided the cheapest energy to our islands.

"The energy debate is not going to fizzle out. It is the PL's cornerstone proposal. We have our own campaign, we will discuss the important things that matter.

Of these, Fenech cites employment as a top priority.

"Work is a key issue. With the PL proposal a family will save €150, but that does not compare to job creation, education and the quality of health service and to be able to keep the economy on a high.

"When people start thinking of the PL proposals, they will say that they will prefer a job to a cheque of €150 which they probably will not even receive. They will see the bigger picture..."

I take him back to the deputy leadership contest. Despite losing that contest Fenech still retains a high profile. Does feel bruised or regenerated?

"In reality it was a wonderful experience. It got me closer to the councillors. I am here to serve this country and I am willing to continue serving this country. They - the councillors - appreciated the loyalty to the country and the party.

"I will serve where I am asked to serve." 
saviour_balzan
Saviour Balzan is the founder and co-owner of MaltaToday. He has reported on Maltese poli...
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Yanika Chetcuti
How may he earn even a five out of ten when he kicked off with the value for Gas supply ships at €100 Million each, to turn around a couple of days later and correct himself to €50 Million each. Also how could you gauge his performance @ ten, when he does not know that the Freeport exists? Why the Freeport? Because he should know that importers do not buy ships to move goods around, but buy space in/on the ships. Just as EneMalta does with oils! What new Energy policy document is he going to ram down our throats? Wasn't this document published late last year? What has changed? Labour's Energy plan???