The heat is on

The Prime Minister blaming the higher uptake of electric vehicles and the shore-to-ship system for this government's massive failings in the energy sector is farcical. 

It is not like these happenings were unexpected events, like an extreme storm. Shore-to-ship, a system supplying electricity to cruise liners has long been in the making. Enemalta was also a party to this project and so it knew well in advance of the increased demand. 

In 2022, then transport minister Aaron Farrugia launched a €50 million scheme spread over three years to incentivise 10,000 consumers to shift towards electric vehicles. When launched, this scheme should have fed into Enemalta’s energy plans and investment. Saying that the government has been caught by surprise is an admission of failure. 

The so-called energy plan that won Labour the 2013 general election was neither a plan to provide cleaner energy nor did it provide the infrastructure to secure Malta’s long-term future energy needs. The misgiving of the National Audit Office when reviewing the procurement process is well documented: It was an opportunity for dubious dealings, a pre-ordained deal where the adjudication process was merely a façade and an unpreceded state guarantee of €360 million being given and a €40 million tax bill written off. 

But enough said on this project that put some people in a financial wonderland. When this grab was secured these people moved for the next kill, the hospital deal, leaving Enemalta to its own devices. 

10 years on, Malta cannot provide for the energy requirements of today. During this period, while energy demand continued to increase there was zero investment in new energy generation and very little in distribution. This failure has now caught up. 

In the complete absence of a Plan A, comes Plan B; the acquisition of a so-called emergency temporary power station that with the best of luck will be operational in mid-August. This investment, which was originally planned to cost €12 million is costing closer to €37 million and will see the installation of a diesel-run 60-megawatt plant. It is too little too late and another failure. It is curious gas is no longer a viable solution. 

The quick fix for the recent spate of power cuts was the sourcing of 50 generators at the reported cost of €10,000 per hour, stuck to sub-stations all across the island. These noisy diesel-run cancer minions will cost the taxpayer nearly €50 million to operate during the four hotter summer months. What this means is more friends will find themselves in financial wonderland. 

With the decision to decommission the Marsa plant and Delimara 1 in 2014, the country’s remaining generation infrastructure - Electrogas, the BWSC plant, and the interconnector – were never going to be enough to fulfil the generation needs of our economy that saw significant pressures from the accelerated increase in population as the driver for economic growth. The need for a second interconnector with Sicily should have been clear then and not today. 

It is only early this year that the second interconnector has received the green light with government promising it will be up and running in 2025. This is another failure. By 2025, we will not even have gotten through the tendering, appeals, and approval process by the Italian side, let alone laying the cable. If the government heeded the Nationalist Party's calls in 2020, rather than ridiculing their proposal, and commissioned the second interconnector the generation capacity today would be secured for Malta’s current and medium-term needs.   

The failure of this government was also exposed by the NAO when it came to the investment in the distribution network over the past 10 years.  The promise of doubling this investment over the coming years will do little to alleviate the chronic problem created by the government.   

The recent NAO report could not be clearer in its assessment that the power outages in July 2023 were due to the underfunding in the investment required in the high voltage network. In its counter-reaction, Enemalta admitted having failed to assess the demands for electricity stating that 2023 saw a 14% increase in demand from the expected 3%. Going off the mark in your estimates by one or 2% is understandable but 14% smacks of outright planning incompetence.  

The fact is that Enemalta is riddled with a lack of planning and secrecy. The last filed accounts are of 2021, as the NAO reported Enemalta defaulted on its legal obligation to publish a network development plan, with the regulator doing nothing about it. There is no transparency on how the millions of subsidies are being spent, while the investment in infrastructure significantly falls behind. 

Enemalta’s annual actual expenditure on the HV network during the past 10 years is significantly lower than the already low allocated capital budgets. Ironically, as the NAO states, annual CAPEX on the HV distribution network system experienced a downward trend, while average temperatures and electricity demand were on the increase. This is a big failure.  

This government is all about living off what was invested in the past and eating into the future by increasing public debt to remain popular. The consequence of Labour’s energy sector failures is catching up fast as the heat is on.