Court annuls Magħtab incinerator tender, orders new adjudication process

The Appeals Court orders the re-evaluation of bids for the incinerator tender after it rules that members of the adjudicating and revision boards at the Contracts Department had a conflict of interest

An artist's impression of how the Magħtab incinerator will look
An artist's impression of how the Magħtab incinerator will look

A tender for the construction of an incinerator in Magħtab will have to be adjudicated again, the Appeals Court ruled on Thursday.

The Court of Appeal found members of the adjudicating panel within the Contracts Department had a conflict of interest and ordered a new evaluation process take place.

The Contracts Department last year recommended that Wasteserv, the government waste agency, award the tender to a consortium made up of French company Paprec and Bonnici Bros. The company put in a €600 million bid.

However, rival bidder Hitachi-Zosen Inova AG – Terna SA, which had submitted a €780 million offer, appealed the decision.

The Court of Appeal’s ruling on Thursday represents another setback for a project, deemed crucial by Wasteserv to reduce the need for more landfilling space to dispose of non-recyclable waste.

A new adjudicating committee will have to be formed to consider the bids once again.

Hitachi-Zosen was represented by lawyers Matthew Paris, Adrian Delia, Luke Dalli and Zack Esmail. The lawyers argued that the Tenders Evaluation Committee was irregularly composed and the tendering process was tainted.

Hitachi first appealed before the Public Contracts Revision Board, pleading that there had been a wrong evaluation of its bid, irregularities in procedure, and irregular composition of the evaluation committee.

The appeal was dismissed earlier this year, prompting the company to take the matter before the courts. Hitachi reiterated its original objections but added that two members of the revision board, Kenneth Swain and Vincent Micallef, also had a conflict of interest.

Hitachi said Swain was a former director of Enemalta, which had a power purchase agreement with Wastserv, and Micallef was a director of ClearFlowPlus plc, a State-owned entity like Wasteserv and Enemalta.

Presided by Chief Justice Mark Chetcuti and judges Josette Demicoli and Christian Falzon Scerri, the Appeals Court first considered the claims of conflicts of interest by members of the revision board.

The judges upheld Hitachi’s pleas, but made it clear that this did not imply the decision taken by Swain or Micallef was motivated by personal gain or intended to breach principles of good governance. The Appeals Court declared the revision board’s decision as being null.

But the judges also ruled that Stephanie Scicluna Laiviera, who stood on the Tenders Evaluation Committee, was in breach of public procurement regulations since she was listed as a member of the Public Contracts Revision Board and also worked as Wasteserv Procurement Manager.

“Once Stephanie Scicluna Laiviera was, by law, precluded from sitting on the Tenders Evaluation Committee, the composition of the committee was irregular and, as a consequence, all decisions it took were irregular too,” the court ruled.

As a consequence, a new adjudicating committee will have to be set up to reconsider the bids.

The Magħtab incinerator bidding process was mired in controversy when the Contracts Department in June last year ‘mistakenly’ published the initial offering price of the five competitors who showed interest until then.

This allowed the bidders to adjust their final offer a month later. Two of the lowest-priced bids dropped out of the running and the Paprec-BBL consortium reduced its initial price by around €17 million to put in a final offer for €599.7 million.

The other two consortia – FCC Medioambiente Internacional and Hitachi Zosen Inova-Terna – submitted final bid prices of €616 million and €781.5 million respectively.

In October 2023, Paprec-BBL were selected as the preferred bidder, however, the process was halted when Hitachi appealed the award.

MaltaToday had also revealed that the Maltese partner in the winning consortium has ties to 2013 oil scandal kingpin George Farrugia.

Bonnici Brothers is the sole shareholder in ENV Energy Solutions, a company run by Farrugia. At the time, a spokesperson for Bonnici Brothers denied Farrugia was in any way involved in the incinerator tendering process and insisted he would neither be involved afterwards.

The Magħtab incinerator is expected to process 192,000 tonnes of non-recyclable waste annually and is a crucial cog in Malta’s waste management plan. The incineration of waste will help reduce the dependence on landfills.

The tender issued by Wasteserv was for the construction and operation of a plant that is also expected to generate 5% of the country’s energy needs. The selected company will be granted a 20-year concession to run the facility.