Parties engage in battle of energy reports
Labour and PN battle it out on energy prices by commissioning and publishing consultants' reports.
14 January 2013, 12:00am
Jurgen Balzan
Jurgen Balzan
4 min read
Consumers have been bombarded by conflicting versions on whether energy prices could be reduced or not.
What promised to be a battle of figures turned out into a battle of consultants and expensive reports. Almost one week after Labour's announcement that it would be reducing energy bills by 25%, finance minister played his trump card and claimed Labour would in fact increase bills by 5%.
On Monday afternoon Fenech explained that an exercise carried out by independent consultants KPMG concluded that Labour's plans to construct a new 200 MW power plant and the infrastructure to store gas at Delimara would increase tariffs by 5%.
Fenech admitted that the KPMG study was based on the assumption that the capital expenditure needed to construct the needed infrastructure reached €600 million against Labour's projected €370 million costs.
He added that Labour's own consultants, DMV Kema, showed that the cheapest option was not to ship gas by tankers but to set up a gas pipeline from Sicily, but Labour opted to transport gas on ships.
Fenech who for the past seven days had fronted the PN's crusade to discredit Labour's energy plan added that the study was also based on the information provided by Labour's presentation.
Explaining that Labour said that 40% of power would come from its new power station, 40% from the new BWSC plant converted to gas, and the remaining 20% from the Malta-Sicily interconnector.
Rubbishing Labour's claims that Enemalta would pay 9c6 per unit of energy produced by Labour's purported energy mix Fenech said: "The cost will be in fact be 10c8, rising to 12c5 after taking into consideration all operational costs, the excise duty laid down by the EU, the cost of the distribution system, the repayment of capital costs and profits for the private operator."
He added that the total cost of energy will increase by 5%, translating directly into a 5% increase in energy prices for consumers.
"The final result would be that it would cost Enemalta 19c2m, up from the present 18c3, to distribute a unit of electricity from the power station to a client, a 5% hike from the current rate," Fenech said.
Justifying the assumption that Labour's projections were "at least" €200 million off the mark, Fenech challenged Labour to publish all health and safety, maritime and infrastructure reports if Labour is to be judged by the seriousness and detail of its plan.
Repeatedly, Fenech said that Labour's plan can only work if Malta chartered ships that are too large to carry smaller amounts of natural gas, and insisted that tailor-made ships will have to be built, apart from being maintained throughout the years, to transport the consignments of natural gas to Malta. "Operating costs for these ships are even greater than the capital cost to build these ships - they probably cost €80 million each to build," Fenech said.
"It is better to go for the gas pipeline a Nationalist government is working on, because it will deliver a cheaper cost of energy per unit produced."
Fenech said large gas terminals away from land-based visibility that can serve Europe also fall under the EU's energy plan. He is referring to the PN's proposal to have an offshore natural gas terminal connecting Europe with a pipeline. "This is not a change in our policy, but a strategy to win European funds in line with the EU's intentions to have more energy security and have gas supplied from North Africa."
He confirmed that studies were underway on having a large offshore gas terminal which would be used to supply Europe.
Fenech said that an offshore gas terminal would be funded by the EU because it would offer alternative pipeline connection to Europe from countries other than Russia, which currently supplies countries as far south as Italy. "So far we always studied a Malta-Sicily link for our needs, now we are considering this wider option. The difference is that our proposal connects us to Europe and qualifies us for EU funds, while Labour's proposal isolates us."
Asked why the report was commissioned by Enemalta and not the Nationalist Party, Fenech said: "The KPMG report has been commissioned by Enemalta as it is within its right to do... and the report shows clearly that Labour's proposal will increase bills by 5%." The minister failed to say how much the report cost and when it was commissioned.
Jurgen Balzan was a MaltaToday reported from 2011 to 2017.
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Nobody is believing the PN anymore and the more they try to discredit the PL energy plan the more the latter gains credibility and support!
I am honestly shocked at the unprofessional sort of report which KPMG in Malta drew up for the PN (paid by Maltese taxpayers). I am sure that if KPMG International gets to know about this, it would have serious repercussions on the persons who manage KPMG in Malta because something like this tarnishes the international reputation enjoyed by this consulting company.
KPMG Malta - this is simply not on and you should apologize to the Maltese people for this very poor and amateurish sort of report you drew up. Such an analysis cannot be made in a few hours if you want to be credible!
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Fenech (g2 to g4), Mizzi (e7 to e5), Fenech (f2 to f3)
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An amazing report which to me appears totally unprofessional and unresearched, as it uses third hand data and other cost information seemingly plucked from the air. I suspect the auditors just tailored a spreadsheet with a goal seeking model which they backward analysed starting from the intended goal of showing that the unit cost was double what the PL claimed and then worked backward throwing in costs . No doubt the majority of us with some statistical knowhow hare not taken in by such amateurish ploys. However no doubt KMPG were paid handsomely from taxpayers' funds for this rushed job even if as expected the auditors peppered their report and the desired findings with disclaimers and caveats. What I find abusive is that this is nothing more than a political report intended to justify the PN criticisms and should have been paid by them as was the case with the PL energy plans. PN ministers seem to forget that they are there in a caretaker capacity and that this report ends up being launched by one such minister is totally abusive of their present role and casts ENEMALTA in bad light .
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X Arroganza li titkellem ghal haddiehor. Mela ghax ma humiex kapaci huma ma hu kapaci hadd!!!
Jien dejjem irnexxieli niffranka xi 25% mill-istimi ghax professjonali u rett.
victor refalo •
After accusing Labour of getting on board a foreign consultancy company specialising in energy to do a study on its Energy Plan, which was based on "desk top research", Tonio Fenech has asked KPMG to prepare this sham report. am calling it a sham report because:
a. it is just a desk top research report
b. done in less than one day
c. based on assumptions given to KPMG by the client, enemalta or rather the PN, WITHOUT attempting to verify anything
d. done by an audit firm KPMG which has no specialisatiion in energy matters, unlike DNV Kema.
This report is just confirmation that Tonio Fenech is desperate to act! Too late Tonio!
However, i do have a couple of questions......how much this report by KPMG cost and how paid for it?
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with all due respects how can KPMG claim to be independent consultants when they drew up a report based on presented figures in LESS THAN ONE DAY, or rather ON THE SAME DAY THEY WERE COMMISSIONED. How can KPMG be credible and if they can make such cock ups then all their previous and future reports are subject to questioning immediately. No independent expert can draw up an audit report in less than a day without being immediately labelled as a quack. And to boost, the report was paid for by you and me, the Maltese tax payers not by GONZIPN which makes the report even more non credible and CONCOCTED. What a mockery and to what levels these people are stooping to.
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Is RCC still a partner of KPMG?
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After the kicks he suffered by being forced to run against Simon, thus being proven ineligible for further promotion later on, Tonju has little to lose and a lot to gain by playing the "bravu" within GonziPN. Can Tonju give us exact time frames, costs, publish EU acceptance of these dreams, and publish exact amounts of EU supplied finance. Even the pipeline is just a dream. What stage are these projects at? Or is their viability still being discussed with Brussels? How far away are discussions to fruition, and what chance do they have of a successful conclusion? Facts and figures please. No Xmas sermon from the pulpit by the obedient boy. However, apparitions by the Madonna are allowed. These might help us see the light at the end of the pipeline( sorry tunnel, whatever).
