Labour excludes tendering process for LNG terminal and power station
No answer on 10-year power purchase agreement for hedged price of gas.
15 January 2013, 12:00am
Miriam Dalli
Miriam Dalli
3 min read
Konrad Mizzi said Labour's gas terminal will not be subject to a public procurement process.
Labour will eschew the standard tendering process for the procurement of a new 200MW power station powered by natural gas, but the party is claiming that its expression of interest will still be in line with EU legislation.
Labour candidate Konrad Mizzi has claimed yet again that a Labour government would carry out impact assessments and safety cases for its LNG terminal and power station within six months, before embarking on a project it intends delivering within 18 months.
"We're not going to buy a power station," Mizzi said when asked by MaltaToday whether Labour's proposed expression of interest was not a transparent method of choosing a private operator that will construct and supply gas to the power station.
"We are inviting a private operator to participate in the supply and generation of energy and this will be in line with EU law... we are going to push bidders to offer the lowest price possible."
The private operator will be a new entrant in the market for generating energy, but the energy will have to be distributed by Enemalta, the state-owned company.
Mizzi was answering to doubts raised by independent environmental safety expert Miles Seaman, who voluntarily participated in a press conference hosted by the Nationalist Party earlier in the day, where he said impact assessments and permits for the new power station would require at least 12 months.
Mizzi however said that upon election, a Labour government would launch an expression of interest to attract a new entrant in the energy market.
"We're calculating a 60-day period on permits - the environmental impact assessment will be carried out when the bidders are shortlisted, and this will be an upgrade of the existing EIA on the baseline studies of the Delimara power station extension that will take place over five weeks. The safety case will take place after the EIA.
"The design of the power station won't be new - we are confident that the safety case can be delivered in three months. Our partner will be able to hit the ground running and implement the project within 18 months. We will have specialized team focusing on government bureaucracy, because this is a very important project that will lead to lower emissions and lower energy bills."
Mizzi could not answer a direct question from MaltaToday asking him whether he could produce a 10-year power purchase agreement for the supply of gas on a hedged price, as challenged by finance minister Tonio Fenech.
Mizzi instead said a Labour government would ask the private supplier to set out an agreement with a gas supplier, and a financial transaction agreement to hedge the price of gas. "Most investment banks offer hedges of up to 20 years, at a premium... we factored in a healthy cushion that includes this premium, and it will include a good safety net for the purchase of gas."
Similarly, Mizzi would not reveal the commercial agreement Labour had with consultants DNV Kema, who were appointed by the party to analyse the party's proposal for a gas terminal and power station.
Mizzi said Labour would still seek EU funding for a gas pipeline, a project which is currently at pre-application stage and which the government hopes to complete within the next seven to ten years.
Miriam Dalli joined MaltaToday.com.mt in 2010 becoming assistant editor f...
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IS SUR MIZZI L-EWWELL QAL LI KOLLOX SE JSIR SKOND IR REGOLI ISSA F'DAQQA WAHDA HABBAR LI MHUX JE JOHROG TENDER. KOLLOX SIGRIET U MINGHAJR TRASPARENZA - TIPO LABOUR.
Rita Pizzuto •
Dear editor,
I am sorry to say that your reporter cannot be said to have reported faithfully this time round. I followed Mr Mizzi's press conference and also listened and read reports on other media and I am sorry to say that your report has left many gaps and leaves many doubts as to reporting the truth in this case. I also cannot understand why somebody like Mr Seaman would out of the blue, without having any interest in the project, as your reporter said, "voluntarily participated in a press conference of the Nationalist Party" on such a controversial issue.
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Heard Bondi+Tonio Fenech+Ciantar+Dr Fenech all doing their best to play GonziPN's tune on Pl's proposal! Bondi's experts were all GonziPN's appartchiks, but he did not have the decency to tell us this 'secret'!
What a mockery of a balanced Public Broadcasting. What is the Broadcasting Authority there for: to rubber stamp these inbalances?
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I was beginning to believe that Malta Today had established itself as the sole independent medium in this General Election. Sadly, these hopes have been dashed after your reporter's performance during this media conference. In what has become a typical performance, your reporter was more interested in trying to trap Konrad Mizzi into making some sort of revealing admission of inpropriety or ineptitude and not at all interested in ESTABLISHING the real facts. It is a sad indictment on today's generally low level of sadly cynical and highly biased journalism.
ALBERT FENECH
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“Most of our companies do some sort of hedging of fuel, in particular gas. In some cases, they’ll hedge purchases of wholesale power or, if they have generation, sales of electricity,” said Richard McMahon, Vice President for Finance and Energy Supply at Edison Electric Institute
Any one can google and verify, that fuel power purchase agreement for hedged price of gas is possible and a common practice in this industry.
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The EU process for such projects where Government is not procuring anything does not stop at an Expression of Interest Stage but is made up of following steps:
Expression of Interest
Pre-Qualification Questionnaire
Competitive Dialogue
Tender
and this usually takes 8 months to 12 months.
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Thorny my friend just in case you are lost in the LP cloud Dr Mizzi does not have all the answers, eg who compiled the report? (basic information), when will this contract be made public?(basic transperancy), how can you provide a utility cost without factoring in private sector profitability and capex costs? (basic accounting), how can you have a contract in excess of 350 million euros and not have a tender process? (basic EU legislation). Clearly there is more to the proposed process and I am sure that Mr Muscat has already consulted his close allies to have their share of this contract. Believe what you want but the fact are clear for those who have eyes to see.
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Li kieku ir-reporter li kitbet dan l-artiklu hi ta' l-affari taghha kienet tfittex hi stess u ssib il-ftehim fit tul ghax xiri tal LNG. Kienet tfittex il-kundizzjonijiet u l-prezzijiet. Imma din aktar mohha biex tattakka lil PL.
Din qatt staqsiet lil Fenech il-prezz li qed nixtru l-fuel?
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We never had a single press conference on the toxic BWSC heavy fuel oil power station when it was commisioned. Today, because it is a Pl's proposal there is a press conference every day with doubts questions and queries the local media who rarely found time to question GonziPN!
Malta Today did ask questions but to no avail; but the Times; Malta Independent, PBS, Lo Bondi: when did they ask a single question on the BWSC scandal? Such is the doubting and intelligent mind of the Maltese reporters and media!
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Why shouls PL expose its hand regarding 10 year gas hedging. Joseph put his credibility on the project and that is good enough for me.
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"Mizzi was answering to doubts raised by independent environmental safety expert Miles Seaman, who voluntarily participated in a press conference hosted by the Nationalist Party,,,,,,,,,,,,,,,,,,,,," and who would believe that. Was he holidaying in Malta and went knocking on tal-Pieta's showroom door? Or did he read the Maltatoday on line and decided to come to Malta to give us his expertise. Mr Seaman works with Technica Ltd which specialises on platform terminals, gonzi's sudden new dream and at present are working on a terminbal in Puerto Rico that will take two years to build. Google Technica Ltd and you'jj see.
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Nafda lil Konrad Mizzi b'ghajnejja maghluqa. Bniedem genwin u jaf x'hinu jghid. Jahdem b'passjoni u fl-interess tal-pajjiz biss....u ghalhekk dawn id-dubji kollha min-nahha tal-PN, ghax is-soltu jfittxu fil-yellow pages lil min se jaghtu l-kuntratt u ma tantx jaghtu kaz tal-poplu. Keep it up Konrad. Lil Tonio Fenech gibtu cippitatu u ma jafx fejn se jaghti rasu. Tehodix bi kbira li johlom b'xi storja ohra tal-babaw.
Paul Sammut •
Would Ms Miriam Dalli kindly do her homework as expected of a journalist in the service of a reliable newspaper? One is sure she can do better. Also what are Mr Seaman's credentials and his voluntary interest in the matter?
Luke Camilleri •
The way Dr. Konrad Mizzi works and has answers to all questions presented to him Is like a breath of fresh air to the way we have been accustomed to seeing things done by the PN & Co. where FISHY SMELLS prevail , no answers given and NO RESPONSABILITY taken!
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Vote PL, get a new PN.
What a shambles of a country.
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Your correspondent should get familiar with EU rules regarding financing of infrastructural projects before making certain statements. If no EU funds are being used for infrastructural projects it is up to the government to decide which procurement option to go for. The EU does not come into it. Also an expression of interest is a transparent way of doing things. Finally the expert did not voluntier to attend the PN's press conference. He was invited to participate. Perhaps your correspondent should have asked who paid for him to come to Malta.
Mark Fenech •
Have just seen the press conference given by the LP, it is clear that your reporter is only interested to know who will be doing that and who will be doing the other. A lot of very unimpressive questions.
The issue is whether the project can materialise so that the electricity tariffs can be brought down.
Who will be doing that or the other is of very little interest to the man in the street, particularly when the LP financed all the studies from own resources and not from taxes.
Contrary to what your reporter is stating, Dr. Mizzi and even the PBS reporter stated that 10 years contracts are available on the internet, but to that contract, one has to add a hedging agreement with a commercial bank so that one can fix or cap the price depending on what hedge is obtained.
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Of course Mizzi would not reveal the commercial agreement Labour had with consultants DNV Kema. It was paid for from PL funds. GonziPN would not reveal the agreement with BWSC, which was paid from the Maltese people's money.
