BWSC’s audit firm KPMG green-lit Enemalta tariffs increase

General Workers’ Union daily l-orizzont today throws its front-page focus on the international audit firm KPMG, with the headline ‘conflicts?’ running across four columns.

Specifically, the newspaper asks whether in its role as a client to both government and BWSC, the audit firm had played a major role in proposing higher tariffs for energy so that Enemalta could actually pay back BWSC for its work on the Delimara power station.

“KPMG stated the new proposed tariffs would help Enemalta pay back its debt to SMBS bank and eventually contribute to the financing of BWSC’s new plant,” l-orizzont reported.

The newspaper lists several controversial contracts in which the audit firm was given the trusted role of running evaluation exercises for government, and quotes government sources who argue that different auditors should have been appointed in the interests of transparency.

KPMG has been appointed on these specific contracts: preparing the report on increasing energy prices in 2009; they are the international auditors for BWSC, the Danish firm awarded the €200 million Delimara power station extension contract; they are the auditors for the Sumimoto Mitsui Banking Corporation (SMBC) – a subsidiary of BWSC’s parent company, Mitsui Engineering.

And they assisted BWSC in securing credit from SMBC itself or the power station extension, l-orizzont reported.

Throughout the negotiations on the Delimara power station extension, KPMG provided the ministry for infrastructure a report on increasing Enemalta’s energy tariffs, which report stated: “the proposed tariffs should enable Enemalta to reverse its historical loss-making and achieve an acceptable rate of return on both its current and future capital employed, which would enable it to service existing debt obligations and sustain an acceptable fixed asset replacement and upgrade policy.”

SMBC have been major lenders to Enemalta since 1993.