Delimara PAC hearing - Fenech says government’s intention was to go for gas

Finance Minister Tonio Fenech has admitted before the Public Accounts Committee that it was always government's intention for the power station extension to operate on gas, but that it was not possible before 2016, because "the necessary infrastructure would not have been in place before that, and that was why the tender specification laid down that the new equipment could use both gas or other fuel.”

He was given his testimony before the PAC this morning Wednesday.

Fenech, who assumed responsibility of Enemalta last April, said both the liquid fuel and gas options met the EU emission standards and government retained the option of choosing between gas and fuel, once the infrastructure was available. He admitted also that a major factor in this would have been the cost.

He stressed however, that “government still wanted to use gas, but the issue is financial,” adding that gas could not be bought overnight and the infrastructure took years to be built. “Yet the option to use gas remained and the interconnector option - linking Malta to the European power grid - could ultimately be even cheaper,”

He was interrupted by Labour MP Evarist Bartolo who pointed out that it would cost €27 million to convert to gas.

Bartolo said that the new equipment could not use gas because government had not built its infrastructure on time, despite having shown interest and issued a call for tender in 2006.

“This is why it got into a straitjacket…you were left with no other choice,” Evarist Bartolo said, prompting minister Austin Gatt to intervene and explain that a call for expression of interest for the supply of natural gas was issued, and it transpired that the project was not economically viable. However, studies on the laying of a pipeline were continuing.”

Evarist Bartolo reminded Austin Gatt that the fact remained that Cabinet had decided that the power station was to be operated by gas, but then that decision was changed to heavy fuel oil.

In March 2006 Mepa had told Enemalta that in order to meet EU emission levels, the new generation plant had to be gas fired. But rather than install the necessary infrastructure for the provision of natural gas, the emission threshold were subsequently changed by legal notice.

Gas prices, Bartolo said, were falling and would mean lower utility tariffs.

But Infrastructure minister Austin Gatt has once again hit out at Israeli firm Hutney-Bateman, stressing that “choosing Bateman over BWSC would have cost the country €30 million more in production costs per year.”

Austin Gatt said that should Bateman have been selected for the Delimara Power Station extension project, the equipment it had tendered for “would have still needed to use liquid fuel when it was commissioned in 2012.”

He repeatedly asked the Auditor General to confirm that BWSC were cheaper than Bateman even when conversion from fuel to gas was considered. An official from the audit officer confirmed that this was the case.

While also asking the Auditor General to confirm that BWSC production costs were 3.4c per unit cheaper than Bateman, he added that this would have meant that had Bateman been selected, the Maltese people would have been required to spend €30 million more per year than the BWSC plant, using the same fuel.

“This was equivalent to the increase in the power tariffs announced last January. But whereas that was strongly criticised, is seemed for somebody that it was OK to incur the extra cost to engage Bateman,” Gatt charged.