Malta to ‘import’ electricity by 2013

The agreement, which will hook up Malta to the European electricity grid, was signed with cable manufacturer world-leader Nexans. The signing was presided over Director of Contracts Francis Attard.

Speaking during the press conference, Fenech said 50 per cent of the project, costing in all €182, would be funded by the European Investment Bank, €20 million is covered through EU funding, and the remaining €71 million would be footed by local banks.

Despite how the inter-connector will open up cheaper energy sources for consumption, Fenech avoided questions on whether tariffs would subsequently decline or not, maintaining that any pricing would need to be seen within the context of agreements drawn up closer to the date of the inter-connector’s activation.

But asked about the financing, Fenech said that the considerable expenditure would necessitate “a return on investment which will be eventually reflected in the tariffs.”

The project, Fenech said, is one part of a holistic project that includes the Delimara power station extension, as well as Malta’s internal network – adding up to €380 million in total.

Asked whether the contract had been vetted by the Department of Contracts, Fenech affirmed that it had been OK’d by the department, but did not go into specifics. Director of Contracts Francis Attard was reluctant to give comments, directing them to the Finance Ministry.

“Infrastructural development is crucial to our country’s economy,” Fenech said during his address. “This project will provide Malta with an energy source that is economically viable and peace of mind.” The island’s generation capacity has increased from 102 megawatts in 1980 to 230MW in 1990. Today that has almost doubled to 400MW.

Amid the controversy of the choice of heavy fuel oil to fire the new Delimara power station extension, Fenech said the combined investment in the new turbine and the inter-connector cable will mean greater capacity to generate energy.

“It is necessary for us to build another foundation for the island’s economic development,” Fenech said. “If we want to increase employment, have high-level hotels, and aspire to excellence, we have to ensure the production and distribution of energy.”

Enemalta Chief Technical Officer Engineer Peter Grima outlined the technical aspect of the project. He said that while the cable would be capable of exporting and importing electricity, the cable would me mostly used for importation.

“This will mean more security of supply,” he said, adding that the increased connectivity would also mean access to new energy sources dependent on different fuel sources – which are subject to different “price drivers.”

“The cable would mean that Malta is less dependent on one sole fuel source for its energy,” he said. This would mean that Malta would be cushioned from significant impacts on energy prices due to fluctuations in fuel prices.

Grima added that the inter-connector would also allow “an impressive spinning reserve” and overload capacity (70 to 80 per cent) meaning that it could ‘takeover’ in instances of energy failure due to shutdowns in existing energy production units.

The main line will also feature 36 fibre-optic cables, some of which will be available for use by third party communications companies – predominantly telecoms networks.

“Without the inter-connector, it would have been hard to implement large-scale long-term energy plans,” Grima said, as the inter-connector can now act as a “balance”.

The inter-connector cable will be span from an existing substation in Ragusa, Sicily, to a specially constructed substation in Maghatab. A full 95 km long, the cable will be laid fully one metre below sea-bottom level inside an especially dug trench by special machines.

Nexans was selected after a second round of bidding after the first call for tenders was cancelled in July. The only bidder at the time, ABB Consortium, was found to be administratively non-compliant with the tender conditions.

Fresh bids were then requested from four short-listed companies but only three submitted a bid - ABB, Nexans and Prysmian PowerLink. The Nexans bid was €25 million cheaper than ABB, who placed second.