Redacted Delimara plant contract published, purchase rates blacked out

The government has finally published the long-awaited agreements signed between Enemalta and ElectroGas Malta, paving the way for a debate in parliament.

ElectroGas Malta was the preferred bidder to design, construct and operate a gas-fired power station and the supply of power to Enemalta for a period of 18 years.

The government will today also publish separate contracts signed with Shanghai Electric for the sale of the BWSC plant and its conversion to gas. A parliamentary debate will take place tomorrow.

Large chunks of the power purchase agreement were blacked out, with the government insisting that it needed to protect commercially-sensitive information.

During a press briefing with members of the media ahead of the publication of the redacted contracts, Enemalta chairman Fredrick Azzopardi insisted that, questions such as the price rate by which Enemalta would be buying electricity and the percentages making up the supply mix, could not be publicised for commercial reasons.

This is the Prime Minister's idea of publishing the power station contracts: so much for transparency. pic.twitter.com/59uwfFdjZZ

— Simon Busuttil (@SimonBusuttil) February 14, 2017

Asked how the consumers should reassure themselves that they were indeed paying the cheapest price possible, Azzopardi insisted that the public was already enjoying 25% cheaper tariffs and the switch to gas will result in cleaner air.

Prices are expected to remain unchanged till at least 2020.

According to the power purchase agreement, the purchasing rate is fixed for the first five years, and indexed during the following five years.

Enemalta officials present for the briefing went on to explain that Enemalta had a capacity planning and dispatch unit which worked round the clock to “nominate” the different sources of supply. The unit would be responsible from ordering the dispatch from the interconnector, the D3 plant and the D4 plant.

Ronald Mizzi, permanent secretary within the OPM Ministry, added: “The government is trying to create a balance between transparency and information which is commercially-sensitive. Enemalta cannot prejudice its position as ultimately it’s all about competition.”

Flanked by representatives of legal firm Camilleri Preziosi, Mizzi said the contractual framework regulated the process, design, permitting, construction and operation of the gas-fired power plant. 

Security of supply, Mizzi added, was also pivotal. 

Lawyer Ron Galea Cavalazzi insisted the publishing any commercially-sensitive information could “compromise” the benefits which Enemalta is enjoying from opening up the market to the private sector.  

The eight agreements published yesterday include the share transfer agreement – for which ElectroGas has paid €30 million – the implementation agreement, the power purchase agreement, the gas supply agreement, the electricity connection agreement, the site services agreement and the site lease deed.

The contracts have been scrutinized by the European Commission which has given its green light to the project: being the sole provider of electricity in Malta, Enemalta had to outsource to introduce a private partner in the Maltese energy sector. 

Enemalta, providing “a service of general interest”, moved to outsource by developing an incentive through a power purchase agreement and a gas supply agreement. Both are fixed for the first five years, followed by five years where the price is “indexed”. 

This ‘incentive’ required the European Commission’s approval. 

The different agreements regulate an array of issues – including studies, permits, construction, the planning and dispatch of gas, product specifications, and penalties and fines in cases of non-compliance.

Parliament to debate Electrogas contracts tomorrow

Parliament will tomorrow debate the Electrogas contracts after Prime Minister Joseph Muscat dismissed the Opposition’s calls for it to be postponed. 

Muscat had proposed that the Opposition scraps its parliamentary motion that called on the government to publish its contracts with Electrogas and that a separate debate on the newly-published contracts be held next week, but the Opposition insisted that the debate be held on its original motion.

The Opposition in 2015 presented a parliamentary motion that called on the government to publish its contracts signed with Electrogas.

PN deputy leader Mario de Marco urged the Prime Minister to postpone the debate to a future date, so as to give the Opposition time to read through the contracts. 

“The Opposition had not been informed that the contracts were going to be published 24 hours before the parliamentary debate,” he said. 

“We want an intelligent and informed debate, and not a superficial one. These contracts are very long and technical, so how can we be expected to study them properly in time for a debate on Thursday morning?” 

However, Muscat insisted that the government was already being lenient in allowing the motion to be debated at all, arguing that the publication of the contracts has rendered it invalid. 

He proposed that the Opposition drop its motion and that the two parties agree on a date on which to hold a debate on the contracts, but without a vote at the end of the session. 

However, Opposition leader Simon Busuttil rejected the offer, arguing that the motion included 12 requests, of which only two referred to the publication of the contracts. 

“We filed the motion two whole years ago, and the government now wants us to study the contracts in 24 hours. Isn’t this supposed to be a government that is willing to offer us a hand of cooperation?”

The debate is now being held tomorrow.