Too many lingering questions on gas power station project – Opposition

Konrad Mizzi said that despite criticism, without the country’s shift to gas electricity prices would have exploded once again

Former Energy Minister Konrad Mizzi gave a ministerial statement on the security of supply agreement signed with Electrogas
Former Energy Minister Konrad Mizzi gave a ministerial statement on the security of supply agreement signed with Electrogas

The Opposition this evening insisted that there were still too many lingering questions surrounding the agreement between the government and Electrogas over the supply of electricity from the latter’s gas-fuelled power station.

Energy Minister Joe Mizzi and Tourism Minister Konrad Mizzi this evening gave a ministerial statement regarding the security of supply agreement, which was essential to the projects viability.

“The government needed to provide a security of supply, in case something happened to Enemalta, in order to guarantee a supply of electricity and gas,” said Konrad Mizzi. “For this reason, through a Security of Supply Agreement, the government needed to commit to stepping in to Enemalta’s shoes to ensure the continuity of a supply of electricity.”

He added that given that this could have been classified as state aid, the government was obliged to notify the European Commission, which in turn had verified the project. The process, he said had taken almost two years.

“The project was analysed in great detail both in terms of whether it constituted state aid, as well as the process by which Electrogas had been chosen,” Mizzi said, adding that all contracts between Enemalta and Electrogas had been looked into by the Commission.

Mizzi said that rather than wait for the Commission to complete its analysis, given that the power station was central to the government’s plans, it had decided to provide Electrogas with a bank guarantee on a temporary basis.

He said that as the project went forward, more banks had become interested, resulting in more lengthy discussions and a delay in signing agreement, and need to extend the bridge loan for which the government had provided a guarantee.

Long statement, little information

Opposition MP said that despite the fact that minister had read out a five-page statement, he had given very little information.

“The important aspects of such a big project are once again missing,” he said, adding that this was the same tactic that had been employed with the Vitals agreement. “Not one single figure was mentioned.”

Grech stressed that the project would not have been viable without the bank guarantee given by the government, “irrespective of what the minister has said about it being financed by the private sector.”

He insisted that the minister was well aware that the government guaranteeing €360 million to a private company was unprecedented, and asked whether its willingness to provide this guarantee had been mentioned when the government issued its request for proposals, since without it, no company would have thought it could bid for the project.

Turning to the term of the agreement, Grech said that while it was previously thought that that agreement would be for 18 years, “it now appears that the agreement is for a period of 25 years”.

Furthermore, he said there was still no indication as to the price at which the government would be purchasing electricity.

“If this is such a good project why doesn’t he tell us what rate he agreed to buy electricity at,” asked Grech, adding that it was also unclear whether the government would be obliged to purchase all its electricity from Electrogas, as this would not give the government any options.

“If the government is obliged to purchase, or pay for electricity irrespective of whether it uses it, then obviously the banks are going to finance the project,” said Grech.

He went on to ask what would happen to the extra capacity the country had, if it turned out that the government was in fact obliged to purchase its electricity from Electrogas.

“Theses are very basic question for the nation to be able to say, yes, this is a good project,” said Grech. “Until the government publishes this information, this side of the House can never have faith in what the government is saying.”

What are you still doing here?

Former PN leader Simon Busuttil, on his part, said that Mizzi’s work had led to a damning report by a delegation of cross-party MEPs, which stated that Mizzi should be removed from office, with criminal proceedings initiated against him.

“Can you tell me what you are still doing here?” asked Busuttil. “Do you not think your presence here is doing untold damage to our country?”

Busuttil highlighted the fact that the Chinese individual he had negotiated the sale of a part of Enemalta with had been discovered to have opened a British Virgin Islands company which was set up by the same firm that had opened companies for him and OPM chief of staff Keith Schembri.

Finally, Busuttil asked Mizzi what relationship he had to the company 17 Black, which is registered in Dubai. Mizzi did not directly respond to any of Busuttil's questions however siad that, like Busuttil, he too had been elected by the people. 

Democratic Party MP Marlene Farrugia said that while it was true that Enemalta had been in a precarious position before 2013, and was desperate for better management. She said that despite the fact that the Labour Party had promised it would not privatise the Enemalta, it had gone ahead and sold 30% of it in what could only be described as an “obscene deal”.

She said it was not true that the nation was benefitting from lower electricity tariffs because of the new power station, but rather because the price of oil had fallen drastically since the 2013 election.

Nationalist MP Beppe Fenech Adami also asked Mizzi what relation he had to the company 17 Black, and quoting a media reports, said that the FIAU had confirmed that money was transferred to the company, whose function was to transfer money to the Panama companies belonging the Mizzi and Schembri.  He continued by saying that the FIAU had concluded that Mizzi had travelled to Dubai to open a bank account.

Nationalist MP Mario De Marco said that Finance Minister Edward Scicluna had described the bank guarantee as a unique one, and asked why the government had not felt the need to give a ministerial statement back when it had been decided that the guarantee would be given.

Without new power station, tariffs would have exploded

Replying to the Opposition, Mizzi said that had it not been for the country’s shift to gas, electricity prices would have exploded once again, given that currently, the price of electricity from the interconnector was higher than the price of gas.

He would not state what price the government had agreed to purchase electricity from Electrogas from however, citing commercial sensitivity.

He rejected claims that the government had committed itself to a 25-year agreement, insisting that the agreement with Electrogas was for 18 years.

Mizzi said the energy sector has been completely transformed, insisting that the Enemalta’s debts had been erased, with the company now registering a profit. Emissions, he said, had also been reduced by up to 70%.

He also stressed that it was made clear when a request for proposals was issued that the project would have required a security of supply agreement.

On whether it made more sense to purchase electricity from interconnector, Mizzi said that Enemalta still had the right to choose were to purchase electricity from. He added that once the gas pipeline linking Malta to Sicily was completed, the government would be in a position any excess gas at a profit. 

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