Government to seek private funding for sewage treatment plants

The government is planning to seek private funding for three new sewage treatment plants, Public Investments Minister Austin Gatt told Parliament yesterday.

He said the biggest plant, a Lm28 million installation at Wied Ghammieq taking 80 per cent of all sewage in Malta, would be financed under the Build, Finance, Operate and Transfer (BFOT) concept. The plant would thus be built using private finance. The government would contribute workers for recurrent operations and also pay a fee to the operators who would eventually transfer the plant to the government after a period of years still to be defined.

Dr Gatt was speaking during the first day of the debate on the estimates of the Water Services Corporation.

In his speech the minister praised the corporation for achieving "exceptional results" year after year. He said that over the past eight years, the corporation had reduced the government subsidy by Lm8.2 million without shedding workers and without raising tariffs. The improvement had been achieved thanks to new work practices, better training of the workers, better financial management and investment in more efficient equipment. At the same time, new services were introduced and water quality was improved.

Dr Gatt praised WSC chairman Michael Falzon, the CEO, Anthony Rizzo and the management team for their success, saying they were showing how one could, in the public service, have a motivated target-focused management.

He also praised the WSC employees, saying they had gone through many changes in work practices, not without initial resistance, but eventually with realisation that the changes would be to their benefit and those of the corporation, as had been the case.

The GWU, in this sector, had also been very cooperative in the fundamental changes made to work practices. Clearly, results were achieved when the union leaders worked as union leaders, rather than politicians.

Dr Gatt said that in the year up to last September, the WSC made a loss of Lm6.6 million, exactly as projected, reflecting the seriousness of the corporation's budgeting. Revenue was Lm310,000 higher than the previous year thanks to better leakage control while spending was cut by Lm200,000 through lower overtime, and lower administrative costs, meaning a total saving of Lm500,000. The government subsidy over the past year was Lm1.5 million lower than the previous year. All this without any workers being laid off and without tariffs being raised.

For next year, the WSC was projecting to reduce its losses by a further Lm1.1 million to Lm5.2 million, again without raising tariffs or reducing workers, although some workers on loan from the civil service would revert to the service.

While most of the savings would come from higher efficiency, substantial savings would also be registered from debt servicing costs, not least because the government was now negotiating debt servicing for all its corporations together.

At the same time the government subsidy would continue to be reduced - from Lm14 million in 1998 under the Labour government, to Lm5.8 million next year.

The subsidy would be retained for as long as tariffs were kept at current levels, however, Dr Gatt said, he felt there should be control to avoid abuse and waste.

Dr Gatt said the sewage system was absorbed by the WSC last year. That involved the transfer of 600 workers to the corporation using antiquated work practices and little equipment. New work practices were being planned to raise efficiency. Far too many workers in this section held medical certificates showing they could not work in confined spaces, meaning they could not work in this section.

The government saw no problem in the allowances given to the employees, but workers holding medical certificates that they could not work in confined spaces could not expect to continue working in this section. He hoped they would not come up with new reasons why they could not even work in the fresh air with, say, the Works Department. These employees, after all, were employed by the civil service and could therefore be detailed back to the service.

It was planned that up to 150 workers in the sewage department would be sent back to the civil service. Lm500,000 would be saved in overtime and administrative costs.

This reform was being accompanied by investment of Lm750,000 in machinery to end outsourcing and better deploy the existing workers, thus realising savings.

Dr Gatt said the sewage masterplan was bringing about a revolution in the sewerage infrastructure. The sewage outflows at San Blas and Wied Mielah would be history by the end of next year and a new Lm3.2m sewage treatment plant would be built near Mgarr ix-Xini by 2007.

Another sewage treatment plant would be built at Ic-Cumnija in 2007. These plants were partly funded by the EU and the Italian Financial Protocol and the government would also seek public-private partnerships for both of them.

The biggest sewage treatment plant, however, would be at Wied Ghammieq. This would be four times bigger than the others and take 80 per cent of all sewage in Malta. This plant would cost up to Lm28 million and the government was proposing that it would be financed from private sources under the Build Finance, Operate and Transfer (BFOT) concept. The plant would thus be built using private finance. The government would contribute workers for recurrent operations and also pay a fee to the operators. The plant would be transferred to the government after a period of years still to be determined.

A further Lm4.3 million would have to be spent on a gallery which would handle the sewage from Marsa to Wied Ghammieq.

Turning to water quality, Dr Gatt said testing had been improved over the past year and quality had also improved substantially, with nitrate levels now within EU standards.

Effective leakage control meant that last year, production was down eight per cent over the year before, despite higher demand, meaning lower costs. The corporation would over the coming months continue to aggressively reduce leakages.

Dr Gatt insisted that the government would not dismiss 80 WSC employees in Gozo, as had been reported. What was happening was that these workers were on loan from the civil service. Since they were now excess to requirements, they would be detailed to local councils in Gozo. He could not see what the fuss was about, but some workers only wanted to work in certain places, and some councils also wanted particular workers.

The WSC was also planning further reform at Malta Desalination Services. The company would be absorbed by the WSC and its workers would become part of the corporation with their current salaries. Here again, what was the fuss about? What was not serious was how under Labour, Lm1.5 million were spent on spare parts of which only Lm200,000 worth had been used.

And it was not true that desalination services were being privatised.

Dr Gatt said the corporation would continue to bring down the cost of water production. Costs of water production per cubic metre/kw hr had been reduced from 6c5 in 1998 to 5c8 now.

An agreement had been reached with KSB of Belgium to install energy saving devices on the small Reverse Osmosis trains and the company would also carry out research and development on the large trains with potential savings of Lm43,000 on each.

The WSC was also floodlighting one of its reservoirs using alternative energy and he hoped this project would be expanded.

Dr Gatt said the campaign for the payment of arrears last year yielded the corporation Lm14.4 million and this momentum would be maintained, not least with the installation of a new billing system which would enable remote meter reading and different billing rates according to the different times of day.

Labour MP Joe Mizzi said Dr Gatt seemed to be blaming the problems at the Water Services Corporation on the workers. He had based most of his speech on the workers, their salary and administrative costs.

The minister praised the chairman and the management but blamed the workers for everything that went wrong in the corporation.

He had mentioned abuses in the management in the past and the minister defended these people.

When a person had abusively used WSC computers for pornography, the person was suspended but things were soon put right for him. Friends of the chairman used to do what they liked because of their position. One also managed to get out of a case of sexual abuse.

Mr Mizzi said that although, late last year, the minister promised there would not be a surcharge on water, the opposite happened a few days later, reflecting a lack of planning.

After the new rise in the water and power surcharge, announced last month, the leader of the opposition had tabled workings showing how the government's calculations were wrong. No arguments had been brought to the contrary.

Mr Mizzi said that while in previous speeches the minister used to emphasise water quality, he hardly mentioned it this year and based his speech on financial figures.

The need to achieve water quality standards was not something new. In 18 years, the Nationalist government knew that the level of nitrates and other contaminants in drinking water was increasing but it did not do anything to improve the situation.

Quality was so bad that during the accession talks, the government had even asked the EU for a transition period to get things right. It was now clear that problems would not even be solved by 2007. Some 1,000 kilometres of cast iron pipes still needed to be replaced. With 60km being replaced per year, about 10 years were needed to replace them all. These were some of the causes of water pollution, he said.

The Nationalist government was trying to solve the problem of drinking water quality only by blending production from reverse osmosis and ground sources. Two polishing plants - one in Malta and one in Gozo were meant to have been set up. But what had happened to the one planned for Malta? Where was the effluent produced by the plant in Gozo going?

Mr Mizzi said that 46,000 water quality tests were said to have been taken by the Health Department. When it came to sampling for chemicals such as nitrates and pesticides, only about 20 samples from 20 localities in Malta were taken. Was this acceptable? Which were the localities? How were the tests carried out? Why did no one want to sign for the results in the annual report? Who was responsible?

Mr Mizzi said membranes of reverse osmosis plants were meant to have been replaced a long time ago but the government always postponed this outlay. Yet the minister was saying that drinking water standards matched EU standards. How could this be?

Turning to sea water quality, Mr Mizzi said that in 18 years, the Nationalist government had not set up a single sewage treatment plant and it requested a transition period until 2007 to build three sewage treatment plants.

Mr Mizzi disagreed with the siting of the largest sewage treatment plant at Wied Ghammieq, near Kalkara. Had any environment impact assessments been made? Would these new plants lead to a new tax on sewerage?

On the Sant'Antnin sewage purification plant, Mr Mizzi said the government had allowed this plant to fall to pieces and then paid an Italian contractor Lm1,000 a day to repair it. Yet the supposedly second class water which used to come out of this plant was of such poor quality that it had harmed crops.

Mr Mizzi observed that the Water Services Corporation would get by with a lower government subsidy after savings thanks to a leakage detection plan drafted at the time of the Labour government.

For next year, the WSC was projecting to reduce its losses by a further Lm1.1 million to Lm5.2 million.