Enemalta 'nowhere near crisis', minister insists

Public Investments Minister Austin Gatt said yesterday that Enemalta was "nowhere near" any crisis in spare power generation capacity.

The minister was reacting to comments by Opposition spokesman Joe Mizzi at the end of the debate on the financial estimates of the corporation.

In his speech Mr Mizzi warned that Malta risked suffering power cuts in the summer because of a drop in reserve generation capacity at the power stations.

Mr Mizzi said reserve generating capacity had been reduced so much, that it was alarming. Over the past months, two turbines, having a total capacity of 120MW had developed faults and had been taken out of service. One had since been repaired.

The corporation's CEO had warned in the annual report that a drop in capacity of 60MW in summer, when demand was at its highest, would result in outrages. So what was in store for this summer once one of the 60MW turbines was still out of service?

Indeed, according to a report by Enemalta's own engineers, demand this summer was expected to be 450 MW but current capacity was 435MW! - 15MW below requirements and without any reserve capacity.

The engineers had argued that reserve capacity should reach 120MW and also insisted that "the current situation is not sustainable".

How could the government act like there were no problems? Where would the money for the much needed investment come from?

And for how long would Enemalta continue to use equipment which was expensive to run and was meant only for use in emergencies?

It was such inefficiencies and lack of planning which had driven up costs for consumers, and not just the international price of oil.

Mr Mizzi said Enemalta also needed to make its distribution network more efficient. It needed to introduce incentives to shift some of the power demand to the night and consumers needed to be encouraged to use more power efficient systems.

The Labour MP said the government was continuing to blame work practices, and hence the workers, for Enemalta's ills when it was management which was the problem. A case in point was how a consignment of gas cylinders remained unused, not because it was defective as claimed, but only to enable the second bidder to win the tender.

Replying, Dr Gatt said Enemalta was far from the collapse which Mr Mizzi had implied and he could not understand why anyone would try to create alarm.

He said that two turbines were out of action for a maximum of two weeks, with one undergoing a planned overhaul. That overhaul had been carried out during the winter because demand this year was relatively low. Indeed during those two weeks, Enemalta still had spare generation capacity of 130 megawatts.

Dr Gatt said there was no denying that Malta would need spare power generation capacity in about two or three years' time but there was no crisis and the generation plan, spanning 10 years, was clear and it was public, but the opposition did not seem to have read it.

It had already been announced that manufacturers had been short listed for the supply of a 100MW generating plant and funding options for this project were being kept open to proposals since several options could be taken up.

Enemalta was also planning to shortly issue tender documents for the supply of natural gas as part of a process which, within a decade, was expected to see Malta's power stations operating solely on gas.

A formal request for information was being issued for a project to link Malta with the European power grid, not for the primary supply but for security of supply.

At the end of this month talks would also be held with investors who were proposing to build a generating plant at their own expense to supply electricity to Enemalta. Under EU rules, Dr Gatt said, Enemalta was obliged to buy such supplies as long as the price was reasonable.

The government, Dr Gatt said, had also published a detailed and costed electricity distribution plan which, among other matters, provided for the building of two 132KV distribution centres - in Marsa and Kappara at a cost of Lm20 million and five 33KV distribution centres - at Xewkija, Marsascala, Manoel Island, Ricasoli and St Andrews, costing Lm10 million. There were also plans for further investment of Lm15m in other sectors of the distribution network.

As to who would pay for the repair work on the faulty turbine referred to by Mr Mizzi, Dr Gatt said this was covered by a long-standing agreement with General Electric in terms of which a major part of the costs would be borne by GE.

Dr Gatt said he was surprised that not much time was devoted in the debate to the surcharge.

Only vague remarks were made. The Labour MPs had not said anything about how any future Labour government would fund any cut in the surcharge.

Reacting to questions on the manner of Enemalta's oil purchases, the minister said the corporation always issued tenders for the supply of oil. Oil prices could be seen on the internet but Malta always managed to make purchases at cheaper prices. Malta had saved Lm7 million last year through such negotiations.

As for incentives to promote renewable source of energy, Dr Gatt pointed out that Enemalta was deducting Lm70 from the meter installation charge when an applicant installed solar water heaters and the government was giving out grants of up to Lm500 for the installation of other such heaters.

Concluding, Dr Gatt reacted to Mr Mizzi's comments on the unused consignment of gas cylinders. He said the cylinders were taken out of circulation on the basis of a certificate by an established engineer who said that the consignment was defective. It later transpired, however that this engineer had conducted tests which were not the ones specified in the contract and Enemalta therefore lost a court case instituted in Turkey.

Dr Gatt said he therefore wanted, on behalf of Enemalta, to apologise to the Enemalta engineers who had been put through a difficult time because of this issue, but on the strength of the information given at the time by the engineer who inspected the cylinders, neither he nor the corporation could take the risk of even one of those cylinders posing a risk to the public. Would Mr Mizzi have taken such a risk?

Dr Gatt said he wanted to stress that this issue had nothing to do with any maneuvering for somebody else to win the tender, as Mr Mizzi has said.

Earlier in the debate Justyne Caruana (MLP) said that the MLP in government would revise the water and electricity surcharge which was causing hardship to many. Hard-up consumers were currently even being disencouraged from applying for a subsidy as they were being informed that the budget had been exhausted. Others who were automatically exempt from the surcharge were still receiving bills which included the surcharge.

Dr Caruana said the high electricity rates had eroded the competitiveness of businesses in Gozo and many had even resorted to laying off workers. She felt the government should have heeded calls by the Gozo Tourism Association for capping of power costs for businesses, particularly hotels, in Gozo, because of seasonality factors.

Family and Solidarity Minister Dolores Cristina said her ministry had a Lm3.3 million budget to be used as a rebate on the water and electricity bills of families which were socially disadvantaged.

She said that the energy benefit, effective as of last January 1, was based on the income and consumption of the account holder and would be given to those receiving social benefits and those whose income did not exceed Lm3,268.72c. This meant that 30,000 households or parts of households would benefit.

These beneficiaries would not have to apply for this rebate. The only thing that was needed was that they should inform the Social Services Department of their account number.

Another category that would benefit would be those families who had members with disability. This also depended on the number of members in the households. Although the scheme would be formally introduced next month, it would be backdated to January.

Mrs Cristina denied that the sum earmarked for subsidies had been exhausted.

Joe Cassar (PN) said that Enemalta engineers were in a very difficult position with energy generation projected to increase by three per cent per capita, which they had to produce with equipment that was getting old. This apart from the EU energy agreements which imposed certain responsibilities on consumption.

Malta was also committed to increasing the use of green sources of energy.

In this sense Dr Cassar said he welcomed the fact that both the government and the public were increasingly making use of energy efficient lamps and equipment and he hoped that this practice would increase.

Nationalist MP Joe Falzon said energy was a major cost element and diligent investment was needed. Malta was still producing energy through oil and the debate on the higher oil prices had to be addressed without turning it into a political football.

Mr Falzon remarked that Enemalta's efficiency had improved but appealed to the opposition to say what it inteded to do about the surcharge once in government.

Noel Farrugia said the government was dragging its feet in building the plant required for adequate and efficient power generation.

Furthermore low income earners were being burdened by outdated legislation with rendered them ineligible for asssitance to cope with their power bills. For example, a man who was boarded out could not apply for an energy subsidy if one of his sons was in employment, even if three other siblings were still at school.

Mr Farrugia urged the government to come up with concrete plans not only to ease consumer costs but also to enable the country meet the challenges posed to rising demand for energy and also growing demand for water posed by declining rainfall.

The estimates were then approved, the opposition voting against.