The Sea Malta headquarters were donated to Enemalta last year. I thought that this would infringe state aid rules...
They were not donated. It was part of what the government owes Enemalta for the surcharge. Instead of giving it in cash, we passed on the property. It will probably be sold.
Enemalta was given use of the quay at Laboratory Wharf for its fuelling - before the Grand Harbour Plan was finalised. Wouldn't it have been better to wait?
They only have right of use. Unfortunately, some years ago quays were given on emphyteusis but I am totally against this concept. I think quays should all be available for everyone's use - unless there is a particular function like Valletta Gateway Terminals. Quays should be for common use.
We have ended up with only one company - IBM - still in the running for the IT tender, the so-called Integrated Utilities Billing System. There were eight interested in January 2006. Why did the others all drop out?
I haven't talked to the others but it is a reflection of the international market. There is so much going on and relative to what else is underway - such as Slovenia redoing all its national accounting systems - this is a small tender. The Contracts Committee gave the go ahead a few weeks ago to open the third packet - the financial offer - and negotations will now start with the Finance Committee. The target is April 2008.
When we spoke in July 2006, I asked whether you had left it too late to increase generating capacity and you assured me that there was still plenty of time. We reached a new record of 434MW last summer. What is happening with the tender for the new 120MW turbine? There were six candidates shortlisted in September...
I believe that they have to submit their offers by April...
Will it be ready in time?
Of course. It is also worth pointing out that we have decreased our technical losses from 20 per cent as at 2000 to 13 per cent. International standards are 9 per cent but we believe that this year's audit will show us just about there. That obviously cuts down considerably on the demand.
We had talked about financing and you had raised the possibility of companies paying for power generation, with Enemalta buying the output.
There is no decision. We have to wait for the offers to come in.
What about the €279.7 million 200MW cable link to European grid?
There are two things going on. We are engaging consultants through an international call before we draft the tender. This is completely new for us and it is hardly a good idea for us to try to do this on our own. We are looking perhaps for someone who already worked on the UK-Europe or the UK-Jersey link, that sort of thing.
There is also a new EU directive being discussed which would affect this connection. So we are waiting for it to be finalised before we proceed.
I understood that the cable would be a back-up rather than a primary source... Is that still the plan?
It could be both. I think it could be useful to consider it as our main way to go for green energy. I personally doubt how much we would, on our own, be able to shift the percentage needed to green electricity.
I am not against wind power but there are problems with it in Malta. No matter what people say to the contrary, the reality is that we do not have constant wind in Malta and would only be able to generate viable electricity for four or five months of the year at most. There are also problems with finding somewhere to put wind-generating equipment. Whether on land or on reclaimed land, they cost a lot and would still not be enough to ensure we reach the 5 per cent target.
Solar energy is viable but again, as a country, we do not have vast tracts of land where enough panels could be set up to make a substantial difference.
Obviously putting them on houses helps which is why we are offering incentives but they will not get us anywhere near the amount that we need.
To get the 5 per cent, we would have to buy in the power from abroad. So I think we should look at the pipeline this way: Say instead of buying energy from a coal-fired plant, we would buy it from an atomic power station in France.
Would it be enough to be able to avoid fines for high carbon emissions - which would cost about as much as a new power station...?
We will use the carbon trading scheme to buy and sell emissions. To avoid the fines, we decided to buy even lower sulphur fuel, which will lower our emission levels to what is required. That means adding another €5 million to our electricity bill. There is a price for everything.
But there is a price for doing nothing...
Agreed! Agreed!
We have to phase out of Marsa by 2015 but chairman Alex Tranter said it could "expire" before then, with no spares for some of the equipment. What if that happened?
The turbines at Marsa are anything from 40 to 10 years old. Obviously for the older ones, parts are no longer but there should be no problem keeping it going. We actually want to close it by 2012. By then we should have the new generating capacity and the pipeline.
So you are not keeping your fingers crossed till 2012?
At the end of the day, we have been through ever increasing peak demands for the past five years - but basic demand remained the same. The demand curve is not going up in an alarming way.
Is enough being done to encourage a reduction in demand?
With prices of electricity being what they are, there should already be pressure...
Couldn't more be done to mandate energy audits and energy-efficient buildings?
Two-thirds of our electricity generation goes to industrial and commercial entities and water production so only about a third goes to households. I think that slowly but surely companies that have heavy consumption are all using energy more efficiently.
The reality is that a lot of buildings were constructed at a time when energy was cheap. It is not easy to make them more energy efficient. But new buildings - not all - are being built with energy conversation in mind, especially the industrial units that we are building.
We only just avoided infringement procedures on the liberalisation of petroleum. Did anyone else apply for a licence and what about privatisation?
Liberalisation is Resources Minister Ninu Zammit, not me. Privatisation is at the data room stage, that is, data is being gathered on anything from contracts on the land to activity reports. The bidders send a team to copy what they need so that they can digest the information and prepare their bids.
They will have a period during which questions can be posed, with questions and answers circulated to all the bidders. Then the bids will be submitted. There are six bidders, all big international companies.
What happened with LPG and with aviation fuel?
On LPG we are close to concluding the deal with an Italian company. But the privatisation includes aviation fuel as well as pump fuels.
As a result of hedging agreements we were paying $80-$84 for oil until this year...
We covered the period for all our requirements at $80-$84 until March 2008 and for half our requirement until June. We have now closed the other 50 per cent at a dollar or so higher until June. Following June, we have started hedging 10-15 per cent of our requirement but consultants are saying that it is still too early to do more.
There was quite a scare at the Qajjenza gas plant last autumn. When is it moving to Benghajsa?
Obviously, the LPG privatisation has to be concluded and we still don't have the permit from the Malta Environment and Planning Authority to move the fuel tanks from Bir?ebbu?a to Kordin. They are finding it a big security problem to put them where no one lives, rather than to leave them in the middle of a residential area...
They were not donated. It was part of what the government owes Enemalta for the surcharge. Instead of giving it in cash, we passed on the property. It will probably be sold.
Enemalta was given use of the quay at Laboratory Wharf for its fuelling - before the Grand Harbour Plan was finalised. Wouldn't it have been better to wait?
They only have right of use. Unfortunately, some years ago quays were given on emphyteusis but I am totally against this concept. I think quays should all be available for everyone's use - unless there is a particular function like Valletta Gateway Terminals. Quays should be for common use.
We have ended up with only one company - IBM - still in the running for the IT tender, the so-called Integrated Utilities Billing System. There were eight interested in January 2006. Why did the others all drop out?
I haven't talked to the others but it is a reflection of the international market. There is so much going on and relative to what else is underway - such as Slovenia redoing all its national accounting systems - this is a small tender. The Contracts Committee gave the go ahead a few weeks ago to open the third packet - the financial offer - and negotations will now start with the Finance Committee. The target is April 2008.
When we spoke in July 2006, I asked whether you had left it too late to increase generating capacity and you assured me that there was still plenty of time. We reached a new record of 434MW last summer. What is happening with the tender for the new 120MW turbine? There were six candidates shortlisted in September...
I believe that they have to submit their offers by April...
Will it be ready in time?
Of course. It is also worth pointing out that we have decreased our technical losses from 20 per cent as at 2000 to 13 per cent. International standards are 9 per cent but we believe that this year's audit will show us just about there. That obviously cuts down considerably on the demand.
We had talked about financing and you had raised the possibility of companies paying for power generation, with Enemalta buying the output.
There is no decision. We have to wait for the offers to come in.
What about the €279.7 million 200MW cable link to European grid?
There are two things going on. We are engaging consultants through an international call before we draft the tender. This is completely new for us and it is hardly a good idea for us to try to do this on our own. We are looking perhaps for someone who already worked on the UK-Europe or the UK-Jersey link, that sort of thing.
There is also a new EU directive being discussed which would affect this connection. So we are waiting for it to be finalised before we proceed.
I understood that the cable would be a back-up rather than a primary source... Is that still the plan?
It could be both. I think it could be useful to consider it as our main way to go for green energy. I personally doubt how much we would, on our own, be able to shift the percentage needed to green electricity.
I am not against wind power but there are problems with it in Malta. No matter what people say to the contrary, the reality is that we do not have constant wind in Malta and would only be able to generate viable electricity for four or five months of the year at most. There are also problems with finding somewhere to put wind-generating equipment. Whether on land or on reclaimed land, they cost a lot and would still not be enough to ensure we reach the 5 per cent target.
Solar energy is viable but again, as a country, we do not have vast tracts of land where enough panels could be set up to make a substantial difference.
Obviously putting them on houses helps which is why we are offering incentives but they will not get us anywhere near the amount that we need.
To get the 5 per cent, we would have to buy in the power from abroad. So I think we should look at the pipeline this way: Say instead of buying energy from a coal-fired plant, we would buy it from an atomic power station in France.
Would it be enough to be able to avoid fines for high carbon emissions - which would cost about as much as a new power station...?
We will use the carbon trading scheme to buy and sell emissions. To avoid the fines, we decided to buy even lower sulphur fuel, which will lower our emission levels to what is required. That means adding another €5 million to our electricity bill. There is a price for everything.
But there is a price for doing nothing...
Agreed! Agreed!
We have to phase out of Marsa by 2015 but chairman Alex Tranter said it could "expire" before then, with no spares for some of the equipment. What if that happened?
The turbines at Marsa are anything from 40 to 10 years old. Obviously for the older ones, parts are no longer but there should be no problem keeping it going. We actually want to close it by 2012. By then we should have the new generating capacity and the pipeline.
So you are not keeping your fingers crossed till 2012?
At the end of the day, we have been through ever increasing peak demands for the past five years - but basic demand remained the same. The demand curve is not going up in an alarming way.
Is enough being done to encourage a reduction in demand?
With prices of electricity being what they are, there should already be pressure...
Couldn't more be done to mandate energy audits and energy-efficient buildings?
Two-thirds of our electricity generation goes to industrial and commercial entities and water production so only about a third goes to households. I think that slowly but surely companies that have heavy consumption are all using energy more efficiently.
The reality is that a lot of buildings were constructed at a time when energy was cheap. It is not easy to make them more energy efficient. But new buildings - not all - are being built with energy conversation in mind, especially the industrial units that we are building.
We only just avoided infringement procedures on the liberalisation of petroleum. Did anyone else apply for a licence and what about privatisation?
Liberalisation is Resources Minister Ninu Zammit, not me. Privatisation is at the data room stage, that is, data is being gathered on anything from contracts on the land to activity reports. The bidders send a team to copy what they need so that they can digest the information and prepare their bids.
They will have a period during which questions can be posed, with questions and answers circulated to all the bidders. Then the bids will be submitted. There are six bidders, all big international companies.
What happened with LPG and with aviation fuel?
On LPG we are close to concluding the deal with an Italian company. But the privatisation includes aviation fuel as well as pump fuels.
As a result of hedging agreements we were paying $80-$84 for oil until this year...
We covered the period for all our requirements at $80-$84 until March 2008 and for half our requirement until June. We have now closed the other 50 per cent at a dollar or so higher until June. Following June, we have started hedging 10-15 per cent of our requirement but consultants are saying that it is still too early to do more.
There was quite a scare at the Qajjenza gas plant last autumn. When is it moving to Benghajsa?
Obviously, the LPG privatisation has to be concluded and we still don't have the permit from the Malta Environment and Planning Authority to move the fuel tanks from Bir?ebbu?a to Kordin. They are finding it a big security problem to put them where no one lives, rather than to leave them in the middle of a residential area...