The government must engage with the opposition on a serious discussion on utility tariffs, Infrastructure Minister Austin Gatt has told Parliament. But the opposition was, on purpose, refraining from such a discussion as it knew that such a sensitive subject would lead the PN to lose voters' credibility and ultimately votes, as the polls had shown.

Winding up the debate on the estimates of Enemalta for 2009, Dr Gatt said that partly, the fault for this loss of credibility could be his: he had not communicated enough and had lacked the patience to explain such a difficult and technical subject.

However, decisions must be taken and, if changes were necessary, these would be in the context of economic difficulties. The government was always at the forefront to help the needy and would continue to do so even to the extent of reducing other infrastructural investment.

But the government would be irresponsible if at the same time it did not keep an eye open as to where this would lead economically at the end of the day. There was no Father Christmas distributing euros for the purchase of oil. It was an illusion to say that one could reform Enemalta and make it more efficient with measures that did not cost anything.

The installation of smart meters, at a cost of between €70 million and €80 million, made sense because it would be financed internally from the wastage saved.

Both parties wanted to reduce utility tariffs, but the price of oil remained what it was. The expense was real and prohibited such reductions. But through discussions, with the Finance Minister present, one could arrive at the proportion to be borne by the government. The costs were known: €350 million. But the tariffs surely must recoup the costs.

There would be no problem if talks centred on how much the government could realistically shoulder and how tariffs were to be spread over the various sectors.

But the PL was, and continued to be, absent from public consultation. It did not know what it wanted and did not say what its solutions to the problem were. Opposition Leader Joseph Muscat had said that he had the proposals, but Dr Gatt said he had never seen them and he was convinced he would never see them. Tariff reductions would result either in more taxation or a massive government subsidy.

At the end of the day, the "Enemalta problem" was a financial problem.

Dr Gatt belittled Alfred Sant's contention that he had predicted oil prices for the 10-year span between 2000 and 2010. Who could have predicted that while the price of oil was $32 a barrel in May it would end up at $71 this month? Who would have predicted in April that in May, the price would soar by $15 in just one month, which was a record? Dr Sant simply was not credible. Nobody had predicted September's economic meltdown.

Dr Gatt said oil was not responding to the supply-and-demand economic formula.

Earlier, the minister said that it was only Dr Sant who had touched on the estimates. A few weeks ago, copies of the Enemalta accounts for 2006, 2007 and 2008 had been laid on the table of the House, containing details of oil prices, hedging, wages and inefficiencies - the whole Enemalta future.

But the opposition had chosen to harp on the tariffs. He had hoped that Dr Muscat's disclosure that he could not give any guarantee of tariff reductions would lead to a healthy debate where the opposition would present solutions. Parliament had ignored a difficult reality. Despite the high tariffs, the government had had to fork out a sum some seven times higher than the subsidy given to the dockyards.

Because tariffs were not enough, the government subsidised some 30,000 households. It vehemently opposed subsidising those who were economically comfortable. One must pay according to consumption.

It was easy to say that tourism, small traders and big enterprises should be helped. Apart from subsidies being illegal, where was the money to come from? What about the deficit? The opposition had not taken any position, and this was irresponsible.

Labour MP Marlene Pullicino had laid on the table of the House a report by Enemalta's former Financial Controller Tarcisio Mifsud and asked the government to follow it. Dr Gatt said that he had not accepted Mr Mifsud's first estimates because they were amateurish and he had apologised to Parliament for this. Had Mr Mifsud now become the opposition's technical expert?

Both Dr Sant and Dr Pullicino had said that the government was incompetent and did not have any direction or strategy. Dr Gatt retorted that the answer to their questions lay in official published documents which they had not bothered to read - Enemalta's Distribution Plan and the corporation's Capital Investments Plan. Even the climate change draft report showed that investment was in line with the targets set. Between 85 and 90 per cent of the targets had been achieved in the set timeframe.

Dr Gatt said that between them, the power stations at Marsa and Delimara produced 565 MW.

Dr Sant and Labour MP Charles Mangion had been present for the presentations which Enemalta officials gave to the members of the House Public Affairs Committee regarding the last tender. They were fully aware that there were already five gas turbines, four at Delimara and one at Marsa, working on diesel because gas was not available. They generated 210 MW or 37 per cent of the capacity, which could work on gas.

The power station at Marsa must close down by 2015 but the government was determined to close it by 2012. Its production of 260 MW would be substituted by 140 MW coming from the new turbine and 250 MW from the Sicilian interconnector, which would be EU-financed. This would mean that capacity would increase by 105 MW from 260 MW to 365. The interconnector would be in place by 2011. If it had been in place, Tuesday's blackouts would not have happened.

Leo Brincat (PL) and George Vella (PL) had both referred to the environmental impact and the new turbine, with Dr Vella saying that nobody knew what was coming out of the chimney of the power station at Delimara. Dr Gatt said that this was a total invention. It could well be that it was not in line with EU environmental requisites on the emission of one particular gas.

Also, the fuel to be used to fuel the new turbine was finer and German experts had confirmed that there would have been no difference if other types were used.

Dr Gatt denied that the chimneys would be lengthened. These were independent from the ones in place.

Mr Brincat had said that comparison had been made only between the new turbine and the Marsa power station, ignoring the alternatives presented. Dr Gatt said the PAC had been told that four different evaluations had been carried out before the tender was awarded: capital and maintenance costs; fuel; a combination of capital outlay, fuel costs and total operation costs; and whether it could be converted to work with gas. In all instances the chosen tender had passed the test.

The opposition had asked whether the new turbine was in line with the Climate Change Report. Dr Gatt said this report had been written by David Spiteri Gingell, who had also been chairman of Enemalta's adjudicating committee and who had told opposition MPs on the PAC that they were reading the report erroneously.

Mr Brincat had insinuated that some elements in the corporation could have favoured one bidder against another because indirectly there were construction sub-contractors who would benefit in the long run. Dr Gatt said that the civil works sub-contractor, nominated even in the tender, was Vassallo Brothers who also owned old-age peoples' homes run by Enemalta chairman Alex Tranter. The minister said that Mr Tranter had disqualified himself immediately from having anything to do with adjudicating.

Ċensu Galea (PN) said Enemalta could not have done otherwise but increase tariffs to prepare for the future, addressing its financial position for break-even or even make a marginal profit.

The gas division was passing through the process of privatisation and it could well be that the petroleum division would not remain under the wings of Enemalta.

The Malta Resources Authority had an important role to play both as far as Enemalta was concerned and regarding the private service providers within the gas and petroleum divisions. While providers expected to make a profit, this did not mean they went beyond what was reasonable.

Mr Galea said Enemalta had invested millions of euros in the infrastructure through the setting up of a number of distribution centres. He called on the corporation to invest in the laying of underground cables.

Referring to alternative sources of energy, Mr Galea said that this would not necessarily lead to a reduction in tariffs. Wind energy required a heavy capital outlay and also carried a high cost for maintenance. Noise disturbance from windfarms, and their visual impact, were also to be taken into consideration. However, the use of wind energy was not to be discarded without first having in hand the necessary studies which needed to identify the right places for their installation.

Studies on the required investment and advantages of using energy originating from other countries through cables were also to be considered. At the same time, one must not become too dependent on energy originating in another country.

Philip Mifsud (PN) said that the emphasis Labour had made on tariffs in the last electoral campaign was irrelevant to the EU and LC elections.

Despite politicising the issue, the opposition had not committed itself to review such tariffs once in government. This indicated that while the government could be criticised about the timing and how these tariffs had been revised, yet the need for such a revision was undisputed.

Enemalta was undergoing a process of modernisation. It was investing big sums of money to ensure modernisation of its operations and services through a number of measures. The installation of smart meters would benefit the country, consumers and the corporation. Consumers would do away with the readings carried out on site by meter readers, and bills would be based on actual consumption and not on estimates.

Stephen Spiteri (PN) said Enemalta remained the main provider for electricity, gas and petroleum, putting a heavy responsibility on employees at all levels. They were to ensure that they worked efficiently.

The increase in consumption presented a bigger challenge for Enemalta to generate even more efficient energy. Since January 2008, units had been removed from the Marsa power station to install a combination with cycle gas turbines. This meant the reduction of the hours of use to enable the carrying out of maintenance work. This ensured better efficiency and sustainability.

Enemalta was to strive towards sustainability and secure environment protection. The Marsa power station would be closed by 2012 and Malta would join the European grid. Moreover, the Delimara power station would be monitored for emissions. The installation of two boilers at the power station and of the smart meters at consumers' would increase efficiency. Enemalta would receive details of consumption in real time and the consumer would also be able to verify consumption through the Enemalta website.

Concluding, Dr Spiteri said that sustainability of the electricity service had required a heavy investment of more than €65 million for the creation of distribution centres and upgrading of other equipment.

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