Minister refuses to release contract

The government has refused to make public the contract between Enemalta and Danish company BWSC for the Delimara power station extension, which according to the Auditor General was drawn up with "undue haste".

Finance Minister Tonio Fenech yesterday did not accede to the opposition's request to table the contract in Parliament, insisting the contract and BWSC's bid were of a "confidential nature".

He said Enemalta had put both documents at the Auditor General's disposal for him to make the necessary checks. In his investigation made public on Monday, the Auditor General said the contract signed on May 26 last year was hastily drawn up to the extent that it even contained "track changes".

The contract was for the supply of a 144-megawatt diesel power plant at the Delimara Power Station for a value of €165 million. An outline proposal for spare parts and a technical support agreement was included in the contract for an additional amount of €18 million.

The Auditor was critical of certain aspects of the final contract, which he said was "more favourable to the contractor at the detriment of the contracting authority and ultimately to the Maltese taxpayer".

He criticised the fact that the technical support agreement only covered the first five years when the power station's lifespan was estimated to be between 25 and 30 years.

This was significant, the Auditor added, since the risk for Enemalta was higher than normal because the chosen technology was a prototype.

He was also critical of the fact that the Department of Contracts was completely excluded during the final negotiations leading to the signing of the agreement.

The contract included capped penalties if the contractor defaulted but had no capping on the discount Enemalta would give BWSC if work is ahead of schedule.

In the case of a dispute between Enemalta and BWSC, the contract stipulates that London would be the seat of arbitration.

The Auditor said it would have been preferable had disputes been referred to the Malta Arbitration Centre once the project was being carried out on Maltese territory and financed through public funds.

Reacting to the Auditor's conclusions, Alternattiva Demokratika chairman Michael Briguglio said the report proved there was "gross negligence and incompetence" in the award of the tender.

He called on the government to shoulder political responsibility for the scathing conclusions reached by the Auditor.

"The fact the Auditor says he has no 'hard evidence' of corruption means that corruption is not ruled out," Mr Briguglio said.