Work on new €20 million LPG terminal to start in October

Work on the new €20 million Gasco Energy liquefied petroleum gas terminal in Bengħajsa is to start in October "at the latest", chief executive officer Roberto Capelluto told The Times Busines.

The plant will occupy 30,000 square metres of a designated 77,000 square metre area in a disused quarry close to the Malta Freeport. It will incorporate a gas terminal connected by a pipeline to a jetty, boast storage capacity of up to 4,800 metric tonnes, a central filling station, and an administrative block.

The project is expected to be completed in about 30 months, Mr Capelluto said.

After the Malta Environment and Planning Authority granted planning permission last month, Gasco Energy and Enemalta immediately started to work on the Mepa application to proceed with the promised - and complex - dismantling of the current gas plant at Qajjenza. Storage capacity at the old plant, which lies at the heart of the Birżebbuġa residential community, totals 2,800 metric tonnes.

Gasco Energy has already committed €500,000 in bank guarantees imposed by Mepa to remove all traces of the plant at Qajjenza.

Gasco Energy Ltd is a 50:50 joint venture between local company Multigas Ltd and Liquigas SpA of Italy. Under a concession agreement, Enemalta will be transferring the industrial operations of its LPG activities to Gasco Energy. Sister company Liquigas Malta Ltd, which has an identical shareholding structure, took over the gas distribution business from Enemalta on February 1 last year. Enemalta currently maintains responsibility for the gas supply, storage and cylinder filling operation at Qajjenza.

Liquigas Italy is the leader in its home market, distributing 370,000 metric tonnes across the country with an annual turnover of €600 million. Established in 1936, it is part of SHV Gas, the largest global distributor of LPG, operating in 27 countries and supplying over five million metric tonnes worldwide. It also has business ventures in China, Brazil and Turkey.

"We have received considerable support for this new, complex project from all stakeholders," Mr Capelluto said of the ambitious Bengħajsa plans. "It is an important project for Malta as it will ensure that shortages will be avoided when there is heightened demand or when unloading is made difficult by the weather conditions. The filling plant will be able to turn around 1,200 cylinders an hour.

"Birżebbuġa council, the consultants, Mepa, and the Malta Resources Authority are all satisfied with this permit and with the plans to dismantle Qajjenza. It is in everybody's interest for it to be dismantled and this is a responsibility that Gasco Energy has taken up. As soon as the new plant is complete, we will immediately start the dismantling project, and that is why we are planning to apply for a permit from now. On completion of the dismantling project, Enemalta will have a cleaned site for future use."

An international call for tenders connected to the construction of the Bengħajsa plant, pipelines, and the supply of equipment has been initiated.

Over the past 18 months, Liquigas has concentrated on establishing its presence in Malta, and Mr Capelluto said consumers will witness increased levels of service as the company consolidates its operation.

"So far, Liquigas Malta's main goal has been to guarantee continuity of service," he said. "It was very important in a market where LPG is a fundamental source of energy. This initial period was an opportunity for us to understand the market and our consumers better, the requirements, and to try to progressively change the way LPG is used.

"Until recently, LPG was sold just for basic needs. As this product was subsidised, there was no interest to increase sales. Today we want to show that LPG is a product with many uses, besides cooking, heating, catering and some industry applications. We would like to incentivise more industries to move from oil to LPG. It is a cleaner product. We also aim to eventually encourage individual consumers to use LPG for water heating purposes and air-conditioning."

Mr Capelluto pointed out that increased use of LPG, including the introduction of autogas, would help Malta meet the EU's 2020 reduced pollution targets. While advocating the new uses of LPG over the past few months, Liquigas has striven to increase safety features on cylinders consumers have in their homes.

New patented Liquigas regulators manufactured for the Maltese market have been made commercially available. Cylinders also bear even safer seals and up to 45,000 new valves have been fitted.

Last year, the company began the laborious task of retesting the 500,000 cylinders in circulation on the islands. Over 25,000 new green cylinders have been launched on the market, all bearing collar tags with details on weight and testing results.

Mr Capelluto said Liquigas Malta intended to retest up to 50,000 cylinders a year: cylinders need to be retested every 10 years.

Asked about Liquigas' application to the Malta Resources Authority to raise LPG pricing for the second time since last August, the chief executive said: "We should have a normal market price which allows the company and the investors to guarantee consumers good service, safety, and quality. All these things have a price. If prices are low, private investors will have little interest in directing funds into the service.

"With a market price, it will be possible to have competition. We are not against competition. As soon as the price is fair, there will be competition which is good for price, service and choice to challenge the business we took over. With a market requiring a total 22,000 tonnes of LPG, it is large enough to allow some competition in the cylinder sector and the bulk business."

Mr Capelluto pointed out that internal studies had shown that even at current utility rates, today LPG is 60 per cent cheaper than electricity. The difficulty in Malta in comparing energies is the absence of alternatives like natural gas - over which LPG still had many advantages - and solar and wind energy which were still in their infancy locally.

Some local hotels and resorts have expressed interest in using LPG to power air-conditioning systems, particularly after Liquigas' own calculations revealed savings of up to 40 per cent were attainable with LPG, coupled with the free supply of hot water. The relevant information and studies have been supplied to the Malta Hotel and Restaurants Association for dissemination to members.

The chief executive said Liquigas has seen cylinder volumes in households remain stable. Significantly, bulk business, where the company sees particular potential for growth from the current 5,000 tonnes, is up 10 per cent year-on-year.

Mr Capelluto also believes there is a future for piped gas on the islands (which would significantly reduce handling of LPG cylinders by consumers) but the infrastructure requires high investment.

He added Liquigas intended to increase fixed points of sale over the next few months, although the current door-to-door distribution will be maintained and upgraded.

"We are working with the distributors to improve their service," Mr Capelluto said. "We will be providing training, giving them commercial support, and upgrading presentation by helping them to endorse a corporate image. We have a very good relationship with the 29 self-employed distributors who operate 80 trucks around the islands."

Liquigas would also consider permanent fixed points of sale in the future, Mr Capelluto added. The company would be prepared to support outlets for the sale of LPG cylinders and related appliances also in collaboration with distributors.