Photovoltaics scheme investigation: Supplier insists he was not breaking the law
A solar panel supplier, who came up with a scheme with the San Lawrenz local council to encourage residents to take up government subsidies, is insisting he was simply “sponsoring” the village and not doing anything illegal.
Three fourths of San Lawrenz households have a solar water heater. Eighty households have also applied for photovoltaic panels thanks to a very lucrative but “illegal” scheme.
Godfrey Formosa, from D&G Projects Ltd, together with mayor Noel Formosa devised a scheme to enable people from the small Gozo village to invest in photovoltaic panels for just €1,000. The scheme was based on the government’s refund policy to give back 50 per cent of the cost price for a maximum of €3,000.
San Lawrenz residents were given the option to pay €4,000 and still receive the maximum government refund of €3,000 by having the price on their invoice inflated to €6,000, which Mr Formosa claims was the actual cost of the system.
“This was a marketing strategy. We chose to offer them at €4,000 and fork out the other €2,000 ourselves,” he said.
Eighty of the 416 who applied for the government scheme came from San Lawrenz, which had about 600 inhabitants.
After receiving a number of complaints from other renewable energy suppliers, the Malta Resources Authority decided to suspend the scheme and later called for a police investigation.
Mr Formosa insists he did not break the law because the MRA’s rules did not rule out sponsorships. His company used this marketing strategy and other companies made similar offers by offering free solar water heaters or reverse osmosis equipment with PV panels.
“Later, we got expert advice to see if we were doing something unethical and we were told the money for the PV system was coming from the EU. The EU has strict rules about sponsorships and benefits, so we regularised our position,” he said, without specifying what action was taken.
He added that a similar scheme was employed by other companies last year to offer San Lawrenz residents good prices to encourage them to take up government subsidies for solar water heaters. Three fourths of San Lawrenz households took up the offer.
Oliver Brownrigg, of the Renewable Energy Association Malta (Ream), whose complaint with MRA prompted the investigation, agreed that the scheme offered, though illegal, could have been done with good intentions.
“We agree with the government’s intention to take action against people who may have been abusing, intentionally or unintentionally, but we never imagined this would turn into a police investigation,” he said. He added that the mayor was very ambitious to put PV panels on all houses in San Lawrenz but never intended to cheat. In fact, he made a call for applications to see which company could give the best offer to the village’s residents.
“He simply chose the most competitive company. I don’t think he realised the company was manipulating the grant,” Mr Brownrigg said.
The association reported the issue to the MRA because it deemed it unfair that some companies were taking commercial advantage of the grant. It was also worried that the malpractice could lead to a suspension of the grant or an investigation by the EU.
“Our intention was to be educated because we felt some people may have been taking advantage without knowing that what they were doing was illegal. We are not geniuses. Yes, it’s wrong to inflate the price in that way but they must have thought it’s money...”
He agreed, that customers were benefitting in an unlawful way and they were taking advantage of funds that could have gone to others.
A spokesman for MRA said every application was being investigated and the mayor and the company involved were called in for questioning.
When contacted, the mayor felt it was “premature” to comment in the light of the investigations. However, in the council’s minutes of a meeting in March, he is quoted as saying he was called in by the MRA and it resulted the council did nothing illegal because it was the company’s duty to see it was going by the book.
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18 Comments
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john borg
Jul 14th 2010, 18:28
i have said this a couple of times........mra should scrap these grants and move directly to a feed in tariff system with enemalta!!!!! several eu contries have a 2 to 1 system where if your pv system produces 100kw you will be paid twice what enemalta would charge for 100kw. alternatively you consume 200kw and produce 100kw and your bill would be nil...
there will be no grants on the purchase price, but in the long run it will be more economical and environmentally friendly. plus the client will do his best to get as much kw/euro!!!!!, with the feed in system in place residents living in a block of apartmants, where a pv system cannot be installed, can invest collectively and install a large pv system somewhere in their village(warehouse,school,fields)and with the money earned pay their electricity bills.
these things work in europe.....where the sun/geographic position achieves less when compared to Malta.......north african countries already have several megawatt plants, and these are 3rd world countries........we have also strict eu targets to meet......
this could be one good solution!!!!
Stephen Vassallo
Jul 14th 2010, 17:15
Leaving aside the legality or not of the scheme, and this appears to be quite complex and inevitably controversial, the mayor of San Lawrenz should be commeded. The smallest village in Gozo has shown these Islands how to go ahead and increase the use of sustainable energy. Just add up the Kilowatts produced by the solar water heaters on the San Lawrenz houses, and compare the result with a large town such as Sliema or Qormi - we might be in for a surprise!
Mike Farrugia
Jul 14th 2010, 15:34
It is illegal to use EU funds to gain unfair competition. http://docs.justice.gov.mt/lom/legislation/maltese/leg/vol_10/kap379.pdf
G.Portelli
Jul 14th 2010, 15:23
The scheme issued by the government was flawed from the beginning. The 'subsidy' should have been given yearly on the number of units of electricity generated by for example doubling or tripling the number of units generated so as to be advantageous for the consumer. In business everyone tries to gain an advantage. The advantage should have been given to the consumers not to businessmen. In doing so suppliers would have sought to give the best possible price.
The same happened with the scheme for wood balconies. Before the scheme was issued a restoration of a balcony would have cost 700 euro, after the scheme was introduced costs spiralled to 1500 Euro. This is all taxpayers money down the drain.
G. Grech
Jul 14th 2010, 14:51
SO, after MRA has done all the investigation and the talking, when is the new scheme going to be issued? End of June has long passed...
Obviously, after summer is over, as a minimum....:)
r pace bonello
Jul 14th 2010, 14:10
Another example of Gozitan ingenuity?
Neville Calleja
Jul 14th 2010, 13:12
Move to the UK ... It's intriguing that the UK - one of the countries with the least sunshine per year in Europe is promoting such a scheme.
http://www.energysavingtrust.org.uk/Generate-your-own-energy/Solar-electricity/Consumer-guidance-on-free-solar-PV-offers
M.Gauci
Jul 14th 2010, 13:11
Was VAT paid on 6000 Euro?
J. Debono
Jul 14th 2010, 12:48
That's why photovoltaics are expensive in Malta!!!
For a supplier to 'sponsor' 2000Euro, out of 6000Euro, and still gains a profit, means that there is a profit of at least 40%.
As I see it he is either saying the truth and is a greedy businessman who wants more than 40% profit,
or if he is lying he broke the law.
One way or the other he is a loser.
Frans van Avendonk
Jul 14th 2010, 12:07
The grant system was bad from the beginning, it should have been based on a grant per KWh peak output and based on the cost the Enemalta/Government has to install 1Kwh peak output of conventional machines. Based on the Delimara extension this is about E 2000 per Kw. Of course it is up to politics whether subsidy would be at par or as a lower percentage of cost. This would be fair to everyone, verifiable and at zero extra cost to the country, it does not matter really whether generation capacity in in private or public hands as long as it produces.
Kevin Zammit
Jul 14th 2010, 11:58
As long as he was not breaking the law ... which I do not think he was ... he's done a job the gov should have done decades ago.
I am more ashamed that a country boasting 90% sunshine per year lagging behind everyone else in solar power.
Silvan Cutajar
Jul 14th 2010, 11:40
What is going to be done in relation to honest applicants who had already paid for the system or paid a deposit? Is MRA going to ask the suppliers to return the money of customers?
a.muscat
Jul 14th 2010, 11:31
“This was a marketing strategy. We chose to offer them at €4,000 and fork out the other €2,000 ourselves,” he said.
Mela dan xi istituzzjoni tal-karita' biex joffri 2,000 ewro rifuzjoni? Nixtieq inkun naf xi qligh kien se jaghmel minnha mela?
Christian Sciberras
Jul 14th 2010, 11:06
At least, their strategy encouraged customers to turn to renewable.
MEPA, on the other hand, severely discourages this!
R. Brincat
Jul 14th 2010, 12:18
Bless their little heart.
G Frendo
Jul 14th 2010, 11:05
Gozitan altruism - I love it. Dispels all the myths about Gozitan/Maltese Financial relationships - what a farce. It was like Giovanna on Dissett claiming that the rate of Social Security contributions in Gozo is relatively higher than Malta because everyone in Gozo is stressed out (because of having no work and having to travel to Malta to work). Imsieken!!
When asked why the contribution of company tax in Gozo is so low compared to Malta the answer was just as straightforward - "because many Gozo companies are registered in Malta".
It shouldn't take a journalist too long to establish these companies and the average rates of tax contribution. We will be shocked!
Mark Fenech
Jul 14th 2010, 10:41
So how much does a photovoltaic system really cost and who is really getting the grant, the consumer or the supplier?
r ferriggi
Jul 14th 2010, 10:30
no matter how much you twist and turn and shake it,,,,,,,,somethings not right in this scheme inveted by the parties in question.
it does not need a lawyer or the police to realise this.