BWSC and the national interest

The need to extend Delimara power station provided the Government with an opportunity to make the right decisions. Experts in the field had advised the Government to opt for a gas-fired power plant that would have enabled lower electricity tariffs and a cleaner environment. This was the right thing to do.

Cabinet endorses this recommendation. However, due to a mysterious and sudden change of direction, the Government decided to build a new power station extension fuelled by heavy fuel oil, which is the dirtiest oil available.

Controversy surrounded all stages of this project. The most worrying factor was that that local environmental legislation was changed in the middle of the procurement process and the goalposts for bidders changed.

This was even criticised by the Auditor General.

There was also criticism on the process adopted and on possible conflicts of interest.

Many industry insiders were worried that BWSC’s proposed new plant’s technical configuration was not tried and tested. This was confirmed by Finance Minister Tonio Fenech himself a few weeks ago when he boasted that the new power plant was entered into an international competition for innovation.

Now we have been hit by a new controversy during the testing phase of this plant, which is the failure of a steam turbine. The implications of this failure include the prospect of restarting the Marsa plant, which should have been long decommissioned, higher fuel generation costs and environmental fines. There is also the possibility of infringement procedures instituted by the European Commission, which I hope can be avoided.

Minister Fenech has highlighted that the process for BWSC to rectify the fault will take up to six months. It is in BWSC’s interest to expedite this process and industry insiders think that this could possibly take 10 to 12 weeks.

I am concerned on a number of contractual matters. I was very disappointed when I heard that no external legal advisers were engaged at the point when the contract was signed.

This is bad practice.

The Auditor General hit out at the Administration because the terms and conditions in the contract favoured the contractor. We are now in a position where most of the fees have already been paid to BWSC and penalties are capped. There is also the prospect of a long process in court to attempt to regain the incremental costs associated with utilising older inefficient plant.

I am also disappointed that the Prime Minister issued a blanket political statement that BWSC had accepted responsibility.

This was contradicted by Mr Fenech who highlighted the possibility that BWSC would challenge Enemalta’s claims. I will not discuss the commercial risks Enemalta faces because I do not want to prejudice their position.

My interest is the national interest. The Labour Party’s interest is that the plant is fit for purpose before it is handed over. Our future intent is that the Delimara power station will be fuelled with gas. Therefore, there are a number of things which can be done now to help safeguard Malta’s national interest.

So far, Enemalta continues to resist the appointment of independent experts at this stage of testing. I, therefore, ask the Prime Minister to do the right thing and appoint an independent engineer in line with international best practice to minimise the risks associated with the final stages of the BWSC commissioning.

Doing so is very important because we need to minimise the risk of faults occurring after the eventual handover. If faults do happen after handover, Enemalta’s rights to damages are very limited. This was a failing of the contract negotiations.

I also recommend that the Government makes a strong case to avoid or minimise environmental penalties associated with the recent events.

My advice to Enemalta is not to prejudice the national interest due to political pressure.

I urge both the Government and Enemalta to change tact and instead be open and transparent on all matters associated with the BWSC contract.

We need to avoid controversies after the handover. This is all in the national interest.