Labour's water and electricity proposals would lead to 'higher taxes'
Labour’s plans for a reduction in water and electricity rates would fail and lead to higher debts which would have to be paid through higher taxes or tariffs, Finance Minister Tonio Fenech said this afternoon.
Addressing a news conference, Mr Fenech said DNV Kema’s recommendation confirmed that a gas pipeline as proposed by the government was cheaper than Labour's proposal.
The PL’s proposals, unveiled last Tuesday, would mean another €200 million at least would be required for infrastructure to be built in Malta. The PL said the proposed plant was estimated at €166 million, but in 2009, Bateman’s tender offer with the same technology was of €186 million for a smaller 150 MW plant.
The cost would, therefore, be closer to €240 million. Additionally, Labour also failed to account for the costs related to the acquisition of tankers, and other infrastructure. Mr Fenech pointed out that Labour’s imagery conveniently failed to show the true size of the storage tanks required.
To cover the capability of the gas tanks being proposed, two to three vessels would have to be dedicated to this operation, built purposely for this 25-year project. These vessels would cost at least €50 million each.
Moreover, no maritime study was carried out to see if a ship would be able to berth with the available infrastructure.
A jetty would probably also have to be built and this was estimated to cost around €50 million.
Labour’s proposal cost closer to €600 million rather than the €370 million the party was claiming. This cost more than the government's interconnector and extension and yet, the PL wanted the people to believe they would reduce the rates, Mr Fenech said.
The minister said that standard power purchase agreements did not provide for a price guarantee for 10 years and an agreement which did provide for such a guarantee would be far more expensive than Labour was claiming.
He said that in the past 10 years the cost of gas had shot up in line with the price of oil. He noted that estimates that Labour would generate electricity at 9c6 per unit did not come from their consultants' report. Labour refused to say how they got to this figure or what the energy mix was going to be.
It was a figure Labour's energy expert Konrad Mizzi came up with without saying how.
The government had been wanting to opt for gas for a long time but all studies carried out had shown that this was not viable.
The government remained committed to give the people the cheapest possible energy in a sustainable way.
The minister said that the timeframes given for the implementation of the Labour's proposal were also unrealistic. Labour was proposing to cut tariffs years before their project could materialise.
Moreover, Labour’s proposal isolated Malta from the EU, which wanted the whole union to be joined with gas pipelines in one united grid.
Since the EU knew that Malta and Cyprus were cut off from the mainland, it had accepted to help financially.
Labour’s project would not receive EU assistance because it breached European strategy even though it was more expensive than the government’s option.
Mr Fenech said that the government had today also published, on the Finance Ministry’s website, all gas studies it had carried out.
Labour’s proposal was a gimmick the same way its proposal to remove VAT in 1996 had been.
The minister's presentation can be read in the pdf link below.