Labour’s proposals would raise energy tariffs by five per cent instead of lowering them by 25 per cent as promised, according to an analysis by international consultants KPMG commissioned by Enemalta.
Labour leader Joseph Muscat, speaking at Ta’ Giorni later, also insisted that the KPMG report was erroneous because the auditors were given the wrong figures
The results of the analysis were given yesterday during a Nationalist Party press conference by Finance Minister Tonio Fenech. Soon afterwards, the whole study was made public on Enemalta’s website and it was later disputed by Labour, which said it used mistaken figures.
Mr Fenech said the study of Labour’s proposals showed that a unit of electricity would go up in price to 19c2 per kilowatt hour from the current 18c.
Asked why it was Enemalta and not the PN that had commissioned and paid for this report, Mr Fenech said it was commissioned by the corporation on the Government’s instructions.
“It’s in the public’s interest to know how such proposals will affect them,” he said.
The study takes into consideration the capital investment needed to build a new 200MW gas-fired power plant, the cost of a liquefied natural gas (LNG) storage and re-gasification tanks, the construction of special vessels for Malta’s needs and the profit to be made by the company investing in the project.
“We told you last week that what Labour is proposing is an amateur exercise. This study proves us right as Labour’s proposal will mean higher, not cheaper, tariffs,” he said.
According to KPMG, the assumptions underlying its analysis were made on the principles approved by the Malta Resources Authority. It was based on Enemalta’s costs estimated for 2013, its three-year financial forecast and energy generation projections.
The study says that when considering the capital investment needed, coupled with Enemalta’s costs to service its current debt – something which Labour says it is committed to – Enemalta’s costs to produce a unit of electricity would increase not decrease.
Mr Fenech said this study was further proof that Labour had made a gross miscalculation and presented a proposal that did not make financial sense.
He said KPMG was confirming the conclusions reached by Labour’s own consultants, DVK Kema, which clearly said a gas pipeline was more cost-effective than the LNG terminal that Labour was insisting on building.
Mr Fenech said the PN had already showed that the country did not need a new power plant and that it was impossible to build this major infrastructure in just two years.
“If, as we are showing, a gas pipeline will take the same time as an LNG terminal to build – at least five years – then we really cannot understand why Labour is choosing to insist on an LNG terminal,” he said.
Mr Fenech said despite claims that Labour’s proposals did not require specific ships to be built, Government consultants had confirmed there were only four ships in the world that could supply Malta’s LNG needs in the small quantities required.
“These are not available for chartering and I can confirm that ships will be needed for Malta’s projects. These will cost at least €50 million each,” he said.
Asked to say how much this exercise cost, Mr Fenech said the expenses were low but would be made public when available.
He said the commissioned company still had to send its bill.
Labour candidate Konrad Mizzi, who is Labour’s spokesman on the project, reacted by saying the KPMG study had been commissioned by Enemalta yesterday and delivered yesterday.
The study’s conclusions were wrong: “KPMG used the figures given to it by the Government, not Labour’s figures,” Dr Mizzi said, adding that the party stood by its own figures.
Speaking at a press conference, he said KPMG had included Enemalta profits twice because they did not know that the PL figures already included return on capital employed of 8.4 per cent. The PL, he said, used actual Enemalta figures and KPMG used 2013 projections.
Their unit cost of production, based on government figures, was off and the PL stood by its estimate that under its plan, Enemalta would have an annual saving of €187 million per year. On capital expenditure, the Government was saying costs would be €670 million while the PL insisted that they would be closer to €300 million. The Government had given KPMG capital cost figures based on a Bateman presentation, which was not used by the PL.
It was not true Malta would need purpose-built gas tankers. Representatives of various companies had said they could use small ships that would berth alongside the power station. Others said they could use bigger ships which would unload in the middle of the bay. The PL used the most conservative figures.
As for the cost of the gas tanks, Dr Mizzi said the PL figures were conservative and therefore covered the required spending to reinforce the foundations.
Labour leader Joseph Muscat, speaking at Ta’ Giorni later, also insisted that the KPMG report was erroneous because the auditors were given the wrong figures.