Infrastructure Minister Austin Gatt has denied ditching a gas pipeline proposal 10 years ago, saying that this was a Cabinet decision based on the exorbitant costs involved.
“When I became minister the decision had basically already been taken. Formally, it could have been taken under my jurisdiction but everything was already concluded,” he told timesofmalta.com.
A former Enemalta manager wrote in The Times today accusing the minister of causing the loss of a potentially favourable gas investment some 10 years ago.
John Pace recounts how negotiations with Italian energy giant Eni fell through when Dr Gatt replaced Josef Bonnici as minister responsible for Enemalta.
But the minister said this morning that the two main reasons for ditching the pipeline idea was that it could have cost around €300 million and when was factored into the end price, it would have been prohibitive.
It also did not make sense to agree to a 25-year contract with Eni with a “take or pay” clause which meant Malta would have had to pay even for gas it did not consume.
“Also, it wasn’t quite the time to change the power stations and make them gas-firing,” Dr Gatt said.
Dr Gatt pointed out that the original idea was to make a t-junction with the Green Stream pipeline but this was found to be not technically feasible. The idea of building a pipeline to Eni’s station in Gela, Sicily, was a separate proposal that Cabinet decided against.
He said the Green Stream study was discarded in early 2001 and the Gela study in early 2003, before Dr Gatt became minister.
Dr Gatt also said that the oil procurement changes he introduced were decided by a board he set up headed by Roderick Chalmers, which included Joe Falzon, the dean of the University’s economic department.
“Mr Pace is basically saying that what Roderick Chalmers’ board recommended was influenced by the oil lobby which is ridiculous... Besides the fact that Malta is totally insignificant on the fuel map.”
In an opinion piece Mr Pace writes:
“(Dr) Gatt immediately made administrative changes in Enemalta, including a change in how fuel was procured. This resulted in the formation of a powerful lobby by the fuel oil importers who would stand to lose millions of euros if the power stations converted to gas. This lobby may have influenced the decision but I think the real reason was elsewhere.”
“I think it was political jealousy,” Mr Pace, who worked at Enemalta between 1999 and 2005 as a manager responsible for generation and, later, EU affairs, adds.
“(Dr) Gatt wanted to turn a new leaf and anything initiated by his predecessor was to be rejected... It was, in my opinion, the biggest mistake in his political career and the cause of much of the Gonzi Government’s present woes.”
Mr Pace says Dr Gatt’s reforms led to nowhere and virtually all the top men he placed in Enemalta to replace the managers left within two years. “One of them was a certain Konrad Mizzi,” says Mr Pace, referring to the face of Labour’s ambitious energy proposals.
Mr Pace refers to the natural gas pipeline – the Green Stream – laid in 2003 -2004 between Italy and Libya. Negotiations and studies were carried out to link Malta to the pipeline.
“This was considered technically superior to tapping the Libya pipeline close to Malta... Eni would construct and own the pipeline and no capital expenditure was required from the Malta side. A gas supply contract for 25 years was proposed,” he says.
Mr Pace says that studies showed the project was favourable and there would be a saving on the fuel costs once the system was converted to natural gas. But, once Dr Gatt took over, the project was “left to lapse”, Mr Pace writes.