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Enemalta clarifies position on the ENI gas pipeline proposal

Enemalta said this afternoon that there was never any formal offer by Italian company ENI to invest in a gas pipeline to Malta 10 years ago.

In a statement reacting to comments made last week by former engineer John Pace, Enemalta said it never had any offer by anyone to invest in any pipeline in a way which would have been free of charge for the corporation.

The ENI report, it said, was a study which it had commissioned in January 2001 about a possible pipeline between Sicily and Malta. The study was completed in 2003.

Malta had requested consideration of the possibility of linking up with the Green Steam pipeline between Sicily and Libya, but the proposal was dropped by ENI itself for technical reasons.

The so-called financial proposal for a pipeline between Gela in Sicily and Delimara was just a reference in the annex of the report which did not lay down the price of gas and only gave an indicative formula, linked to oil prices.  Important details, such as the workings of the index, were missing.

A critical aspect was the obligation which Enemalta would have had to 'take and pay', meaning that it would have had to pay for gas even if it did not use it.

The document laid down clearly that this was meant for discussion only and there was no formal proposal.

The report also included a note which said that the use of gas would not have led to reduced costs and hence, lower bills. In fact, the report said that: “The Market Value of Natural Gas in Malta … generates the same total expenditure that would be incurred by using fuel oil and gasoil for power generation”.

The report excluded a gas sales agreement and said this had to be negotiated separately.  The annex to the report spoke of two rates, a commodity charge (the price of gas) and a capacity charge, which was the charge for the return on investment over 25 years.

Enemalta noted that at the time it also had to take into consideration the costs of a new power station for the use of gas.

The ENI report was studied by the government as well as Enemalta and it was evident that the the costs meant that the project was not viable at that time, the corporation said.

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