Enemalta made no contact with potential gas suppliers following a report in 2004 by an energy economist who urged the corporation to “seriously consider” pursuing natural gas, The Times has learnt.

The Government confirmed this in an e-mail sent reacting to a story published by The Times yesterday about a report drawn up by international energy economist John Gault.

The 2004 report mentioned a proposal by Algerian energy company Sonatrach to co-invest in an LNG terminal and enter into a 10-year supply contract, mirroring Labour’s current proposals.

“Others who should be contacted include BP, BG, Gaz de France, Shell and Qatar,” the report recommended after pointing out that the gas pipeline option being studied at the time would be more expensive than an LNG terminal.

A spokesman for Finance Minister Tonio Fenech said: “The minister fails to understand this continued emphasis on reports, conclusions and recommendations made over almost a decade ago, in a debate on defining Malta’s energy policy up till, at least, 2020.”

Noting Labour’s “interest” in resurrecting such reports when its own conclusions showed a gas pipeline to be cheaper than shipping solutions, Mr Fenech’s spokesman added: “Irrespective of all reports, there is one basic fundamental issue which makes an important difference: it is only the gas pipeline, in view of the fact that it would be connecting us with the rest of Europe, that will be able to receive EU funding.

“Hence all other solutions would have to be fully financed through taxpayer money, either directly as a capital investment or through higher electricity tariffs as private investors seek their return.”

The spokesman said the Government “remains against the LNG terminal for safety reasons which have been amply pointed out by safety expert Miles Seaman in his presentation on the subject”.

Mr Seaman, who addressed a PN press conference earlier this month, warned that Labour’s proposals constituted major safety issues and gas terminals had to be designed in a way that mitigated the risks.

“All previous reports have to be considered in this context. This is why the Government’s strategy provides the right energy mix which will guarantee the lowest possible prices in a safe and secure environment.”

Referring to the Gault report, Mr Fenech’s spokesman noted that it was based on assumptions which the report itself warned needed to be re-examined if Enemalta were to enter into negotiations.

He said the report also noted that to make the gas pipeline being proposed by Eni feasible, part of the infrastructure cost should be funded through grants or loans at preferential rates, “a possibility that did not exist at the time”.

“The results of this report were considered by both Enemalta and the Government at the time and effectively translated to an increase in fuel costs as well as a massive capital investment in new generating plant which was not sustainable,” the spokesman said.

“In view of the oil and inflation indexed pricing formula for the commodity (gas) tariff, the capacity charges (to recoup the investment in a pipeline) which lead to higher fuel costs and the ‘take and pay’ clauses as well as the significant investment which would be required by Enemalta to both convert existing plant and purchase new plant, the project was not considered viable at the time.”

Since the project was not considered viable, because of the increase in actual and forecasted costs, “no contact was made at the time with potential suppliers”, the minister’s spokesman said.

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