A contract for a €1 million feasibility study on a natural gas pipeline between Malta and Sicily is yet to be awarded because a call for tenders issued more than 18 months ago is still awaiting adjudication.

Times of Malta is informed that the adjudication process was stalled after the election in March because the contract of the Government consultant working on the project was terminated.

The Government is examining long-term alternatives for gas connectivity and the pipeline option is also being evaluated

The call for tenders for the EU-approved project, with 80 per cent of its costs funded by Brussels, was published in December 2012.

When contacted, the Energy Ministry confirmed the delay, saying, however, that the pipeline option was still being considered.

“The tender for the commissioning of a feasibility study and cost benefit analysis of a gas pipeline connecting Malta to the European grid is still under adjudication,” a ministry spokesman said.

“The Government is examining long-term alternatives for gas connectivity and the pipeline option is also being evaluated.”

Although the Government is insisting it still wants to study this option, it has also announced plans for the building of an LPG storage and re-gasification terminal as part of a new power station project fired by gas.

Sources close to the European Commission told Times of Malta that while a gas pipeline would automatically qualify for EU funds, the possibility might be lost if Malta builds an alternative gas facility earlier.

“Our energy policy states clearly that the EU’s priority is to connect all member states to a natural gas network. Once the island establishes some kind of LPG facility, the pipeline project will no longer qualify as a priority for the EU network,” the sources said.

Although various Nationalist administrations had actively considered a gas pipeline, it was not considered commercially viable.

However, with the rise in the cost of fuel and a change in EU policy the previous Nationalist government had a change of heart in 2011, particularly when EU leaders agreed on a new EU energy policy that established the need to connect all 27 member states to the EU’s gas grid.

Brussels had also earmarked 2014 as the cut-off date when all member states should be connected.

Former Prime Minister Lawrence Gonzi had said the EU decision would change the scenario for Malta as Brussels was now committed to help member states connect to the gas grid.

So far, Malta and Cyprus are considered as the only isolated networks since they still lack a connection to mainland Europe.

Malta has been studying the possibility of a permanent natural gas connection for decades and was closest to a deal in the mid-1990s when, as part of a project connecting Gela in Sicily to a Libyan gas field, Italy’s petroleum giant Eni had offered an option to add Malta.

However, when the proposal was studied in detail, the Government had decided not to take up the offer as oil prices then did not justify the terms offered by Eni to switch to gas.

The Italians had offered to build the connection for free on condition that Malta enters into a long-term gas supply agreement at commercial rates.