Liquefied gas will be stored on a ship permanently berthed at Delimara, according to plans submitted by the winning bidder for a gas-fired power station.

Yorgen Fenech, a director at Gem Holdings, the Maltese company with a 30 per cent stake in the winning consortium, said the specialised storage ship had already been contracted.

Gem Holdings is composed of the Tumas and Gasan groups and has partnered with German firm Siemens, the commodities trading arm of Azerbaijan’s State energy firm Socar and UK company Gasol to form Electro Gas Malta consortium.

The consortium was yesterday chosen by Enemalta to build a gas-fired power plant and related gas-handling infrastructure.

The company will enter into an 18-year power purchase and gas supply agreement with Enemalta. It will also guarantee a fixed price of electricity for five years.

Mr Fenech told Times of Malta shortly after the winner was announced that the 18-month timeframe to complete the project was “challenging but doable”.

A floating storage depot was the best option to ensure the company could make the tight deadlines imposed by the Government, Mr Fenech explained. The storage ship will have capacity of 126,000 cubic metres, a third less than the maximum storage that had been identified in the permit application lodged with the planning authority

The consortium is committed to start supplying electricity in 18 months’ time but the LNG terminal has to be ready before that. Mr Fenech said the liquefied natural gas terminal, which includes the storage facility and a regassification plant, had to be ready within 15 months.

The terminal will supply gas for the new power station and Enemalta’s BWSC plant, which will be converted to run on gas.

Mr Fenech said it was an advantage that Siemens, the company entrusted with the engineering and construction of the facilities, was also an equity holder. The German firm will be the project leader.

The facility will need between 10 and 12 shipments of LNG per year but Mr Fenech said it was also an advantage to have Socar, the gas supplier, on board.

The Geneva-based Azeri company recently bought a 66 per cent stake in the Greek gas distribution network that includes an LNG terminal. This gave Socar a strong presence in the Mediterranean, Mr Fenech said.

“This is also a strategic advantage for us because an LNG terminal belonging to one of the partners is situated just a day’s sailing away.”

Mr Fenech said the consortium had secured finance for its plans from four banks, including Bank of Valletta and HSBC.

The consortium will dish out €30 million to buy Enemalta’s subsidiary company Malta Power and Gas, set up earlier this year to initiate the planning process.

Energy Minister Konrad Mizzi said the money will be used by the Government to cut energy bills by an average of 25 per cent for families in March next year.

Businesses will start benefiting from similar cuts the following year when the plant should become operational.

There will be a separate lease agreement with Enemalta for the public land on which the consortium will build the necessary infrastructure.

Dr Mizzi did not specify the price at which Enemalta will buy electricity from the private company, citing commercial sensitivity until the deal was actually signed.

“Signing should take place in a matter of days but the price is very much in line with our business model,” he said.

Describing the consortium as “a world class team”, Dr Mizzi said after five years electricity prices will be revised according to a formula that will ensurea price “cheaper than that for an oil-fired plant”.

He said this was the first time that the private sector was investing in power generation.

Asked about Enemalta employees’ future, Dr Mizzi said some will be seconded to the consortium but their job will still be guaranteed by Enemalta.

Opposition leader Simon Busuttil criticised the proposed deal, saying it made no sense to enter into an 18-year agreement but only have the price fixed for five years.

He said the Opposition will pour over the details of the contract and grill the Government over this deal. The PN leader said this year Enemalta will save more than €50 million on fuel, due to the greater efficiency of the new Delimara power station.

Who owns the group?

Maltese investors Tumas and Gasan groups have a 30 per cent stake through a joint company Gem Holdings.

UK-based Gasol owns another 30 per cent while Socar and Siemens respectively have a 20 per cent stake.

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