The Parliamentary Public Accounts Committee this evening continued its hearings about fuel procurement procedures in 2010 and 2011 in the wake of a report by the Auditor-General.

At the start of the meeting Philip Borg, manager of Enemalta's petroleum division, resuming his testimony, presented a document with reference to a claim  during Monday's sitting, that a consignment of fuel oil bought by Enemalta in October 2011 did not satisfy the sulphur contents specifications.

He said that it had resulted that following further testing which were carried out on his request it transpired that the level of sulphur content was within accepted levels.

He said that he did not ask for the reason of this discrepancy in results, saying that it could well have been the case that the original sample was contaminated.

Labour MP Justyne Caruana said that separate tests carried out in Italy showed that the sulphur content was also found to be above the threshold level. Mr Borg insisting that the sample was contaminated.

"There was no magic involved, but simply a different sample yielded a different result" the Enemalta official said. However Dr Caruana insisted that there was no evidence that the sample was different.

Dr Caruana then questioned what would have been the repercussions if the sodium level in the fuel oil was above the acceptable level. Mr Borg said that his did not have the technical background to give a reply.  

Asked whether he was aquatinted with George Farrugia, the local representative of Total/Totsa and Trafigura, he said that he knew him as the agent of Totsa. He did not remember if Mr Farrugia had ever spoken to him about the quality of oil. He also denied ever receiving an invitation from Mr Farrugia.

Mr Borg categorically denied that Enemalta was ever pressured to buy out of spec fuel oil.

Probed by Labour MP Luciano Busuttil about fuel procurement committee meetings under the chairmanship of Tancred Tabone, the Enemalta official said that no minutes were taken. He said that the selection criteria were mainly the oil specifications, the price, the credit terms and security of stocks. Mr Borg said that the invitations to tender for petrol and diesel used to be drafted by him.

He said that when the email system replaced fax under the chairmanship of Alex Tranter, they used to receive the printed copies, but were not in a position to guarantee that no other bids were received on the chairman's email. He remarked that this system is still in place today.

Asked whether it was "too good to be true" that Totsa had won 9 out of 11 contacts from 2008 till 2011 by presenting the best bids, Mr Borg said that Enemalta used to negotiate even better terms with the best bidder.

Asked about the password security procedure introduced later under the chairmanship of William Spiteri Bailey to access the bids, the Enemalta official said that this procedure was not carried out in front of the committee members.

Regarding the incident of January 2011, when an offer was received a day after the contract had been awarded, he said that following an internal investigation by the IT section it transpired that the email was overlooked as it was marked as personal.

Mr Borg said that he only learnt of the reasons behind this incident following the auditor's findings.

Mr borg said that Tim Waters (from Trafigura) as well as Mr Farrugia once popped at the shipping office in Birzebbuga, saying that they only wanted "to say hello" - with Government MPs raising their eyebrows to his remark.

Replying to questions from Opposition MP Beppe Fenech Adami, Mr Borg said  some of the contracts were not awarded to the cheapest bid as they were not up to standard. He added that saying that Enemalta did not choose the best bid, would be a mistake.

Regarding the fact that no minutes were taken, he said that this had no impact on the committee's operation. However he said that all the bids were kept, saying that this was the most important piece of evidence.

Mr Borg said that since the report was presented no changes were introduced, but its conclusions and recommendations including recording the entire meetings were discussed informally. He said that the general feeling was that if this procedure would impact on the negotiating power, it would not be adopted.

The Enemalta official said that there were never approaches to bribe him or to influence his decision.

The committee today also started to question Janice Mercieca, Financial Risk Officer and a member of the Risk Management Committee and the Fuel Procurement Committee.

She was questioned about policies and procedures and also recalled an urgent meeting held in September 2011 in the CEO's office with George Farrugia. The issue was the excessive sulphur content of a fuel oil consignment of September 2011. She said that Enemalta had fined the supplier a quarter of a million dollars, which would rise to $400,000 dollar if the incident repeated itself.

She said that there were other incidents of out of spec supplies which pertained to the same contract with Trafigura.

Asked about the January 2011 incident, when Totsa did not win the gasoline contract and complained that its bid was not read during the fuel procurement meeting, she said that Totsa's bid was still not acceptable due to security of stock issues. She then presented an incident report dated 19 January 2011, which highlighted the reason for which the email had be overlooked.

Asked by PAC chairman Jason Azzopardi on the auditor's remarks about lack of accountability and a lack of policy of the risk management committee, she said that minutes show otherwise and that they had presented a document on procedures of this committee, which were attached to the auditor's report. She refuted claims that there was no distinction between strategy and policy as regards the risk management.

Ms Mercieca said that the email sent by Austin Gatt on November 10, 2009, which was mentioned by the auditor, was a clear political direction which the committee adhered with. She said that as a result of that email there was a loss of €4millon on oil and a profit of €17.8 million on foreign exchange. Ms Mercieca said that the Minister's decision was intended to bring price stability at a time when the market was very volatile.