Former Finance Minister Tonio Fenech insisted this evening that proof that the former government did not bow to the wishes of oil traders was the fact that it had started the work on the power interconnector with Sicily, thus effectively leaving oil and gas traders out of power generation.
Mr Fenech read a lengthy statement before the Public Accounts Committee, which is considering oil procurement procedures between 2008 and 2011.
Mr Fenech said he assumed ministerial responsibility for Enemalta in March 2010.
This was a time when Enemalta was losing up to €70 million a year owing to high oil prices, and the government could not pass on such high costs to consumers. This was a period when the government planned and went ahead with the BWSC plant, which was saving the present government €1m a week, and the interconnector, which had made it possible for the present government to reduce electricity bills and close down Marsa power station.
This was also the time when the PN government started preparing for eventual conversion to the use of gas in power generation. Funds were being sought from the EU, and it was a condition for the BWSC plant that it could be converted to gas when a pipeline was laid.
Mr Fenech referred to evidence before the committee by David Spiteri Gingell, former Enemalta CEO and said his request for the recruitment of some 10 chief officers and 40 management position would have cost €4.5 million. That would have seen Enemalta having more Chiefs than Indians at a time when consumers were burdened with heavy bills. Eventually only half the recruitment was approved. It was not a decision which Mr Spiteri Gingell liked, and he resigned.
Mr Fenech said that when William Spiteri Bailey became Enemalta chairman, he asked him to review oil procurement procedures. A report was submitted in January 2011.
Mr Fenech said he disagreed with comments that there was a ‘policy vacuum’ in oil procurement before that time. The policy was that there had to be stability, without risks where possible, with protection through hedging to get the lowest prices. The oil bidding was made in full meetings of the oil procurement committee.
He agreed that the lack of documentation regarding those meetings was deplorable and did not constitute good governance. Mr Spiteri Gingell’s excuse that this had happened because of lack of human resources did not hold water as the committee did not meet often and it did not take much to keep proper records.
However there had been nothing like the political interference witnessed recently by Energy Minister Konrad Mizzi regarding hedging to be made from Azerbaijan. The Azeri bid was received very late and after meetings held in Baku. This led to justified suspicion of what had taken place.
Minister Austin Gatt’s involvement, Mr Fenech said, amounted only to a policy ‘direction’ that when a particular price was reached, it should be locked, in the interests of consumers.
Mr Fenech said the auditor’s report showed no corruption by any politician or any member of the oil procurement committee at the time. The oil procurement scandal was at a different time.
Mr Fenech welcomed the fact that the auditor had acknowledged further improvement in oil procurement procedures in 2011, in order to strengthen governance in 2011.
Concluding, he denied that the former government had wanted to continue to buy oil in order to benefit some importer or trader. Such people, he said, could also trade in gas, but it was the former government which set out the plans for the interconnector, effectively keeping the traders out of the matter completely.
Justice Minister Owen Bonnici asked why ministerial responsibility for Enemalta had been transferred from Austin Gatt to him. Mr Fenech said that was a question which Dr Gonzi could answer. Asked if he was surprised, Mr Fenech said he was given a challenge.
Replying to other questions, Mr Fenech said it was the present government which had not kept its promises. It was still using heavy fuel oil, and the promised new gas power station had not materialised.
Mr Fenech askwer a number of questions over why the former government had not converted power generation to gas.
Mr Fenech said that the former government had not been prepared to take the risks that the present government was taking about gas storage. The former government had wanted a pipeline and had started working towards that end. However it was a mandatory condition that the BWSC plant could be converted to gas.
The sitting was then adjourned.