The Nationalist Party this afternoon questioned the legality of the changes in the consortium that is to build the new power station, saying that in terms of general procurement rules 'all partners in the joint venture/consortium are bound to remain in the joint venture/consortium until the conclusion of the contracting procedure.'

The party demanded answers from the government on the state of the power station project following the departure of Gasol from the Electrogas consortium.

It also called on the government and Bank of Valletta to explain in detail the implications of this development on the state guarantee on the power station loan.

In a statement, the PN observed that Gasol was the leading partner in the consortium commissioned by the government to build this power station.  

The government had cut corners in the procurement process in order to meet the two year deadline for the project. The procurement process was based simply on an expression of interest and did not proceed, as should have been the case for a project of this nature, to a full tendering process. The evaluation of the bidders failed to pick up the fact that Gasol was facing financial problems even though they had been  highlighted by Gasol auditors in their comments on the company's 2013 published accounts.  

During the development application phase, a number of important studies, including a maritime impact assessment, were not carried out in order to expedite matters. The lack of these studies raiseed questions on the safety aspect of the project. The fact that this project, as revealed through recent statements, may lead to bunkering activities within the harbour, made it more damning that the Maritime Impact study was not carried out.

Despite doing away with these studies, the two-year deadline was completely missed as the project faced new problems in part relating to the financing of the project.

The government issued a state guarantee to Bank of Valletta to cover an €88 million loan to Electrogas (Malta). This move, the PN said, was unprecedented and exposed the tax payer to risks which government was refusing to quantify. "The political risk for the government was passed on to the tax payer in the form of a commercial risk."

"As a holder of that risk, the taxpayer has now an even greater interest in having all the facts tied to this project, not least the facts surrounding the departure of Gasol, made public. The conditions pertaining to this loan were not published. Government has in fact refused to publish most of the documentation of this project. The publication of these documents becomes more imperative with the departure of Gasol," the PN said.

"The general rules governing public procurement state that: “All partners in the joint venture/consortium are bound to remain in the joint venture/consortium until the conclusion of the contracting procedure. The consortium/joint venture winning this contract must include the same partners for the whole performance period of the contract other than as may be permitted or required by law”.

"The performance period of this contract has not elapsed. Therefore the departure of one the lead partner should not have normally been considered and approved except in exceptional circumstances as may be ‘permitted by law’.

"Government should therefore explain what procedure was used to allow Electrogas (Malta) to dispose of one of its lead partners. Government should also state who approved this significant change in the consortium’s formation. Was the Director General (Contracts) involved in the process? Was legal and technical advice sought? If so, who provided this advice? Government should publish this advice.

"Did Government receive detailed submissions from the consortium explaining how the consortium is going to cover the expertise, functions and financial obligations that were going to be provided by Gasol? Were these submissions evaluated by government appointed experts? How long did the negotiations, between Government and the consortium, on this change in formation of the consortium take?"

Given that the taxpayer was now guaranteeing the loan, the government and Bank of Valletta should explain in detail the implications of this development on the state guarantee, the party added.

Would the departure of Gasol impact in any way on the conditions of the bridge loan? Was the bank consulted prior to the change in formation?

"In view of the risks involved, government needs to subject itself to full public scrutiny by the taxpayer, the same taxpayer who today is unwittingly and unwilling guaranteeing this project," the party said. 

In a reaction, the Energy Ministry said the Gas and Power Project which led to reduced tariffs and cleaner air is 'proceeding as planned'.

The Nationalist Party, it said, still could not accept the fact that tariffs had been reduced to the tune of 80 million euro per annum and that heavy fuel oil was being phased out.

MINISTRY: NO CHANGE IN TIMELINES

"ElectroGas Malta's recent consolidation of its structure demonstrated commitment by world class organizations to the project. These include engineering and power plant giant Siemens and gas specialist Socar.

"The specialization, skills and knowledge required to implement and operate the power and gas facilities have not changed and are still vested in ElectroGas through Siemens and Socar.

"Construction, operations, maintenance and all other contracts remain unchanged," it said.

"The recent consolidation will have no impact on project timelines, construction and provision of power and gas to Malta and the Maltese people.

"ElectroGas, through Siemens, Socar and GEM holdings, has strong financial backing and will deliver a world class infrastructure which will continue to contribute to the country's competitiveness and also reduce emissions significantly."