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Enemalta imposes €10m penalty on Electrogas for power station delays - Busuttil tears up blacked out contracts

Opposition leader insists power tariffs should be reduced further

Enemalta has imposed a €10 million penalty on Electrogas for late delivery of the new power station, minister Konrad Mizzi told parliament this afternoon.

Dr Mizzi was the last speaker from the government side in a six-hour debate on an opposition motion presented some 18 months ago calling for publication of the power station contracts. The contracts were published over the past two days but parts of them were blacked out.

Dr Mizzi spoke on the process leading to the building of the new power station by Electrogas and said the conversion to gas meant cleaner power, lower emissions, cheaper electricity and an adequate and diversified supply of power, such that the Marsa power station and the oldest part of Delimara power station would be closed down.

It also meant security of supply, in a deal approved by the European Commission after detailed scrutiny of all the project contracts. The EU approval belied Opposition claims that there was corruption in this project.

Dr Mizzi said there was no illegal state aid in the project, and the price being paid by Enemalta for gas and power was reasonable with a fair return. It compared with prices in Europe.

Dr Mizzi said removal of the floating gas unit from Delimara, as the Opposition was promising, would deny the power stations of adequate generation capacity and thus lead to blackouts.

Going into details of the contracts, Dr Mizzi said they included conditions on guaranteed output from the power stations with a guaranteed price of electricity for five years, independently of prices abroad. After five years the prices would be indexed to international price movements.

Enemalta would have the right to source its power from the different Delimara power stations and the interconnector.

Once the gas pipeline was in place, Enemalta may opt out from the gas supply contracts.

Dr Mizzi said Electrogas has already paid €30 million in development fees to Enemalta. Electrogas would also pay €10 million in penalties for delays in the building of the new power station.

The contracts also included safeguards in case defects in the new power station should be noted after several years, as had happened at Mater Dei.

Dr Mizzi said half of the former BWSC plant would be operating using gas by the end of the month, after which the other half would be closed and converted. The new power station had also started producing power through the open cycle and was being tested.

In his speech Dr Mizzi also explained how the deal with Shanghai Electric - which bought a big stake in Enemalta almost four years ago - had rescued Enemalta from dire financial straits and cut its debt by half. As a result Enemalta's credit rating had been raised. 

The Opposition walked out when Dr Mizzi rose to speak, with Opposition leader Simon Busuttil explaining that the Opposition did not recognise the legitimacy of a minister who had set up a secret company in Panama to deposit funds from commissions.

MARTHESE PORTELLI: WHAT IS THE GOVERNMENT HIDING?

Earlier, shadow minister Marthese Portelli said the people were none the wiser after the publication of the contracts. The government should explain why it had blacked out the most important parts of the contracts.

“What does the government want to hide, who is it protecting?” she asked.
The contracts, after all, were negotiated by a minister who had set up a secret company in Panama, she said. This was also the minister who personally intervene in oil procurement from Azerbaijan, costing the country €14.1 million. 

It was a disgrace that Shanghai Electric was reportedly making a profit of
€41,000 per day from the former BWSC plant, or €75 million in five years.

The people deserved to be told exactly what had been negotiated, Dr Portelli said.

BUSUTTIL: POWER STATION IS A SYMBOL OF THE GOVERNMENT'S DECEPTION

Winding up the debate, Opposition leader Simon Busuttil said the new power station was a symbol of the government's deception in everything it did.

This was a government which promised transparency. Yet the contracts had been published now, after almost two years, and their essential elements were all blacked out, making publication useless. 

Dr Busuttil pointed out how page after page were blacked out, and then tore up one of the contracts.

A prime example of the government's deceit, he said, was how the prime minister promised to resign if the new power station was not ready within two years. Four years had passed and he had not kept his word.

The government had also promised not to privatise Enemalta and then proceeded to do so.

The biggest lie was that the project woudl lead to lower electricity bills. The bills were reduced before the project had been completed, proving that it was not this project which led to lower tariffs.

TARIFF SHOULD BE REDUCED FURTHER   

Indeed, given that oil prices had fallen by 66% in four years, why had local power tariffs been reduced by only 25%?. This meant that the people were being robbed.  

The tariff reductions in Malta should also have gone deeper because Enemalta had been saving a million euro a week thanks to lower generation costs at the BWSC power station. Further savings were also being made through the purchase of power via the interconnector.  

Power from the interconnector was so cheap that the interconnector was being used at full capacity. Incidentally, there was no cleaner source of electricity than the interconnector.

A future Nationalist Government would obviously not demolish the new power station, once it had been built, but it would ensure that contracts were fair and favourable,  Dr Busuttil said.

What sense did it make to be bound by a power purchase agreement for 18 years on all output? Did it make sense to buy electricity at 9c6 per unit from the Electrogas power station when power from the interconnector cost half as much?

Dr Busuttil also raised questions on how the government was transferring prime sites to Shanghai Electric, including the site of the Marsa power station.  

So many things did not make sense, Dr Busuttil said, that it was logical that one suspected corruption. The contracts were negotiated by Konrad Mizzi, who set up a secret company in Panama. His opposite number at Shanghai Electric, with whom the talks were held, had also set up a secret company, in the British Virgin Islands. Both the companies in Panama and the British Virgin Islands were set up by Brian Tonna at  Nexia BT.

A future PN government would investigate all contracts negotiated by Dr Mizzi and chief of staff Keith Schembri. The blacked-out contracts would also be renegotiated in the national interest, Dr Busuttil said. 

The gas storage tanker would be towed out of Marsaxlokk as soon as possible and electricity would be bought from the cheapest source, leading to savings for consumers. 

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