Energy Minister Konrad Mizzi confirmed he had recommended that Enemalta seek “help” from an Azerbaijani energy company to secure a good price for fuel hedging.
However, he refuted Opposition claims he had involved himself in the deal or tried to force an agreement with Socar Trading, the State-owned Azeri company that is also part of the Electrogas consortium commissioned to build the new gas-fired power plant in Marsaxlokk.
“Hand on heart, if I had to be in the same situation today, I think I would do the same thing,” he said.
Dr Mizzi was addressing a news conference a day after the National Audit Office expressed “reservations” on the extent of “ministerial direction” exercised in the hedging agreement sealed last April.
In his report, focusing on Enemalta’s hedging activity in 2014, the Auditor General said his office had not been given enough documentation on this particular deal, contrary to the other hedging agreement, which, he noted, had been well documented.
Hand on heart, if I had to be in the same situation today, I think I would do the same thing
Dr Mizzi welcomed the findings and said the Auditor had noticed marked improvements in the way Enemalta hedging transactions were recorded when compared to a previous report presented in 2013. Enemalta would have a formal hedging policy in the coming weeks, he added.
Touching on the reservations expressed by the NAO, he said these were just limited to two out of about 80 hedging contracts signed last year.
Nevertheless, he acknowledged that there had been shortcomings in the record-keeping of the Socar deal and promised to take action. As for the NAO’s reservations on the minister’s level of involvement, Dr Mizzi emphasised that his role was just to instruct Enemalta to remain in the market longer to avoid raising fuel prices by 2c and approach Socar for a quotation.
Before his recommendation, Enemalta had never approached Socar because the Azeri company had never shown interest in a hedging agreement, he said.
Following his ministerial direction, a deal was reached within two weeks to cut petrol prices by 2c, while maintaining the cost of diesel for the second half of last year.
‘My direction was to try to get good price’
Dr Mizzi said that, subsequently, Socar’s interest cooled and no more agreements were reached. “My direction was not to conclude a deal with Socar. Far from it! The direction was to try and reduce the prices and get a good deal,” he said.
He said the government was familiar with Socar as it was part of the winning bid for the new power station. Malta had also had discussions with the Azerbaijani government and Socar on general collaboration in the energy sector.
Last December, Malta signed a memorandum of understanding with Azerbaijan but, to date, the government has resisted calls to publish it. The agreement was signed during a visit by the Prime Minister and Dr Mizzi to the capital Baku.
Asked whether this had been his only visit to Azerbaijan, Dr Mizzi confirmed he had previously visited the former Soviet Republic for talks with the energy ministry. These were related to the power station contract awarded to Electrogas. He could not remember the exact dates of the trip.
Commenting on the €5.6 million losses registered by the Enemalta hedging agreements last year, he said this was lower than the losses made in 2009 when Enemalta had lost €50 million.