The parliamentary Public Accounts Committee will be asking the Office of the Auditor General to investigate what Labour MP Evarist Bartolo has called “collusive bidding” for the Delimara power station extension contract.
Speaking at yesterday’s PAC meeting, Mr Bartolo agreed to table “new documents” which he and Opposition Leader Joseph Muscat had submitted to the Auditor-General at a meeting held after the latter’s completion of his report into the award of the contract to Danish company BWSC.
Mr Bartolo said collusive bidding was not allowed. BWSC was 100 per cent owned by Mitsui, and Mann, the second-placed bidder, was the senior licensee partner in Mitsui. This meant that the first and second tenderers were owned by the same company.
Moreover, in February 2008 Enemalta Corporation had agreed to borrow €210 million from Mitsui, with the loan subscribed by Nordic Bank and the European Investment Bank for 50 per cent each. Five months later, Enemalta had awarded the power station extension contract to a Mitsui-owned company.
At the start of the meeting, Mr Bartolo made a breach-of-privilege complaint about what he called “anonymous advertisements in the media, paid by the Office of the Prime Minister with selective, out-of-context comments” taken from previous PAC meetings. He said this constituted manipulated reports of committee meetings.
Infrastructure Minister Austin Gatt, heading the government side, made another breach-of-privilege complaint about an advertisement in Wednesday’s l-orizzont whose content had not been taken from the transcripts of PAC meetings.
Committee chairman Charles Mangion (PL), promised to evaluate the complaints and report to the Speaker.
Regarding recent reports that the government side would have no further problems with witnesses being called to testify after the Auditor General had answered all questions, Dr Mangion asked for a list of witnesses from both sides.
Auditor General Anthony Mifsud and his team confirmed that it was always clear in the tendering process that gas for the power station would not be available in Malta before 2015-16. Finance Minister Tonio Fenech said the cost of the pipeline had not yet been factored in, and the government had always kept its options open on heavy fuel or gas operation for reasons of emissions and affordability.
Minister Fenech added that “heavy fuel oil” was actually a misnomer, because the fuel had a very low sulphur content. He would be able to decide on diesel or heavy fuel oil according to market prices when the power station extension would be close to coming on stream.
The Auditor-General also confirmed that according to Enemalta’s cost workings, BWSC had come out €296 million cheaper than third-placed bidder Bateman in total cash outflow. On other formulae BWSC had come out €124 million cheaper. The cost per unit generated stood at 3.4 cents against 4 cents, which meant that Bateman would have cost the people €30 million more for 10 years.
Following several questions from Dr Gatt about cost comparisons, the Auditor General’s team said Bateman had only been right to complain about the fact that they had not been notified that the tender had been awarded.
Mr Bartolo asked the Auditor General to confirm that in 2003 the government had already been studying the costs of a gas pipeline, then estimated at €40 million, and that in 2006 Enemalta had issued a call for tenders based on gas operation but the procedure had been stopped. Mr Mifsud said this had not been within his Office’s terms of reference.
Minister Gatt pointed out that what Enemalta had issued was a call for expressions of interest, not tenders, and that in 2005 an intensive study had found that a natural gas plant in Malta would still have been expensive. As far as he knew, Enemalta’s study was still going on with Eni.
Mr Bartolo said that on March 30, 2006, Enemalta had received a letter from Mepa saying that the new-generation plant must be gas-fired.
Minister Fenech said the government had never changed its policy in favour of gas.
As to why the tendering process had not been restarted after specifications had been changed, Dr Gatt asked Mr Mifsud if he realised that restarting the whole process would have given Malta a new power station at least two years later than the closure of the Marsa power station, incurring at least two years of EU fines by the time of commissioning.
Mr Mifsud replied that if Enemalta had not procrastinated, or if decisions had been taken higher up for the gas infrastructure, this would not have happened.
When Dr Gatt said that any screening procedure would have entailed more delay in the process, Mr Mifsud said it would have taken just two minutes on internet to get to know of Lehmeyer International’s blacklisting by the World Bank. But he agreed that the law currently did not allow blacklisting of any company.
Mr Bartolo said it was wrong to belittle LI’s role to just a direct order worth €12,000. The company had been instrumental in the changing of the Legal Notice. When Enemalta had come to change emissions standards it had adopted German standards – not very surprising when LI was a German company.
Mr Bartolo also said he would never have expected an IT minister to claim that checking any company for blacklisting would have unduly delayed the process.
He asked if BWSC or any of its proposed sub-contractors had declared any cases of corruption or professional misconduct, as demanded in the application form. The Auditor General said they had not, but BWSC had not been convicted of any such wrongdoing.
Mr Bartolo said that was only because the Danish law had been changed in 2000. After nine months he was still waiting for Minister Fenech to tell him if the Attorney General had an opinion on whether BWSC and its sub-contractors should be fined 10 per cent of the contract’s worth.
The Public Accounts Committee stands adjourned to January 11.