An Israeli company that tendered for the Delimara power station extension was not the preferred bid even though its offer was cheaper and more environmentally friendly, according to Labour Leader Joseph Muscat.
He quoted "allegations" made by Israeli company Bateman Hutny in a letter sent to the Prime Minister and the Public Accounts Committee last month.
However, the Infrastructure Ministry accused Dr Muscat of taking on the role of the company's representative and said Bateman had a right to appeal but had chosen not to.
During a press conference yesterday Dr Muscat outlined the concerns raised by Bateman, one of three companies that bid for the 100 megawatt power generating plant at Delimara.
"There is a lot of talk about climate change and reducing emissions... but the decisions being taken by government are not in favour of the environment," Dr Muscat said.
Dr Muscat said that, in the letter, the company said it had submitted a €149 million bid to install a combined cycle turbine which could operate on diesel or gas.
Bateman said its bid was cheaper than the other two submitted by BWSC and MAN that would cost between €16 million and €41 million more. BWSC was awarded the contract.
Replying to this point, the government said the chosen bid was only €3 million more, as Bateman had failed to mention fuel and maintenance costs that were essential to operate the plant.
Bateman claimed in the letter that apart from its own offer being cheaper, BWSC and MAN's bids ran on heavy fuel oil that was more harmful to the environment than diesel or gas.
Although currently oil was cheaper to buy than diesel, Bateman noted that under the EU's environmental policy, the plant would have to run on gas by 2015 since it was a cleaner form of energy.
Bateman added that according to its bid, there would be no additional cost to change from diesel to gas. However, the other two bids listed a further spending of between €10 million to €27 million to be converted to operate on gas.
In its reply the government stressed that gas was more expensive than fuel and its choice would ensure people paid less for electricity generated, according to EU norms.
Bateman said the oil-operated station would create about 50 tonnes of toxic waste daily which would have to be shipped out for disposal.
Despite all this the adjudication board, made up of people appointed by Enemalta Corporation, seemed to prefer going for the old type of technology, Bateman wrote.
It was also worrying, Dr Muscat said, that this Israeli company was alleging that the rival bids had only become eligible for the call for tenders after the government, halfway through the tendering process, changed the law so as to allow an increase in emissions.
Reacting to this, the government said this was irrelevant as the law had been changed by the Malta Environment and Planning Authority to ensure Malta - like other EU countries - was allowed the use of diesel-operated machinery.
However, Dr Muscat accused that Prime Minister of losing control on the environment. The fact the government wanted to set up an incinerator near Marsaxlokk confirmed how its waste management policy had failed - especially since NGOs were claiming incineration should be a last resort.
He was concerned at the manner the government was taking decisions about the environment.
Turning to the wind farms, he said the government initially spoke about offshore wind farms but a Nationalist Party parliamentary group had discussed land based ones, which were now being proposed.
"Such strategic decisions should be taken within technical fora and not in a parliamentary group meeting," he said.