Opposition spokesman on finance Charles Mangion told Parliament yesterday that because of the liberalisation of the sector, a gas cylinder would, in the near future, cost the consumer at least €14.

Speaking on the motion for the transfer of land for the operation and storage of a gas bottling and distribution plant, Dr Mangion accused the government of abdicating its responsibility because no socio-economic impact assessment had been made.

He said inflation was hovering around the five per cent mark. Coupled with the proposed new energy tariffs this would compel workers' unions to ask for hefty cost-of-living increases which, in turn, would impact on Malta's competitiveness and lead to unemployment. This put the onus of the problem squarely on the shoulder of the government and the Prime Minister.

Dr Mangion said that the liberalisation of the gas sector was a whitewash because under the proposed agreement, Enemalta could not give the same facilities to other parties interested in entering the field. Would the government provide them with same area of land, at the same rate and complete with Mepa permits? he asked.

Parliament was being requested to authorise the right of passage for a pipeline from the Freeport to Bengħisa where Gasco Energy Ltd, the new consortium, would build the new LPG production and storage plant. It was also be authorising Enemalta to transfer, on a 33-year sub-lease basis, the land for the building of this plant. The land was given to Enemalta by emphytheusis for 65 years in 2004.

At the start of yesterday's sitting, Dr Mangion said he was withdrawing his request for the Speaker to rule whether the opposition had a right to a draft copy of the contract which it was being asked to approve. He said that following a meeting with Deputy Prime Minister Tonio Borg and Parliamentary Secretary Jason Azzopardi, a copy had been handed to the opposition.

Dr Azzopardi said Gasco, the new gas consortium, was to invest millions of euros in building and operating the facility. Gasco would build six large storage tanks and install and connect the pipeline to its facility. Gasco would decommission the Qajjenza plant at its expense.

The gas market had now been liberalised and it was possible to have another competitor in the sector. Dr Azzopardi said Gasco could not raise gas prices at will but would have to convince the Malta Resources Authority, as the regulatory body, that its proposals were justified. The government would continue to subsidise the gas sector for three years.

After the 33 years, Gasco would transfer the upgraded facility to the government. Areas which would not be utilised for gas bottling purposes would be subject to additional sub ground rent.

Concluding, Dr Azzopardi said the terms of the agreement with Gasco were a win-win situation for the residents of Birżebbuġa and for Enemalta, with the consumer benefiting from a better service.

Dr Mangion asked whether the plant would be out of date, technology-wise, when it reverted to the government in 33 years' time. Interjecting, Dr Azzopardi said that the contract laid down that the plant had to be in good working condition, and state-of-the-art, for that time.

Dr Mangion said Enemalta had given its guarantee that the accounts Gasco were presenting were true. This guarantee was given despite the fact that recent records were missing. This had been confirmed by Finance Minister Tonio Fenech when asked about electricity and water tariffs.

The contract stipulated that cylinders acquired by EVAS tenders should not to be in circulation, as they might have some problems. But the cylinders were still in circulation. What was being done about this issue?

Interestingly, the workers were being offered a choice; they could stay on with Enemalta or transfer to the new company Gasco.

The probability was that they would choose to stay on, as people tended to value job security with the government. Dr Mangion questioned whether any incentives had been offered during the negotiations to attract workers to join Gasco. The government could offer the workers a chance to come back, within a period of time, if they did not succeed in integrating themselves into the new environment. The government would do well, in particular economic circumstances, to safeguard job security.

Enemalta had to provide the service for three years, after which the distribution and supply of gas were to be assumed by the company. While the various obligations were listed, the company's public service obligations were not in the contract.

There was nothing about consumer protection. The contract only stated that the Resources Authority would be keeping a close eye on things, such as prices. But costs had to be covered somehow, and the company had to make a profit.

Dr Mangion said the government had promised to provide subsidies for three years but had not said how much cylinders would cost or how much the subsidy would be. A private company like Gasco would continue increasing prices, and this was what the opposition objected to.

The opposition was not against liberalisation, but it was not right to pretend it was some gift, and then realise it was just another burden. Would there be any guarantee that subsidies would remain the same?

Under a Nationalist government, the social aspect became more important. It seemed that the government was only interested in covering its back, and the deficit this year was shameful. Taxes collected by the government increased by Lm150 million, and the targets for this year had also been reached.

Words meant nothing, considering the overruns of projects like Mater Dei Hospital, the quay at Ċirkewwa and the Malta Embassy in Brussels. These added up to about €430 million and if these had not been wasted, the government would not be in crisis. The deficit which had more than doubled and the national debt were a result of its own incompetence. It was no wonder the government was issuing stocks. The irresponsibility of the government and the way it dealt with finances had to be exposed.

During the last budget speech the Prime Minister had said that if he increased the water and electricity charges he could remove the surcharge, but this would not be good governance. He promised that prices wouldn't fluctuate, but the surcharge would.

The new water and electricity tariffs would be increasing government's earning by more than a hundred million euros.

Cost-of-living increases were calling for substantial salary increases. The government had to react in the face of a shorter working week, increased unemployment and lack of competitiveness in hotels, despite these being the result of international crises.

It was impossible to keep ignoring the burden being carried by the people, especially those who had a low pay packet. Over the last four years wages in Malta had seen the lowest increases in Europe, although inflation was the highest.

Dr Mangion appealed to the government to take its responsibility towards the Maltese family seriously.

Labour MP Marlene Pullicino said that when there were warning signals about the possibility of a crisis in the energy sector, Malta was far behind in its energy plans, to the point that the country was completely dependent on energy imports.

She criticised the government for taking such a long time to replace the Qajjenza facility, adding that Birżebbuġa residents should be given compensation.

This could take the form of rehabilitating and embellishing the Qajjenza area. She said that these residents have been exposed to risks because the present facility does not satisfy the Seveso directive.

Parliamentary Secretary Azzopardi maintained the facility was safe.

Continuing, Dr Pullicino said the Opposition favoured liberalisation when it truly benefited the consumer. She expressed doubts that the present prices for gas cylinders would be retained, adding that gas subsidies were under threat.

Dr Pullicino also referred to the proposed electricity and water tariffs, adding that these were giving rise to a lot of uncertainty. She said that increases in tariffs would also be reflected in more VAT being paid by consumers at a time when they should not carry more economic burdens.

She said that when faced with an energy crisis, the Cypriot government used taxes derived from new tariffs to mitigate negative social and economic effects. She appealed to the government to consider the social and economic impact before introducing the new tariffs.

Dr José Herrera declared an indirect professional interest in the resolution as legal representative of third parties that are awaiting final Constitutional Court judgement on a piece of land that may form part of the area of land to be leased to Gasco. He exhibited and tabled a map showing the land which is being contested.

Parliamentary Secretary Azzopardi said that government advisors had assured him that the land shown in the tabled document did not form part of the land to be leased. Dr Herrera said that he would submit a more detailed map for verification.

Speaking on the resolution, Dr Herrera said that true liberalisation of the sector would have come about if Mepa had indicated other areas suitable for storage of energy products so that other competitors could be attracted to apply for a licence to operate in the sector.

The Malta Resources Authority should have drafted and implemented sound regulations and policies before embarking on the liberalisation of the energy sector. There are no regulations on tariffs, while subsidies would be removed.

Dr Herrera said that the company operating the new bottling plant could make offers to attract consumers to use more gas.

Carmelo Abela (MLP) said the resolution involved the transfer of property for commercial purposes, and the government would be passing a monopoly into the hands of a commercial enterprise. This included the whole gamut of importing, storing, bottling and distributing gas. But there was not yet a full-blown policy on energy as a whole.

The production and distribution of gas had always been a monopoly in the hands of Enemalta. Ostensibly the gas sector was being liberalised and there was nothing to hold back another operator from entering the fray, but Mr Abela questioned the de facto opportunities for competition to serve a country of just 400,000.

The opposition fully agreed with the dismantling of the Qajjenza plant, which was now too close to a residential area, and the construction of a new plant at Bengħisa. But the government could have done this any time if it had really wanted, and did not have to wait for the liberalisation. On the other hand, there had been real competition in the process leading up to the selection of Gasco Ltd.

If any other operators would someday want to enter the now-liberalised market they would have to go through the whole process that Gasco had gone through, including the selection of operating land by Mepa.

Mr Abela said the government should not be the operator in any sector, but the regulator. There would only be a place for a regulator in any sector if that sector were liberalised.

The opposition agreed with any liberalisation process of a public monopoly, so long as the consumer stood to win. Malta's small size could, and did, present difficulties which would not be experienced in any other much-larger market. The government was effectively letting go a public monopoly and allowing it to be turned into a private one.

Mr Abela questioned how much the various regulators were successfully protecting the interests of the consumer, and how many resources they had available to do this.

On the price of gas, he said he knew of no pricing policy governing the sales of liquid gas cylinders. It was true that Dr Azzopardi had said that any increase in the price of gas would have to be justified. He had also said that the government would continue to subsidise the price of gas cylinders for the next three years, but had not said by how much. The current subsidy amounted to Lm5 million a year, but how much would it cost over the first three years?

Mr Abela said anything about pricing would have to be clear and unequivocal. Certain national issues, and problems that had been created or could yet be created locally, needed to be divorced from the current international finance crises.

It was turning out to be the worst possible time for water and electricity tariffs to be raised disproportionately as the government was suggesting, although there had been indications that the government was taking a new look at its proposals. But there had been no official announcement to date.

Higher prices for gas, water and electricity would hit the people hard, and the government needed to keep in mind the socio-economic impact of its actions on family life and the national economy, he concluded.

Charles Buhagiar (MLP) referred to what had been said on the motion under debate when it had been discussed in committee. The motion was being debated in plenary session because there had been no agreement in committee.

Mr Buhagiar said that when he had asked where the land being transferred to Gasco was coming from, he had been told that it had always belonged to the government. The fact was, it had been found, that part of the land was expropriated land. This brought into question the legality of what was being done: The letting of expropriated land for commercial purposes.

He asked what links there would be between Enemalta and Gasco in terms of the draft agreement. One question that had been asked in committee was on what criteria Gasco was the chosen bidder. Another question had been the proposed pricing policy, something which was not even mentioned in the draft agreement.

The dismantling of the Qajjenza plant should not be the only way that the consumer would be benefiting. Mr Buhagiar recalled that when Labour had initially thought about the land at Benghisa for just such a project, Mepa had said the proposed site was directly under the flight path of landing aircraft.

Labour had no problem with privatisation, but it did have problems with the creation of monopolies. A government monopoly was one thing, because the public could benefit from profits made, but the people would gain nothing, or very little, from a private monopoly.

Mr Buhagiar said the opposition would be voting against the motion, not because it did not agree with the dismantling of the Qajjenza plant or liberalisation as a concept, but because it was against the granting of a private monopoly. It was puzzling how Enemalta could estimate the value of its bottling plant at just €740,000, especially when Gasco would be utilising the Qajjenza plant and paying the proceeds to Enemalta for at least the first three years, pocketing only an operational fee of €90,000.

The government seemed to be congratulating itself on the fact that the plant at Benghisa would be reverting to the government after 33 years. Mr Buhagiar questioned if the government felt that the technology of three years from now would be worth anything in the face of the technological progress that would have occurred by 33 years from now.

During the committee meetings government MPs had had no ready answer on the pricing policy, suggesting that Gasco had had talks with the MRA. Mr Buhagiar said the truth was that the MRA did not even have a gas directorate yet, without which it would be unable to regulate the gas operation.

It was certain that after the introduction of the impending higher water and electricity tariffs the people would turn even more to the use of gas for their energy needs. So government subsidy on gas would continue to be a necessity, although there were no figures available. The opposition could not be expected to vote for empty air, and so would be voting against the present motion, Mr Buhagiar concluded.

The debate continues today.