Investment Minister Tonio Fenech told Parliament last night that if everything went according to timeframes in the power station extension’s performance test, the government could take delivery of the project as early as December 15.
Earlier yesterday afternoon, Enemalta had said the power station extension could be taken over by the end of the month.
Mr Fenech was concluding the debate on the creation of a Service Purpose Vehicle to finance Enemalta Corporation. The Opposition is backing the motion.
Mr Fenech said that until delivery took place, the government would continue to impose contractual penalties on BWSC for late delivery.
The minister referred to samples of black dust and substances tabled in Parliament by Opposition MP Joe Mizzi, and that investigations being carried out by the local council with Mepa on air quality were showing that the pollution was almost entirely caused by traffic fumes, the old Delimara plant, and other sources.
At the start of his winding up Mr Fenech thanked the Opposition for understanding the importance of the resolution and accepting to vote for a stronger financial position of Enemalta to invest in the future of electrical generation.
He said that investment of a certain importance had to be undertaken with outside financing that would be repaid according to an agreed plan. Part of the utility tariffs would go towards the repayment of investment loans.
Mr Fenech said that when the economy had been in the pits in 1991, utility tariffs had been revised to cover the refinancing of Delimara 1. At that time it had made sense to have tariffs which were cheap enough to attract foreign investment, but the country today had advanced to the stage where a corporation of such national importance must be sustainable and repay its loans within reasonable timeframes.
The SPV was being created as an important refinancing instrument on the principle that this time the debt would be repaid. It should be feasible to do this within 25 years.
Enemalta was making good for the amount by giving the SPV the same value in assets.
FINANCING FUTURE INVESTMENT THROUGH THE TARIFFS
Now that past problems were being taken care of, future investments could be
repaid only if they were reflected in utility tariffs. It was not realistic to reason that only raw materials needed to be paid, forgetting about initial capital.
Mr Fenech said that was why the government had not yet invested in gas. Studies showed that gas was cheaper than other fuels, but calculating the costs for the pipeline and the equipment, it would come out more expensive. A gas infrastructure would be a huge investment.
Unless the government received financial aid from the EU it would not recoup
the cost by resorting to higher tariffs. So the best solution in the meantime was the interconnector and now the power station extension. These two initiatives were an important pillar to avoid Malta falling into the same problems as other countries.
The minister categorically refuted the Opposition’s charges of inefficiency through the wrong technology in the power station extension. The efficiency of the power station extension would mean saving €3 million a month on fuel supplies.
The project had not taken off much earlier because appeals and investigations after the awarding of the contract had delayed it.
Rather than faults, the extension was facing snags which needed to be rectified. Enemalta had commissioned an international company to carry out an independent evaluation before the final performance test was carried out.
Concluding, Mr Fenech said that when the power station extension went into
operation, part of the Marsa plant would be shut down again. And once the interconnector came on stream, Marsa could be closed down completely – something which the government would have wished to do much earlier. It was only to be hoped that Enemalta would find its way clear to repaying the investment.