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Crystal clear conclusions - Alex Cutajar

Last week’s publication of the investigation report on the awarded contracts to the Electrogas Consortium by Enemalta by the National Audit Office has removed any form of doubt raised by the Opposition on the project during the recent years.

Since 2013, the Opposition has questioned the need for a new power plant for electricity generation in Malta. Back in the days when he was still Opposition leader, Simon Busuttil had mentioned numerous times that “a new power plant for electricity generation in Malta is not needed” since, according to him, the Interconnector project was enough to sustain Malta’s energy requirements.

In a reference to this issue, the NAO establishes the need for a new power plant in Malta in order to be able to close off old and polluting plants such as Delimara 1 and the Marsa Power Station, as well as in terms of capacity, reliability, and more cost-effective electricity generation.

The NAO also clears any doubts with regards to the need of a power plant in parallel with the Interconnector. In its report, the National Audit Office clearly mentions that a power plant is needed due to the fact that the Interconnector may have issues with regard to price volatility, reliability and security of supply due to issues that can occur on Sicily’s end.

In this report the Auditor General confirms again what has already been stated by European Commission Vice President Maros Sefcovic, when he labelled this project as “best practice” in the sector and as a “blueprint” on how such projects should be implemented.

In this aspect, this is the second independent investigation confirming this process as well-structured, fair and transparent. This besides being also confirmed by the European Commission in its extensive examination of the project and on its related processes, and includes all the contracts and the competitive process, with regards to State Aid clearance.

The NAO notes that the investigation found only minor administrative shortcomings which did not impact the final outcome

This brings me to another aspect – the Opposition’s relentless corruption allegations. The 500-page report finds absolutely no corruption and no trace of such unfounded allegations, and thus clears any form of allegation in this regard. This is very different from what we had seen in the investigations relating to BWSC in 2012.

The PN administration at that time had enacted changes in legislation which triggered major changes in the selection process. The NAO at that time had also flagged serious concerns of conflict of interest by lawyers acting both for Enemalta and for the BWSC representatives during the selection process.

On another note, I feel that the analysis on the Interconnector provided by the NAO report does not actually give a realistic picture to the exact pricing structure of both sources.

First of all, the period under review by the NAO was the period when the Delimara 4 plant was operating on open-cycle mode as contractually bound to do so at that time. This essentially means that the efficiency delivered by the D4 plant was much less at that time than what is being delivered today.

Another point that needs clarification, is that the NAO does not make reference to the initial €300 million capital investment in the Interconnector infrastructure and quotes only electricity prices per mWh. Apart from that, the NAO excludes costs related to other aspects such as maintenance fees.

 On the other hand, the price for electricity quoted by the NAO for Delimara 4 includes full costs.

The third aspect worth mentioning is the fact that Interconnector prices cannot be analysed on a short-term basis. As stated by the NAO itself in the report, one must note volatility and reliability of Interconnector prices.

Since August 2018, the Interconnector prices have spiked up to 60 per cent more than the previous year, which essentially correlates to around 48 per cent more than Delimara plants prices.

In summary, contrary to the allegations mentioned, the government notes that in this report, the NAO concludes that the process used was comprehensive, well-structured and transparent throughout all the stages undertaken.

In its conclusions, the NAO notes that the investigation found only minor administrative shortcomings which did not impact the final outcome of the evaluation committee in its selection of the bidder.

Alex Cutajar is head of marketing and communications, Ministry for Tourism.

This is a Times of Malta print opinion piece

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