€1 million tender exempted from procurement regulations

The law exempts Enemalta from abiding to public procurement regulations with regards to the importation of petroleum while obliging it to follow regulations on non-petroleum products.

The tender was awarded to Attard Services Limited who will supply the lubricants for the duration of six months with the option of extending for subsequent six-month periods provided that the difference in price did not exceed 5%.

If the contract is renewed for the whole length of the expected life of the diesel engines, the value of the contract would rise to a staggering €20 million.

The all-inclusive price of the contract is €419,469.80 for each six-month period.

Unlike other petroleum products, lubricants are not burnt to produce energy. In fact they are banned from being burnt due to the environmental damage they cause. Used lubricants are collected and exported to a third country as hazardous waste.

Questioned why lubricants were classified as petroleum products, a spokesperson for Enemalta said this decision "was given to Enemalta by the Department of Contracts". 

Given this decision, the open call for tenders issued in July was not regulated by the Public Procurement Regulations Act but by the Enemalta Act) which specifically excludes the purchasing of 'Petroleum' products from having to follow the Public Procurement Regulations.

Enemalta still claims that the tender was awarded to the "the cheapest compliant offer". 

This claim is rebutted by Palm Shipping Company Limited which claims to have made the cheapest offer in the first tender.

The Public Contracts Review Board confirmed the decision to exempt lubricants from public procurement regulation in November 2011. This followed an analysis of this tender due to an appeal lodged by one of the bidders, the appeal of which was turned down.

During the sitting of the Public Contracts Review Board, Dr. Kenneth Grima on behalf of the appellant company, Palm Shipping Agency Limited, argued that if one were to include all hydrocarbons under the definition of petroleum products even polyester garments and any plastic item fell under this definition. Grima argued that the law cited by Enemalta applied to fuels.

But Enemalta confirmed that it had sought the advice of the DG contracts who confirmed that since the product was required for the generation of energy, it was excluded from the scope of public procurement legislation.

The Public Contracts Review Board appointed expert Alfred J. Vella to prepare a report to establish whether the product in question - Shell Argina X 40 Engine oil - is a petroleum product.

The report concluded that this product "should unequivocally and unambiguously be considered as a processed and refined product derived from petroleum and this should be regarded as a form of petroleum".

Vella based his conclusion on the fact that the material consists of "highly-refined mineral oils and additives".