Labour’s energy proposal: not a gimmick, but…

Labour's energy plan has surprised those who expected Labour to come up with a wish-washy proposal. Labour's proposal has the semblance of a serious plan presented in an impeccable, business-like fashion.

It also offers what seems to be a win-win situation: conversion to a more environmentally friendly gas with €300 million expenditure forked out by a private company, ensuring that the burden will not fall on taxpayers. Surely this fits perfectly with Labour's "no pain, all gain" narrative.

Surely it would be far more credible if the party had also divulged the studies so that we can all understand how it arrived at the 9.6 cents per unit cost of energy (down from the current 18c) irrespective of rising gas prices documented in various reports. Labour should also provide us with evidence of similar gas purchasing agreements in other countries.

Still, let's give Labour the benefit of the doubt and assume that a private company is willing to sell energy to the Maltese government at a fixed price for an entire decade. Even if this is the case, the proposal presents long-term risks which should be considered in a serious and non partisan assessment of the proposal.

Effectively, the implementation of the proposal would mean that Malta would hive off 40% of its energy supply to a private company. For 25 long years we will be obliged to buy 200MW of energy, which is over and above the energy we need, from the same private source.

This would mean that even if we find a cheaper source of energy we will still have to buy nearly half of our energy supply from the same company.

It also means that Malta will depend on fossil fuels for at least of 40% of its energy supply for the next quarter of century. What if, for example, deep-sea water wind-farms become a technical possibility? In terms of technology, 25 years is a really long time.

Curiously Labour's own study shows that importing gas by pipeline (the option favoured by the government) would be even cheaper. But Labour rebuts this, saying that the massive savings they would make by commencing the project in 2014 justify the decision to go for shipping instead of a pipeline, which would take place a number of years later. But the cost of this is the long-term risk of depending on one private company for a quarter of a century.

Surely, if the price of energy from the interconnector becomes cheaper we would still be able to change the energy mix by decreasing the share of the government-owned power station but we will not be able to decrease the share of the private operators.

Moreover, after 10 years the government will have to negotiate a new price. Curiously the 10-year agreement fits perfectly with electoral cycles. If at that point the price offered would be unsustainable the choice for us will be either to buy the plant or accept what is imposed on us.

Moreover the new private operator will not only own a power station but will also own the gas importation terminal. This means that Enemalta will have to pay the private operator to import its own gas requirements. One may well argue that we might make savings in the short-term and the private sector will pay for investment which Enemalta presently does not afford. But does this outweigh the long-term consequence of dependence on a sole private company?

This is a major decision which our country has to make. It is a decision which should be made in full serenity and after all studies (including geological and safety studies) are published and after all tendering and planning regulations are abided to. The two-year timeframe for the completion of the project militates against transparency and good governance.

Fast-tracking a decision which would bind our country's fortunes to a private company for a quarter of a century would be irresponsible. But I would not shoot down Labour's proposal. After all it comes after two decades of neglect of the energy sector by the Nationalist government whose only positive inheritance is the interconnector but the negative legacy consists of an indebted Enemalta, a power station burning Heavy Fuel Oil and no significant investment in renewable energy.

It is also positive that energy policy has taken centre-stage of the electoral campaign even if this in itself could tempt politicians to make unsustainable commitments.

But the urgency of tackling our energy problems not justify taking a hasty decision which could jeopardize the national interest in the not so distant future.

It surely does not justify bypassing tendering and planning regulations. In this case an call for expression of interest should only be a prelude to a rigorous public tender procedure.

My fear is that in its haste to kick-start the economy in the short term Labour could be tempted to fast track a project which could would have a very long term impact on the country.

But if Malta really belongs to all of us, we surely deserve better.