To tender or not to tender

Labour has imposed very ambitious time frames for its energy project which hinges on a deal with a private company that would commit itself to supply 40% of Malta's energy needs for 25 years through a price fixing agreement which covers the first 10 years.

Labour has committed itself to have its project completed in a two year time frame which includes the selection process, the assessment of environmental and safety impacts and finally the construction of the new infrastructure.

One of the decisions Labour has taken as a government in waiting, is that the bidder will not be chosen by a public tender procedure but through a sheer expression of interest.

The main difference between the two is that while a public tender includes the possibility of an appeal if any of the bidders feels the process was unfair, an expression of interest (EOI) simply leaves it up to government to choose the most favourable bid and its decision would be final.

EOIs are normally issued to assess the level of international and local interest in a particular proposal. Subsequently, a public tender is issued to select the bid for which the department of contracts becomes responsible.

Labour argues that tenders are not a guarantee of transparency and that the EOI process itself will conform to EU procurement laws. Joseph Muscat is right to point out: "Our experience in the recent past has showed that while the Nationalist government issued a public call for tender, yet it failed to deliver on transparency".  The BWSC case is a case in point as it involved a change of the law on emissions during the procurement process. But would it not have been even more suspicious if the BWSC contract was issued by a direct order following a sheer expression of interest? 

Secondly - for the past years Labour has been rightly insisting on the lack of transparency in every sector.  Just imagine what Labour's reaction would have been if the Nationalist government was proposing such an enormous project without issuing a public tender.

The other argument made by Konrad Mizzi to justify the decision not to go for a tender is that the government will not be effectively buying a power station but it will simply be allowing a new player in the field.

Yet this ignores the long-term and strategic nature of the commitment being taken.  Doesn't a 25-year contract to buy 40% of its energy needs from one private company merit full public scrutiny? Let's not forget that the new privately-owned gas terminal will procure 80% of our energy needs, as both power stations will be supplied from the new terminal. Should not this new long-term partner, who will operate under five different legislatures until 2039 be chosen in the most transparent way possible?

Labour's perplexing decision to exclude a tender seems to be the result of its self imposed time frame to deliver its project in two years.

Labour is clearly banking on popular resentment against bureaucratic delays which characterise this administration. Therefore it wants to avoid a situation where if one of the bidders appeals, the time frames of its project will go haywire.

Labour's strongest argument is that these delays would mean that the power station will continue using environmentally unsound heavy fuel oil, and Enemalta would continue paying higher prices to procure oil. Still even if its costings for the first 10 years are correct, it should not never forget that this agreement will be binding till 2039 and therefore prudence is more than warranted.

We also have the option to switch to gasoil diesel if getting rid of HFO is such a priority. Muscat does not need the gas terminal to close what he calls the so-called "cancer factories" as soon as possible.

Apart from excluding a tender, Labour has committed itself to fast track the approval of this project citing the Smart City precedent. But how can one compare the environmental impacts of a power station infrastructure with the impacts of a real estate project?

Surely finance minister Tonio Fenech has resorted to scaremongering when comparing an LNG plant, which exist all around Europe, to a bomb. Still that does not mean that lengthy studies are not required to propose mitigation measures, which arise from the fact that the gas storage tanks will be located next to the power station.  One would also expect MEPA to ask for alternative locations for the gas storage tanks.

This is neither a private sector or a government decision, but one which can only be taken during the planning process.

Finally through its campaign Labour is focusing on the need to do away with red tape and bureaucracy. The question raised by its first major commitments on public procurement and planning is whether this would come at the cost of due process and transparency.