‘Not an option but an obligation for Malta’ – the Q&A on Labour’s energy plan

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During the second part of the meeting, Joseph Muscat said the Labour Party was delivering a quantum leap in how a government was expected to deliver on energy.

"It's up to the people to decide whether they want things to remain as they are or whether they want issues to be addressed. But from a commercial point of view, I don't see why the need to reduce utility tariffs is up for discussion," Muscat said.

"If we allow things to stay as they are, matters will only get worse. This is not an option but an obligation for our country."

Muscat said that there was across-the-board consensus that Enemalta's debt and the utility bills must be changed. "People have two options: either approve our proposal or vote for government, whose plan is to leave things as they are until 2018 while utility bills will continue to increase next year."

He also said that a Labour government would honour the parliament agreement in which a Special Purpose Vehicle was set up to repay €375 million of Enemalta's €835 million.

Muscat also ruled out the introduction of sewage tariffs.

Labour's deputy leader Louis Grech told the business community that a Labour government would stick to timeframes.

"We will stick to the timeframes set out. But this will also require a change in the work entities operate. For example, it is unacceptable that MEPA has to take two years to issue permits because it is burdened with bureaucracy. This is an urgent issue and therefore the dimension of the timeframe must be urgent."

Grech said that Enemalta's huge cash flow problems means that debt and losses are expected to increase, even when efficiency is improved through the interconnector.

"We are not inventing the wheel with our plan. Our policy is 'doing nothing is not an option'."

According to Grech, if government were to simply sell Enemalta's property to meet part of its debt and reduce its workforce, it would only solve part of the problem and would only be a one-off income. The remaining option would be injecting between €250 or €300 million to service the problem, either by increasing tariffs or making capital injection.

During the business breakfast, Konrad Mizzi also told the business community that consultants DMV Kema calculated the tariffs on the projected price of gas for 2014 and 2015. The price was also increased to cater for a safety net.

According to Mizzi, if elected, a Labour government would issue the expression of interest in April, followed by a five-month procurement period. Companies will be shortlisted, analysed and successful company appointed. Mizzi added that by 2015 the new unit will be built, replacing the existing chimney.

A Labour government also plans to roll out a roadshow visiting private companies in a bid to attract their interest in the project.

"The companies will have time to submit their proposals. This will not be a tender to buy a power station but for Enemalta to buy electricity and we will be providing the space and opportunity to do this."

Reacting to concerns raised over the 10-year price fixing period, Mizzi said that fixed price contracts were a common procedure in Europe

"This agreement means that the government would establish the demand the private company would have to supply for. That company would then calculate the gas needed to supply for the demand and make arrangements to buy the gas accordingly.

"The certainty that there will always be demand and the signed contract would mean that the contractor's security will be guaranteed."

Mizzi added that the price would be fixed between the government and the private.

Asked what return on capital employed was envisaged for the private sector, Mizzi said that while he couldn't publish the figure, a fair rate was enable. He argued that revealing the rate now would prejudice Enemalta's position when the time comes for the deal to be carried out.