Fenech claims Labour energy plan costs €600 million

You can follow this press conference live on live.mychoice.pn

PRESS CONFERENCE HAS ENDED

2:50pm Fenech says the Australian option had been discarded.

2:47pm Fenech is asked whether an Australian firm with Japanese financial backing had already proposed an LNG terminal for Malta? We're waiting for the answer...

2:43pm Fenech raises suspicions that Labour has already earmarked a provider for this technology. "Why do they want to pay for an infrastructure that includes the supply of gas by tanker..." - here Fenech also insinuates that Labour's "well-financed campaign" could have the support of such providers, citing Bateman.

2:39pm Fenech again has no costing on the gas pipeline - but repeats claim that Labour's own proposal states that energy production using the gas pipeline is cheaper than its natural gas option.

2:30pm Fenech says he cannot quantify the financial package for the gas pipeline, which appears does not have EU approval yet for fund - he estimates 4-5 years as the kind of duration necessary for the gas pipeline.

2:25pm Fenech says the Maltese government has already had similar offers, but that the tenderers themselves had lost interest or found that it was not feasible enough for them to give the government more details as and when required.

2:22pm Fenech says the private sector must be paid to build specially-built tankers to transport large volumes of LNG as well as the necessary infrastructure for the docking of the ships.

2:18pm Fenech: "the private sector will only come into this project if they get guarantees from banks to enter this project."

2:14pm Time for some questions from the press: Fenech is asked by One TV why pipeline last promised in 1999 as a millennium gift (Gonzi's words), nothing was done about this project. "Well, detailed studies have to be carried out on such projects. They cannot be done in a matter of months... and it takes time."

2:09pm Fenech says the PN's gas pipeline option, which still does not have confirmed EU funds, is cheaper than Labour's. "Labour's proposal does not work. It's a gimmick, just as its promise to remove VAT had been."

2:08pm Fenech says Labour's project cannot benefit from EU funds because it is not part of the EU's energy strategy.

2:06pm Paul Borg Olivier rendering himself useful by showing the press a batch of documents, just like an auctioneer's assistant.

2:05pm Fenech adds that the Labor project is not doable before 2018, and ridiculed Labour deputy leader Louis Grech's claims that he had overcome MEPA bureacracy for the construction of an airport hangar - "you cannot compare a power station to a massive garage of steel."

2:00pm The 9c6 cost per unit for the production of energy does not include capital costs, Fenech says.

1:58pm By 2025, there will be a 175 million tonnes-gap between the demand and supply of gas - Fenech cites BG Group chief's comment on Financial Times. "Obviously, the price of gas will be increasing... projects look easy until you try to deliver them."

1:56pm Fenech says that a 10-year guaranteed price for gas will come at a very high cost or will not be able to fixed because of the rising price in the fossil fuels of both oil and gas..

1:55pm Fenech doubts that such a contract can be hammered out within a matter of six months. "I think Labour's 25 years in Opposition has put it of touch with the realities of how such agreements work."

1:52pm Fenech turns to the power-purchase agreement Labour is touting. "The power-purchase agreement recommended by the World Bank... suggests that you finance your own infrastructure."

1:50pm Fenech claims the total project costs at least €600 million - double Labour's estimate.

1:47pm The other issue Fenech is raising is an additional €50 million needed for the supply infrastructure to have container ships import LNG into harbour - here he mentions the fact that bad weather conditions delaying the LNG tankers could mean leaving the island without energy. On this point Labour says its contingency plan is running the Delimara turbines on gasoil.

1:46pm Fenech is also saying that the artist's impression of the tanks in Labour's proposal appear only to be able to house half the natural gas that could be needed. "If they scared you with the smoke of the Delimara chimney, Labour is threatening you with a bomb," the minister says, referring to the tanks of LNG sited next to the power station.

1:45pm "They also want to build two LNG tanks on the land reclaimed at Delimara - they need piling and stronger foundations to site these two tanks of natural gas, another €40 million. The reason they underestimated this cost was because the consultants did not even go to Delimara."

1:43pm "Labour has underestimated the cost of its project to make it appear feasible. The new 200MW combined-cycle gas trubine is estimated at €166 million - in 2009, Bateman tendered the same technology at €186 million for a smaller, 150MW CCGT." (Bateman is the Israeli firm that tendered, unsuccessfully, for the Delimara extension that was won by BWSC).

1:42pm Fenech says Malta does not need a new 200MW power station. "When in 2014 the interconnector will be installed, we would use the new Delimara turbine for 25% of our needs, 70% of energy purchased from the interconnector, and the rest from renewable energy."

1:38pm Fenech also calls into question the need to build a 200MW power station powered by natural gas when a 200MW interconnector cable to Sicily is currently being installed, which Labour says will only be used for some 20% of its capacity. "Are we to believe that this investment of some €300 million cannot come with added taxes or higher bills?"

1:37pm "Labour's choice is more expensive because it did not go for the gas pipeline option" - here Fenech is referring to the PN'S pipeline proposal, believed by KEMA to be able to generate electricity at 8.7c per unit. Labour's on the other hand puts the price of energy at 9c6 per unit.

1:32pm Fenech says DMV KEMA - consultants on the Labour proposal - declared in their proposal that they did not make any recommendation of what infrastructure Labour had to pick for its energy generation price. "DNV KEMA did not prepare Labour's tariff reduction proposals and have at no stage endorsed them," Fenech claims - [this is expected to be countered by Labour...]

"Labour's brief to DNV KEMA was to reproduce an estimate of cost of electricity with some possible options for using gas in Malta, building or contain and also the supply infrastructure."

1:31pm Fenech appears to be giving a confident display in his criticism: "Labour assumes the private sector is going to assume the risks of the capital costs of this project... I wonder which private company is going to be our Father Christmas? That's why I have called this proposal an 'Alice in Wonderland' idea."

1:30pm Fenech now is turning to further detail on the issues he has just raised, and claims that Labour's estimates are based on assumptions, what he terms a "desktop review" that lacks proper studies but simply drafted by some Dutch consultant from his office. "There is no detail on what type of infrastructure is needed, whether there is enough support for this infrastructure; and assumes gas prices that we do not yet know if they are even possible."

1:29pm "Calculating all this investment, and factoring in the future risks of this projects, the price of energy as proposed by Labour will not be reduced, but will have to be backed up by added taxes to compensate for the increase in additional capital costs."

1:28pm The other issue Fenech raises is the short time-frame Labour is claiming it can deliver the cuts: Fenech says that finishing the project in two years is impossible.

1:27pm Fenech also says that nobody can lock the price of gas for 10 years: "These hegding agreements do not exist anywhere else".

1:26pm The third issue is the 10-year agreement Labour wants to keep the price of gas locked over a long period: Labour wants the private sector and supplier of this gas to finance the 200MW plant that will produce energy through liquified natural gas, apart from the regasification unit and LNG depot.

1:25pm The second key issue is that Labour's presentation greatly understates the capital costs of what they are porposing by ove €200 million, Fenech says.

1:24pm Tonio Fenech addressing the press conference: he starts off saying that the DNV KEMA presenation for Labour confirms that a gas pipeline is cheaper than what is being proposed by Labour.