[Watch] Fenech warns country will pay dearly for Labour's energy plan

As it happened Live blog of Tonio Fenech press conference

A confident Tonio Fenech presented the media with an analysis of the details made known so far by the PL on its energy policy.

Tonio Fenech stressed that Labour's proposal was based on what he described as "simplistic assumptions", accusing Labour of purposely underestimating the costs, in a bid to make its energy project appear as feasible as possible.

He said Labour's estimate to generate electricity at 9c6 per unit clearly did not come from Dutch consultants DNV KEMA, but from Labour candidate Konrad Mizzi, who so far has not provided details to sustain such a cost of production, especially when the PL is proposing the construction of a 200MW power station which the country does not need, Fenech claimed.

The finance minister also claims the €360 million project will cost as much as €600 million due to costs the PL has not factored in - amongst the construction of tankers to ship in natural gas, and to strengthen land foundations to site the 200MW gas power station.

Fenech said that over the past 10 years, the price of gas had shot up almost in parallel with the price of oil, and said that it would be "madness" for any entrepreneur or business to enter into a 10-year hedging agreement on gas with Malta. "Who is going to be this country's Father Christmas?" he quipped.

Fenech justified his government's delay on delivering the gas pipeline - dubbed Gonzi's 'millennium project' back in 1999 by the same prime minister - because it was not viable at the time. The finance minister did not quantify the cost of a gas pipeline that needs to have EU funds approved before being constructed.

Fenech said that while work was underway for the completion in 2014 of an electricity interconnector with Sicily for the island to import energy from Europe, studies on a gas pipeline have also been ongoing, and also involve the European Union which is in the process of formulating a common policy on gas importation and was prepared to co-finance the project.

The finance minister said that consultants DNV KEMA's presentation for Labour confirmed that the cost of energy generated through a gas pipeline was in fact cheaper than what is being proposed by Labour, at some 8c7 per unit compared with the LNG terminal's 9c6 per unit; adding that the natural gas terminal would not benefit from EU assistance, because it went against the EU's strategy for energy.

"Calculating all this investment, and factoring in the future risks of this project, 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."

Fenech said that contrary to the projections, the PL's proposal would require at least another €200 million for the infrastructure.

With Labour's proposed plant standing at an estimated €166 million, Fenech made the comparison with Israeli firm Bateman's tender offer with the same technology for 150 MW plant in 2009. Bateman had in fact offered a smaller 150MW plant for €186 million.

He added that Labour also failed to account for costs related to the construction of the gas tankers - estimated to cost at least €50 million each - €100 million for two or €150 million for three - and other infrastructure. He also accused Labour of deceiving the people of Marsaxlokk by providing them with "conveniently doctored" images which failed to show the true size of the gas storage tanks which had to be built to complement the plant.

"They used to accuse us on black dust, but this time they would be subjecting Marsaxlokk residents to sit on a time-bomb," Fenech said, alluding to the danger of having gas storage tanks next to the power station.

He said that no maritime study was carried out on berthing feasibility for vessels supplying gas, while also omitting any reference to the need of building a long jetty which would probably cost around €50 million.

Fenech described Labour's proposals as a "gimmick" and compared them as the promise to remove VAT in 1996, which led to higher taxes rather than cheaper taxes.

Fenech meanwhile raised 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..." - Fenech said, as he insinuated that Labour's "well-financed campaign" could have the support of such providers, citing Bateman as a possible financier.