Former Enemalta chairman questions Labour’s proposal for gas

The man who presided over one of the most contentious energy projects in modern Maltese history has spoken out on Labour's proposal to establish a natural gas storage terminal and new power station.

Alex Tranter was chairman of Enemalta when in 2009 the corporation opted to purchase new turbines from BWSC that would run on heavy fuel oil, instead of gasoil; a controversy made only more uncomfortable for the energy entrepreneur due to his business relationship with the PN donor and magnate Nazzareno Vassallo: whose company was the agent for BWSC.

An engineer by profession, Tranter points out that Labour's proposal is fraught with questions: pricing of gas supply, under-utilisation of the 200MW cable, safety of the storage terminal. But first... some background.

Today Tranter is a director at renewables giant SunPower. In 2010 MaltaToday revealed that soon after stepping down from chairman at Enemalta, reportedly on finance minister Tonio Fenech's insistence, Tranter was taking up a position with renewables giant SunPower, which was already tendering for a €25 million government project for photovoltaic panels with Vassallo Builders Group.

Tranter was never directly responsible for the decision to go for HFO, and only because he absented himself from the meetings of the adjudication committees. Those decisions were left to Enemalta's chief executive David Spiteri Gingell, who - availing himself of the lack of any revolving doors policy - would later leave Enemalta to join Vassallo Builders Group.

So what does Tranter think of Labour's proposal? He writes in The Sunday Times saying that he welcomes the involvement of the private sector in Labour's plans, and that solar energy (the industry he is involved in) has been identified to play a key role in the renewable energy mix for Malta instead of wind. (Labour is keen on solar parks, just the kind of business SunPower does).

But what about the negatives?

Tranter believes that hedging a price on gas for 10 years, as Labour hopes to convince people of, is purely dependent on what the conditions of the energy market are at the time a hedge is made. The former chairman predicts high costs due to the various risk factors that will be taken into consideration.

He says that converting the HFO turbines to run on liquefied gas will take time, and Labour's 2014-2015 timeframe does not consider planning and environmental bureaucracy.

He also claims the risk of an explosion at the LNG storage terminal, albeit rare, would expose the island to catastrophe.

The alternative to the LNG terminal - first proposed in the draft national energy policy of 2006 - would be the gas pipeline, which remains eligible for EU funding under the EU energy strategy.

Tranter also questions the under-utilisation of the 200MW interconnector to Sicily - now imperilled by local community unrest in Ragusa - at just 20% of its capacity. "From an engineering point of view as well as from a financial point of view, the low utilisation factor of 20 per cent is an extremely inefficient use of such a vital and expensive energy interconnection asset. This will surely come as an additional cost to be borne by the consumer.

"It would be highly undesirable to envisage the scenario whereby, as a result of the long-term commitment to purchase electricity locally from the private sector, the use of the interconnector to the European grid will be restricted. There will undoubtedly be possibilities in the future, when imported electricity from abroad will be cheaper than the cost of local electricity generation. In such a case it should be better to expand the capacity of the interconnection link to the European grid by the laying of an additional cable between Malta and Sicily."