Parties engage in battle of energy reports

What promised to be a battle of figures turned out into a battle of consultants and expensive reports. Almost one week after Labour's announcement that it would be reducing energy bills by 25%, finance minister played his trump card and claimed Labour would in fact increase bills by 5%.

On Monday afternoon Fenech explained that an exercise carried out by independent consultants KPMG concluded that Labour's plans to construct a new 200 MW power plant and the infrastructure to store gas at Delimara would increase tariffs by 5%.

Fenech admitted that the KPMG study was based on the assumption that the capital expenditure needed to construct the needed infrastructure reached €600 million against Labour's projected €370 million costs.

He added that Labour's own consultants, DMV Kema, showed that the cheapest option was not to ship gas by tankers but to set up a gas pipeline from Sicily, but Labour opted to transport gas on ships.

Fenech who for the past seven days had fronted the PN's crusade to discredit Labour's energy plan added that the study was also based on the information provided by Labour's presentation.

Explaining that Labour said that 40% of power would come from its new power station, 40% from the new BWSC plant converted to gas, and the remaining 20% from the Malta-Sicily interconnector.

Rubbishing Labour's claims that Enemalta would pay 9c6 per unit of energy produced by Labour's purported energy mix Fenech said: "The cost will be in fact be 10c8, rising to 12c5 after taking into consideration all operational costs, the excise duty laid down by the EU, the cost of the distribution system, the repayment of capital costs and profits for the private operator."

He added that the total cost of energy will increase by 5%, translating directly into a 5% increase in energy prices for consumers.

"The final result would be that it would cost Enemalta 19c2m, up from the present 18c3, to distribute a unit of electricity from the power station to a client, a 5% hike from the current rate," Fenech said. 

Justifying the assumption that Labour's projections were "at least" €200 million off the mark, Fenech challenged Labour to publish all health and safety, maritime and infrastructure reports if Labour is to be judged by the seriousness and detail of its plan.

Repeatedly, Fenech said that Labour's plan can only work if Malta chartered ships that are too large to carry smaller amounts of natural gas, and insisted that tailor-made ships will have to be built, apart from being maintained throughout the years, to transport the consignments of natural gas to Malta. "Operating costs for these ships are even greater than the capital cost to build these ships - they probably cost €80 million each to build," Fenech said.

"It is better to go for the gas pipeline a Nationalist government is working on, because it will deliver a cheaper cost of energy per unit produced."

Fenech said large gas terminals away from land-based visibility that can serve Europe also fall under the EU's energy plan. He is referring to the PN's proposal to have an offshore natural gas terminal connecting Europe with a pipeline. "This is not a change in our policy, but a strategy to win European funds in line with the EU's intentions to have more energy security and have gas supplied from North Africa."

He confirmed that studies were underway on having a large offshore gas terminal which would be used to supply Europe. 

Fenech said that an offshore gas terminal would be funded by the EU because it would offer alternative pipeline connection to Europe from countries other than Russia, which currently supplies countries as far south as Italy. "So far we always studied a Malta-Sicily link for our needs, now we are considering this wider option. The difference is that our proposal connects us to Europe and qualifies us for EU funds, while Labour's proposal isolates us."

Asked why the report was commissioned by Enemalta and not the Nationalist Party, Fenech said: "The KPMG report has been commissioned by Enemalta as it is within its right to do... and the report shows clearly that Labour's proposal will increase bills by 5%." The minister failed to say how much the report cost and when it was commissioned.