Minister challenges Labour to explain utility bills' reduction, candidate replies

Finance Minister Tonio Fenech has attacked Labour's strategy to reduce energy bills if elected to power, challenging the Opposition to make its electoral proposals public and tell the electorate how it will reduce bills.

Fenech said statements by Labour candidate Konrad Mizzi, formerly a chief information officer at national energy producer Enemalta, indicate Labour will be unable to reduce any energy bills before five years into its administration.

"Mizzi publicly stated that Labour will not be increasing the subsidies that are already being paid to Enemalta. So if they will not increase the €30 million subsidy that the government is already paying, Labour cannot reduce those bills that currently subsidise Enemalta," Fenech said.

Instead a new Labour government would have to turn to "new technologies" it had been touting, Fenech said, saying the massive investment involved in each would still make it impossible for any government to reduce bills before five more years.

"If Labour is serious about the carbon capture technology being proposed by Sargas, the only route to reduce bills would first involve finding the money for the project itself, by increasing taxes," Fenech said.

The minister said a pre-feasibility study carried out by KPMG on the Sargas option had raised various environmental, logistical and infrastructural issues over the construction of a coal-fired plant docked by the Delimara power station, that would then capture the carbon emissions and be exported overseas.

"If Labour is instead inclined to go for natural gas, as it seems to be veering towards, the infrastructurally feasible option is the Malta-Sicily pipeline, which will come at a cost of €334 million, almost twice the electricity interconnector between Malta and Sicily," Fenech said.

The minister however pointed out that although gas was marginally cheaper than oil, its price rose and fell with that of oil as well. "Today we produce each unit of energy at 16c, but with gas this price would only go down to 15c4... when one considers how long it takes to build the terminals, after tendering and surveying is over, and building the specially-made pipeline between the two areas, this would take a period of at least five years."

Fenech said the other two different 'technologies' Labour could consider would have to be either liquefied gas or compressed natural gas, but said the government had excluded the first option due to the environmental impact it would have on the Delimara peninsula; and said the CNG option would involve a €343 million cost for three specialised container ships to transport the gas into the port.

"Gas cannot be a viable solution unless there is substantial EU funding for a pipeline and so that the burden of that investment is not passed on to consumer tariffs. If that burden goes on the tariffs, then Labour not only cannot reduce energy bills, but it will have to raise taxes until it is in a position to reduce bills in five years' time."

Labour reaction

In a reaction, the Labour Party said Tonio Fenech "knows nothing" about energy bills, saying the government had no credible policy on energy after having spent €157 million on a power station that runs on heavy fuel oil.

The Delimara extension's turbines have only just been fitted and now returned for extensive repair after they were damaged during their test phase.

"It would be better for Tonio Fenech to explain how he is alreadyin agreement with the EU, to go by the EC's autumn forecast, which says that utility bills will increase after the election.

"Today's half-baked declaration that he won't increase utility rates is a clear reflection of the promise made by 'GonziPN' in the 2008 election. And he is doing the same thing now."

Reaction from Konrad Mizzi

Labour candidate Konrad Mizzi, formerly a chief information officer at Enemalta who is being pushed to the electoral forefront on energy issues, has replied to the finance minister's claims that Labour cannot reduce energy bills before 2018 by saying his party will provide "leadership" to address energy challenges.

Mizzi said Labour will be reducing the cost of electricity generation to the extent that it will reduce the need for government subsidies to Enemalta, currently at the level of some €30 million a year.

Earlier in the day Fenech said that Mizzi's statement that Labour would not raise subsidies to the national energy producer would make it unable to reduce energy bills, and called on Labour to reveal its plan of how it would reduce the bills.

On his part, Mizzi said Fenech had given up on making Enemalta competitive.

"His only response to our energy challenges is to provide subsidies to Enemalta which only alleviate a small proportion of the pain the tariffs are causing to our economy. This does not address the core problem of the cost of electricity generation. Moreover his plans to increase electricity tariffs after the election were also recently exposed by the European Commission's autumn forecast."

Mizzi said Fenech was "in panic mode" and worried about "the prospect of credible proposals" from Labour.

"Laboru has a credible plan to address our energy challenges which will be an integral part of our electoral manifesto. Partit Laburista will reduce energy costs for families and businesses and in doing so, restore hope through economic growth and prosperity for all."

Mizzi also said that the €200 million electricity interconnector between Malta and Sicily did not have a commercial plan for the procurement of electricity from Europe.

"Government has invested €200 million and does not have an indicative price for buying electricity over the cable. This was admitted by Tonio Fenech on a TV programme earlier this week. Fenech also admitted that government's plans for wind energy, which account to 40% of our clean energy targets, are failing."

Mizzi said government had to disclose what the unit-cost of electricity supplied by the interconnector would be when it is finally operational.