Tempers flare in Parliament over power purchase agreement

Opposition whip David Agius' point of order during this evening's Parliamentary sitting provoked an angry reaction by transport minister and former Opposition whip Joe Mizzi.

Agius raised the point of order following the reply given by environment minister Leo Brincat to an Opposition question on the power purchase agreement the government is pursuing for the new gas powered plant in Delimara.

Nationalist MP Jason Azzopardi asked energy minister Konrad Mizzi: "Can the minister provide a copy of at least one contract which he talked so extensively about during the electoral campaign, a contract which shows an agreement to provide gas at a fixed price for ten years, which the minister never produced despite pledging to do so during the campaign."

Standing in for energy minister Konrad Mizzi, fellow Cabinet member Leo Brincat reiterated the Labour Party's stance that long-term power purchase agreements for the provision of gas do exist, however failed to produce an example of such an agreement.

This answer did not satisfy the Opposition and PN whip David Agius raised a point of order and said: "The minister is not replying to the question," adding that the Speaker should protect the Opposition and ensure that the government replies to the questions correctly.

As Brincat was about to continue answering the question, former Labour whip Joe Mizzi pointed out, in his inimitable style, that the Opposition MP had no right to invoke a point of order because the minister was replying to the question.  

Speaker Anglu Farrugia interrupted the brief disturbance and asked minister Brincat to continue answering the question.

Brincat repeated that "the energy minister has no qualm in answering your questions," adding that a number of power purchase agreements exist on the international market with differing conditions and mechanisms.

"Such agreements are possible and exist," he said and quoting Jonathan Stern, from Oxford University's Institute of Energy Studies, Brincat said the price of gas is bound to decrease and such agreements are favourable to Malta.

He added that the price of gas was not only expected to go down in the long and medium term, but also in the short-term.

Answering a supplementary question by Opposition MP Claudio Grech on why the government had opted for a five-year agreement instead of a ten-year agreement as promised during the electoral campaign, Brincast said: "This is a sign of this government's flexibility."

The issue of the power purchase agreements first surfaced during the initaial stages of the electoral campaign preceding the 9 March election, with current energy minister Konrad Mizzi failing to produce a copy of  a 10-year power purchase agreement for the supply of gas on a hedged price, as challenged by than finance minister Tonio Fenech.

Mizzi insisted that a Labour government would ask the private supplier to set out an agreement with a gas supplier, and a financial transaction agreement to hedge the price of gas. "Most investment banks offer hedges of up to 20 years, at a premium... we factored in a healthy cushion that includes this premium, and it will include a good safety net for the purchase of gas."

Earliwer this month the government issued an international expression of interest for a five-year power purchase agreement and gas supply agreement. Energy minister Konrad Mizzi said the government has scaled down the gas purchase agreement from 10 years to five years, in a bid to allow his ministry more leeway in the search for a gas supplier.

He eplained that the reason behind government's decision to scale down the power purchase agreement, which binds the developer of the new gas power plant and accompanying natural gas terminal, to supply the gas itself, was to give it more space in negotiations.

Mizzi had claimed throughout the campaign that the power purchase agreement would fix the price of gas for 10 years, but the Nationalist Party always claimed that having the price of gas fixed for such a long time did not reflect the volatility of the market.