Enemalta claims €800,000 fuel savings in new Shell contract

Shell will for the first time sell its heavy fuel oil to Enemalta Corporation for the operation of the Delimara power station, after years in which oil trader George Farrugia's consignments from Trafigura and TOTSA provided the bulk of the corporation's fuel needs.

Farrugia's Total, TOTSA and Trafigura had provided jet fuel, liquid petroleum gas, and low sulphur oil to Enemalta continuously since 2003, before MaltaToday revealed earlier this year that Trafigura was also paying Enemalta officials commissions on its oil consignments.

The oil scandal rocked the Nationalist administration, forcing it to grant Farrugia a presidential pardon to turn State's evidence on Enemalta officials who are today being charged with corruption related to the supply of oil to the State corporation.

TOTSA, a Total subsidiary, and Trafigura have since then been blacklisted, with the Enemalta procurement board opting for Shell for its heavy fuel oil, MaltaToday was informed this week.

A corporation source claimed the purchase has delivered savings of €800,000 on a contract that will supply HFO until December 2013.

The Enemalta official, who spoke to MaltaToday under condition of anonymity, said the price of HFO in 2013 was more expensive than last year's, despite the savings the corporation had managed to make on the Shell deal.

While the oil scandal led to the pardon of oil trader George Farrugia, he is himself implicated as an alleged instigator or broker for the oil companies that paid former Enemalta officials commissions for the supply of oil to the corporation. The subsequent police investigation opened further doors into how former Enemalta chairman Tancred Tabone and Frank Sammut, the chief executive of the Enemalta bunkering arm MOBC, allegedly stalled the liberalisation of the bunkering corporation to suit the ends of their own, undeclared interest in Island Bunker Oils to take a substantial control of the bunkering market. The two men are still facing procedures in court together with two business partners, Francis Portelli and Anthony Cassar, while two other former Enemalta officials, Alfred Mallia and Tarcisio Mifsud, face charges of taking kickbacks from George Farrugia's companies.

Shell, in the meantime, has returned back in from the cold, as one business observer put it to MaltaToday, after having been embroiled in a legal wrangle with Enemalta since 2004 for being barred from selling its jet fuel at Malta International Airport.

Just weeks after MaltaToday broke the story of the Trafigura kickbacks in January 2013, then finance minister Tonio Fenech agreed to a €5 million out-of-court settlement with Shell's Maltese agents, who happened to be legally represented by Simon Busuttil - then the PN's deputy leader.

Shell had in 2004 protested to the Malta Resources Authority (MRA) that Enemalta was supplying aviation fuel and preventing the company from supplying its own fuel, despite the liberalisation of the fuel ground handling market at Malta airport, through "uncompetitive measures".

Shell found no joy from the MRA, which instead of issuing a decision, attempted to encourage both parties "to negotiate in good faith to arrive at a mutually agreeable fair cost-based charge for the services".

In a subsequent appeal by Shell, the MRA's appeals boards ruled the original decision null and void, calling on the authority to review the complaint. But both the MRA and the government failed to act on the appeals board's decision, leading Shell to commence legal procedures.

Then in 2011, the European Commission referred Malta to the European Court of Justice for breaching EU rules on fuel ground handling services at Malta International Airport after having issued various warnings over the past years.

According to EU rules, ground-handling services at airports must be open to competition, including the check-in of passengers, handling of baggage and refuelling of aircraft.