Former chairman’s ‘no regrets’ over Delimara heavy fuel oil decision

Former Enemalta chairman Alex Tranter yesterday faced a gruelling four-hour question and answer session in the public accounts committee, with questions by Labour MPs taking him to task over his stewardship of the state utility between 2005 and 2010.

Tranter stepped down from Enemalta chairman shortly after a private company he was a director of, Sunray Renewables, was acquired by the US renewables giant Sunpower Corporation, in February 2010.

He presided over the now notorious fuel procurement meetings in which minutes of fuel purchases were never formally taken down, and instead carried out in the form of 'scribbles' jotted down by chief financial officer Pippo Pandolfino.

But yesterday, Tranter told the PAC examining the National Audit Office's (NAO) audit into the procurement of oil that he had "inherited" a system whereby no minutes were ever taken during these important meetings where millions in euros were spent for the purchase of Enemalta's fuel.

Tranter said it was the practice for the CFO to take notes, and that decisions would be communicated to the minister in charge of Enemalta.

"They were not minutes," Tranter said. "I cannot understand who said that those notes were minutes. Such an interpretation is embarrassing," he said, referring to the only records of decisions taken by the fuel procurement committee - which he led as chairman - found by the NAO during its audit of the state utility's fuel purchases.

Tranter, who was not summoned to testify before the Auditor General on the audit, read out a statement to the PAC yesterday saying that all decisions taken by the FPC had been unanimous and signed by all committee members, in a bid to shirk any ultimate authorship of the fuel purchase decisions.

"There was no 'chairman's domain'. I used to chair the meetings but decisions were taken by all of us," Tranter said. His statement was given to the Auditor General shortly after the publication of the audit report.

Tranter then said that the reason why minutes were never kept of the FPC's decisions was that bidders' prices "was information of such commercial and sensitive nature that no minutes were kept".

Tranter said that companies like TOTSA, the oil firm represented by oil trader George Farrugia - now State's evidence on the corruption charges filed against Tranter's predecessor Tancred Tabone and a former Enemalta consultant, Frank Sammut - always submitted the cheapest bids for the supply of oil.

"But you have hit the nail on its head with regards to the sensitivity of these meetings. The way we operated as that phone calls were prohibited and that people never left during these [FPC] meetings," Tranter told MPs.

Tranter said the FPC would receive oil bids via fax and email, before moving on to a system where the email password had to be changed regularly by the Malta IT Agency after each fuel procurement decision - a system that was not always strictly adhered to.

Tranter was careful not to take any form of ownership of any pre-2005 decisions of which he was not part of, when Nationalist MP Beppe Fenech Adami asked him about contracts award to TOTSA without even having tendered. The contract in question coincided with the period during which Tancred Tabone and Frank Sammut are accused of having accepted kickbacks from companies like TOTSA and Trafigura, through the agency of George Farrugia.

Tranter however said the reason oil tenders awarded to companies that did not necessarily have the cheapest bids was down to other factors. "The price itself was not enough and issues of fuel quality and security of supply were two determining factors. However, I insist that our hedging systems have always been favourable to Enemalta and that the FPC managed to save millions in negotiations. TOTSA was the cheapest every time it won the tender and FPC had even managed to bring down the prices even more."

Bonnici charged that without any minutes or record-keeping, the PAC had nothing to go by to confirm the veracity of Tranter's claims.

In his reply, Tranter said that minute-taking "will not fight corruption... minutes simply list what happens. Undoubtedly minutes were not kept but it was a practice I inherited... in hindsight things could have been different. But Enemalta's practice at the time, even within other tender adjudication committees, was that no minutes were taken."

Tranter described the FPC's role as being to receive, analyse and award oil tenders, through the help of technical experts, the head of petroleum and LPG, and that his role was to make sure all bids were analysed and that fuel was purchased according to the best specifications and price. "I would also negotiated personally with my counterpart, during a conference call to which all FPC members could listen to."

Trafigura

Tranter also added that he had never held meetings with Frank Sammut, the one-time chief executive of the Mediterranean Bunkering Oil Corporation (Enemalta's bunkering arm) and that he never had exit meetings with Tancred Tabone upon assuming the chairmanship of Enemalta in 2005.

"TOTSA was already a major supplier to Enemalta at the time and the cordial relationship remained. In meetings with TOTSA I always took an Enemalta official along with me."

But Tranter denied any knowledge of the activities of Frank Sammut, whether formal or informal, and of any possible corrupt dealings related to oil trading or bunkering. "I was not aware of these allegations until they were made public," he said. "I never head anything about Trafigura until the scandal was broken in the papers," Tranter said, after being asked about a meeting he had had with Tim Waters of Trafigura. "I met him just like I met other suppliers. It was the part and parcel of the relationship with a supplier."

Tranter, who confirmed that energy minister Austin Gatt was a relation of his through his wife, denied any political interference from the minister. "Enemalta was at the time [2008] under siege. We had to report to committees and even the MCESD, on a crisis situation were oil was constantly increasing in price, and it affected the tariffs," he said of the time Gatt hiked energy prices to meet Enemalta's rising cost of procuring oil.

BWSC decision

As chairman, Tranter - who was a director in a Vassallo Builders Group Ltd company - presided over the decision to grant Danish firm BWSC the contract for Delimara's phase-two turbines, and to be fired on heavy fuel oil rather than diesel. Apart from the apparent conflict of interest - BWSC was represented in Malta by Vassallo Builders - the controversy to switch to heavy fuel oil after a stated government intention to go for gas, developed into one of the Nationalist government's major headaches.

Tranter kept his cool throughout the four-hour question and answer session, bombarded by questions from Labour MPs over the influence he exerted on the fuel procurement decision-making process.

At one point, parliamentary secretary for justice Owen Bonnici and Tranter were locked in an argument over the decision to go for a HFO-fired turbine instead of gas.

"I am proud to have been the chairman who introduced a long-term generation plan," Tranter said, when asked about why Enemalta had shifted to HFO when it had in 2008 declared its policy was to use gas. "I could not yet implement it. In 2008 and 2008, it would have been impossible to switch to gas. The price of oil affected everything, from gas to foreign exchange."

Tranter said that in 2008, the government could not simply shift its entire infrastructure to import gas.

"It would have been a complete change, not simply by just getting gas on tankers, but a change of the whole infrastructure. At the time the government considered gas as well as the electricity interconnector. Those were the two choices, and Malta decided to go for the interconnection, but the gas option was never eliminated. I am proud the decision to go for the interconnector was also take under my chairmanship."

He also defended the decision to choose the BWSC plant, which ran on HFO. "The HFO plant is being fired in the most efficient way the country has ever seen. I am proud of the decisions taken.... The final price being paid by consumers is the cheapest price for energy ever produced by Enemalta."