Enemalta CEO: 'Late submissions being considered today'

Welcome to MaltaToday's live blog of the PAC hearing into the Auditor General's audit of Enemalta's fuel procurement policy

EXPLAINER | Auditor General's report on Enemalta fuel procurement

21:13 The PAC session ends here. Thank you for following us.

21:06 Back to Enemalta's savings. Prompted by Owen Bonnici, Giordimaina now says he prefers to first make his workings, and then answer.

In December 2012, Enemalta had issued a statement saying that after a full week of the extension in operation, the state entity had made a €1 million in fuel savings in one week.

Last week, the Opposition said this year Enemalta would be making €52 million in savings, and €64 million by next March. This, the PN said, had made it possible for the government to honour its electoral pledge to reduce the utility bills by €25 million in March.

Giordimaina this evening said that the BWSC efficiency had translated in €12 million savings in fuel costs for Enemalta.

Fenech Adami quotes from a report presented to the European Commission which states that, according to the Finance Minister, Enemalta would have made €51 million in savings.

"I will make my own workings and report back. I don't want to mislead," Giordimaina reiterates.

20:59 Fenech Adami asks Giordimaina to confirm that utility bills will be reduced by 25%.

"They will be reduced by an average of 25%," Giordimaina says, adding that the energy minister has already presented a table with the units and the reductions to be enjoyed.

Fenech Adami asks whether the reductions will be on both the consumption and the service charge.

"The reductions will be on the consumption," Giordimaina says.

20:46 In reply to Beppe Fenech Adami, Giordimaina confirms the interconnector will be in place by October 2014.

He says prices in Italy vary according to the regions, with the most expensive region being Sicily. The reason is that there is currently a "bottleneck" between Sicily's connection to Italy.

This is however set to improve by 2015 or 2016 as two other interconnectors are set to be in place, effectively removing that bottleneck. This would in turn alleviate the burden on prices.

20:43 Caruana asks the Auditor General to comment on the fact that bids would be considered after the submissions deadline, on the basis that oil suppliers would only be aware of the deadline and not when the password would be issued.

"Deadlines should be respected, or else on what basis will you determine the cut-off time?" the Auditor General replies.

20:35 Giordimaina says Enemalta's projections are that the state entity will be closing off this year at a loss.

20:25 Giordimaina says the BWSC power station operates on an average of 47% efficiency. "This translates in an average of €12 million in savings," Giordimaina says.

This declaration contrasts highly with statements that Enemalta was making €1 million in savings per week thanks to the BWSC efficiency.

This €12 million, he says, was in fuel savings because of its efficiency.

None of the PAC members have so far sought clarifications on statements that BWSC's efficiency would be translating in €52 million in savings this year and €64 million by next March.

20:04 Replying to questions raised by Beppe Fenech Adami, Giordimaina says that even today there were bids which would be submitted after the submissions deadline and would still be considered.

Fenech Adami asks the Auditor General to see how many bids were submitted after the deadline, between January and October 2013. The NAO has already carried a similar audit covering between 2008 and 2011.

But the Auditor General, while saying the NAO had no problem in doing so, commented that this is turning out to be "a never ending story".

Luciano Busuttil adds that the NAO should look into the security of the issue.

NAO's legal consultant Ian Refalo says this would require "a separate investigation". But Fenech Adami says the NAO should simply request information on the number of FPC meetings this year, bids submitted and tenders awarded.

19:46 Giordimaina says he never spoke to George Farrugia, and when Enemalta wanted to negotiate with either TOTSA or Trafigura, this was always done directly with the oil firms.

He says he didn't know George Farrugia personally, and the one time he met him was during a meeting with TOTSA in January 2012. TOTSA brought Farrugia along.

"But I don't know what role was he holding with TOTSA," he says.

Giordimaina says he doesn't know how Farrugia was employed with TOTSA. He also confirms that during meetings with other oil suppliers, no Maltese representatives were present.

Giordimaina's reference to Farrugia as "George" prompted Justyne Caruana to press the CEO on his relationship with Farrugia. But Giordimaina insists he only met him once during the TOTSA meeting.

He insists he doesn't know what Farrugia's official role with TOTSA was and that he had "heard through the corridors" that he was their trader.

19:38 Giordimaina explains that the fuel procurement committee was not regulated by the policy regulating public procurement. He says that, according to the new policy, an FPC meeting couldn't start before the tender submissions deadline was over.

Also, tenders could be submitted until the password would have been passed on to the FPC.

Bids were received on a generic email. At the beginning of every meeting, the FPC would contact MITA requesting a new unique password to access the bids.

For example, if submissions deadline is at 10am but a request for password would take 45 minutes, bidders would have that extra 45 minutes to send in their bid.

"There have been occasions when bids were submitted a minute or 5 minutes late... but always before the password would have been granted," Giordimaina said.

An NAO investigation has found that, between 2008 and 2011, there were 31 bids which were submitted late. Nine of these were awarded, with six going to BB energy and three to TOTSA.

Giordimaina says he never went out to eat with oil suppliers.

19:23 Giordimaina says MOBC has meanwhile carried out a technical audit to come in line with MEPA requirements. Tank filters have been bought and a month ago these were commissioned in the presence of MEPA officials.

"Everyone appeared to be satisfied with how the filters worked and we are now awaiting MEPA permits to start operating again," he says.

He adds that once MOBC's would be in operation, international adverts will be issued advertising MOBC as a storage facility for petroleum products.

19:14 iBOL (Island Bunker Oils Ltd), one of three storage companies in Malta, had for some time stored its fuel in Enemalta's tanks. Giordimaina says he knows what he knows about IBOL from the papers.

Giordimaina says he couldn't say when MOBC started making losses.

"I think I would be misleading you if I were to tell you when MOBC stopped making profit," Giordimaina says, agreeing to send in the necessary information.

Bonnici has requested Girodimaina to provide a summary of MOBC's financial accounts since 2003, including the reason as to why MOBC started making losses.

19:05 When Giordimaina joined MOBC, the state-owned company was temporarily inoperative due to a number of lack of compliances with MEPA.

Enemalta has a number of storage tanks, situated in Birzebbugia, Wied Dalam and Has Saptan. There was also a private company, Oil Tanking, who offered storage facilities at Benghajsa.

Giordimaina was told that MOBC's role was limited to storage, have been availed of its bunkering roles.

"I was never given a clear explanation as to why MOBC stopped operating its bunkering services," the CEO says.

He adds that, with clear instructions to get MOBC back on its feet, he concentrated on the company's remit as a storage provider.

19:02 Giordimaina is not in a position to confirm the different amounts of HFO, gasoil, fuel and jet fuel which Enemalta buys. He however adds that almost 80% of Enemalta's costs are related to the procurement of fuel.

18:59 There appears to be a problem with parliament's live-streaming. Meanwhile, MaltaToday will keep you updated through its live-blogging.

18:52 Enemalta's CEO Louis Giordimaina is this evening's witness.

He joined Enemalta in November 2011 as executive chairman, promoted to CEO in May this year.

Between 2008 and 2011, the period covered by the NAO report, Giordimaina was employed with a private company.

In May (or June) 2012, Giordimaina was appointed chairman of the Mediterranean Oil Bunkering Corporation (MOBC). He has also served as the chairman of the Water Services Corporation (WSC)

18:48 Parliamentary secretary for justice Owen Bonnici has asked the Auditor General to investigate whether the generic email account used to receive bids could have been accessed without the use of a password. Bonnici tabled eight methods by which an email could be accessed without a pssword. The Auditor General said he would look into the issue, and did not exclude appointing an independent IT expert in helping the NAO with the investigation.

The Auditor General also said he would ask for MITA's assistance.

18:42 Sit tight... public accounts committee session to start soon.