EU accused Malta of favouring BWSC bid by changing emissions laws

READ THE FULL LETTER OF FORMAL NOTICE ON GOOGLE DOCS.

Opposition leader Joseph Muscat has revealed a stern letter from European Commissioner for the Internal Market and Services Michel Barnier to foreign minister Tonio Borg, which calls for a government reaction in two months to accusations of an irregular procurement process 144MW Delimara power station extension.

The letter of formal notice represents the first stage in the pre-litigation procedure, during which the Commission requests a Member State to submit its observations on an identified problem regarding the application of EU law.

In the letter, which has never been published by the government, the EC raises serious doubts on legal changes in emissions rules, which it says was carried out to benefit Danish firm BWSC’s bid for a diesel-powered engine that had been previously ruled out by emission laws.

“The change… occurred at a very late stage, just a few days before the expiry of deadline for the receipt of the final bids so that the deadline for the submission of the final offers was extended by four weeks.

“The change was not necessary to comply with European legislation as the Maltese authorities seemed to indicate [but] to benefit one of the exceptions to the applicability of the Large Combustion Plant Directive,” the Commission said.

It added that the new emission limits only applied to diesel engines and not to gas power plants, meaning this disadvantaged a bid by Israeli firm Bateman, which was proposing a cheaper, gas technology.

“This constituted a clear advantage for the bidders that had presented an offer for a diesel powered plant, as the possibility for a plant to produce a higher level of emissions ahs a clear impact on the costs of such plant.”

The Commission said this was in breach of Article 10 of Directive 2004/17/EC that provides equal and non-discriminatory treatment of economic operators.

It added that in posting its award decision online, the Contracts Department had infringed Article 49 of the same directive, which gives operators the right to be informed in writing, and also informed of their right to appeal the decision.

The government was expected to reply to the Commission on 3 August.

Labour leader Joseph Muscat said he expected that works on the Delimara power station should have never started in the first place, given the findings of the Auditor General and the European Commission.

Muscat said the letter had belied government claims that it had changed emission limits to bring them in line with EU regulations, after the Commissioner said the change was not needed for Malta to conform to EU legislation. "Government's excuse was a lie," Muscat said.

Labour MP Evarist Bartolo, who also addressed the press conference, said Labour had submitted new information to the Auditor General, referring to a recent annual general meeting of BWSC's parent company, Mitsui Engineering Shipbuilding Co Ltd.

Bartolo is claiming that BWSC, MAN-Diesel, and Sumimoto Bank (SNBC) - which in mid-2005 lent €210 million to Enemalta - are all Mitsui subsidiaries, and part of a "octopus" that had clinched the Delimara contract.