Commission opens in-depth investigation into planned investment at Delimara power station

The European Commission has opened under EU state aid rules an in-depth investigation into Maltese plans to grant €15.5 million aid to the Delimara Power Station.

17 November 2010, 12:00am

3 min read

The EC said the state aid was to support the modification of boilers at the power station.

"Such aid would reduce the investment costs of meeting the existing environmental standards applicable to large combustion plants across the EU. At this stage, the Commission has doubts whether the investment subsidy is necessary and well designed to perform a service of general economic interest, as is argued by the Maltese authorities," the EC said.

The opening of an in-depth investigation allows the Maltese authorities to present further arguments on this file and also gives interested third parties the possibility to submit comments on the proposed measures. It does not prejudge the outcome of the procedure.

Commission Vice-president in charge of competition policy Joaquin Alumina said: "At this stage I have doubts the investment aid is compatible with our EU single market state aid rules as Malta would thus subsidise the environmental standard costs which other electricity producers in the EU must meet on their own".

Under the plan notified to the Commission, Malta plans to support the modification of boilers 1 and 2 at the Delimara power station, which is owned and operated by State-owned electricity producer Enemalta. The total cost of the project is estimated €18.3 million. The Maltese authorities plan to finance €15.5 million (i.e. 84.7%) from regional funds put at its disposal by the EU. The remainder €2.8 million would be financed by a commercial loan with a government guarantee at market prices. The project is expected to be completed by 2014.

The project will enable Malta to meet its obligations to reduce nitrogen oxide (NOx) and dust emissions under the Large Combustion Plants (LCP) Directive 2001/80/EC and the Integrated Pollution Prevention and Control (IPPC) Directive 2008/1/EC, which requires the application of the best available technologies for large plants. Both directives will be replaced by the recast Industrial Emissions Directive, adopted by Parliament and Council on 8 November 2010. Malta has derogation until 31.12.2019 to meet the emissions limits set in the new directive. In the meantime, it must abide by the requirements set in the LCP and IPPC legal texts that seek to guarantee environment protection in the EU.

Enemalta is at present the sole operator licensed to distribute electricity in Malta and it also holds a near monopoly for electricity generation in the country. The situation is expected to change by 2012, when an interconnector with Sicily, partly funded by the EU, should be in operation. In that context, a public subsidy to meet already applicable environmental standards that competitors in Italy and elsewhere in the EU must meet is liable to distort competition between Enemalta and such suppliers.

EU environmental aid rules allow for such subsidies, however to much lower proportions than envisaged by Malta, only if companies reduce pollution further than what EU law requires. This is the case when the aid encourages companies to anticipate future applicable standards or to go beyond their legal obligations.

"The Commission does not find, at this stage, that the plans of Malta comply with these rules on aid to environmental investment," the EC said.

Malta also alleges that the investment would extend the useful life of the boilers and serve to provide back-up capacity in case of supply disruptions. "However, some of the investments considered seemed destined exclusively to reducing harmful dust emissions up to the requisite level, not to extend the life of the boilers. Moreover, the planned electricity interconnector with Sicily should also considerably increase the future capacity of supply in Malta," the EC said.

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We welcome the intervention of the Enquiry and the EU's statements but in the end nothing will happen other than a “rap on the knuckles” for the Government's Procurement Department. Hopefully though the corruption centred upon the Consulting Engineers engaged in the Programme (a company that has been struck off the advisory lists of the World Bank and the Asian Development Bank and now the EIB and others will with their cohorts the commercial advisors receive an exemplary fine that will pay for the Latent Costs resulting from the Exposure of the Maltese People to Consequential Losses resulting from the Advices given by same organisations. This is not a case of hiding behind Professional Indemnity Insurance provisions for there would appear to be a direct connivance between the Consultants and the Provider of Services – to whit – “that at the outset of this project” there was set up “a procedure to manipulate events” in a manner that was “so contrived” that the inevitable consequence “was to result in the award of the Contract - for the Provision of Services - to a Party which had Prior Knowledge and Information which could be used to its own Advantage so that it could guarantee that it was always to be awarded a project which it would have been hitherto unlikely to have been awarded at the outset!” This condition in Procurement Law is one of using Prior Information and Knowledge before-hand and involves a very serious criminal intent. The inevitable consequence of such actions (as has been determined before) would be to call the Parent Company - Mitsui (the ultimate benefactor of the Contract) regardless of whether it had hedged the contract to its servant company BWSC to redress the issue and account for its actions in this project in Malta and face full corruption charges on this project as well as others upon which it has also been engaged upon in the EU! The Aggrieved in this complex tangled web of Procurement of the Contract are People of Malta (not the Government) who are now Financially At Large here for having to foot the bill for Manipulation of the Legislation in Malta which in Law has to abide with and be subservient to the Over-Riding tenets of the European Union’s own Mandate. There can be no departure or obfuscation in this, as precedent has already been set elsewhere. These costs – in effect Latent Damages – will be large. From a crude investigation the first of these will involve a substantial fine placed upon the Government of Malta by the EU, and the only way that fine can be implemented will be to reduce future EU support grants given to Malta. So there goes any money to upgrade the highway infrastructure in the next four years. The second and more important issue will be the consequences of trying to redress the emission status of the Additional Green House Gases (Carbon Monoxide, Carbon Dioxide, UN-oxidised Hydrocarbons, Sulphur Dioxide, Nitrous and Nitric Oxides, and the likes) brought upon the Inventory for Malta which will come to haunt it within the next round of GHG statements. This means that as a country Malta will be fined for failing to address and comply with its own agreed targets for reductions agreed to be implemented under Statutory Obligations by 2018. It doesn’t sound a lot but effectively Malta will have to pay €2,000 Million of GHG emission charges to the EU by 2018 or be penalised even further under subsequent treaties. (So to put it bluntly that means the equivalent of at further taxation burden of around €5000 (between 2012 and 2018) for every man woman and child in Malta!) This is the sort of figure that this project will cost Malta, unless it is redressed quickly to the parent company. It needs dealing with and it is right to bring it to our attention. Heads must roll!

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Scrap the BWSC contract and make the company pay back the money it has already been given with commercial interests and fine it for "perceived" corruption and withholding information about it being black-listed by the World Bank for corruption. http://subicbaynews.blogspot.com/2009/11/payumo-tagged-in-power-station.html Payumo tagged in a power station corruption investigation http://www.scandasia.com/viewNews.php?coun_code=ph&news_id=6340 Danish Company Accused of Bribery - Again http://subicbaynews.blogspot.com/2009_11_01_archive.html Payumo tagged in a power station corruption investigation (Scroll Down) http://www.ecomarsaxlokk.com/media/media.html ECO Marsaxlokk