Finance ministry report says Delimara tender was ‘regular’
Matthew Vella A report by the finance ministry’s permanent secretary has defended the Enemalta tendering process for the €200 million extension to Delimara power station, as having been “regular”.
Alfred Camilleri’s six-page report states that the tendering process for the 100MW extension, was carried out “calmly and within the time-frame required for the necessary evaluation and consideration for a project of this type and size.”
The award has been protested by Israeli firm Ido Hutney/Bateman, whose local representatives are the Tumas Group and Fenlex.
The award to Danish firm BWSC has been fraught with controversy after Labour MP Evarist Bartolo revealed that a local middleman had been carrying out informal talks with Enemalta officers for BWSC before tendering opened.
Enemalta claims the “informal discussions” between BWSC’s representative – former Enemalta employee Joseph Mizzi – and the corporation’s officers in 2004 and 2005, were normal practice.
“It’s normal for meetings to take place at this stage between officials and company representatives to seek out the new technologies available and whether these are adequate for Malta,” an Enemalta spokesperson said this week.
Emails sent by the representative to BWSC officials Martin Kok Jensen and Anders Langhorn reveal Mizzi pointed out the “need to tap another source higher up in the political hierarchy”. The claim is made with reference to technical specifications being presented to “non-technical” Enemalta officials.
Enemalta said that the emails, published in MaltaToday, refer to an earlier 15MW extension.
And yet, these email discussions of February 2005 predate a March advert by the corporation, calling for an expression of interest for the power station extension. Enemalta officials met with interested parties in the last week of March, including BWSC manager Anders Langhorn.
‘Potential conflict’ BWSC’s local partners also include Vassallo Builders, whose major shareholder Nazzareno Vassallo is a business partner of Enemalta chairman Alex Tranter.
Tranter says he declared his conflict of interest on 26 June 2008 when Vassallo was listed as a possible sub-contractor for the civil works on the Delimara extension.
In comments to MaltaToday this week, Tranter said he had been informed of the six potential bidders who would be invited to tender in August 2007, and that BWSC declared a Danish company would be responsible for the design of the civil works.
“There was no indication that any Maltese contractor had been approached. This information was only available after the receipt of bids following the invitation to tender, which were received in March 2008.
“Once these bids were assessed in detail and it was noted by the evaluation committee that Vassallo Builders had been listed as a one of the potential Maltese civil works contractors one of the bidders (BWSC) could use, and this was brought to my attention, I took immediate steps to exclude myself from any involvement in the process and delegated the Deputy Chairman to handle all board matters related to this tender, to handle himself,” Tranter said.
Tranter added that he had no input “whatsoever” in discussions with Enemalta directors on the tender. “The internal structures set up for the evaluation and adjudication process were completely separate to the board of directors.”
Economical issues
Camilleri’s report states that the tendering process formally started in 17 Novemebr 2006, closing on 20 February 2007. In December 2008, the general contracts committee approved three finalists – Bateman, BWSC and MAN Diesel – to submit their final offers, which were opened in February 2009.
BWSC was chosen by Enemalta’s evaluation committee, however rival bidder Bateman never appealed this decision with the Contracts Department.
Bateman claimed the tender was prepared “in such a way that gave an illegal advantage” to other tenderers.
It said the new power station had to run on gas, and not using a heavy fuel oil engine, such as the one proposed by BWSC. Bateman said this ran counter to Malta’s environmental policy to turn to gas by 2015.
Bateman added that no comparative study was made over the use of heavy fuel oil and gas, and that no environmental impact assessment was carried out.
Depsite its offer being €16 million cheaper than BWSC’s, Enemalta said the Danish firm’s offer was “the most economically advantageous offer”.
This was determined by the fact that every kilowatt-hour of electricity produced by BWSC’s technology would cost 12.4c compared to Bateman’s 16.8c/kWh. “It’s not true that gas is cheaper than heavy fuel oil. Gas prices can change on the market. It’s expected that it will be a little bit higher than the price of HFO.”
Enemalta however said no guarantee was given that changeover to gas would take place in 2015, and that its tender allowed for fuel technologies that could be later converted for the use of gas.
It rubbished Bateman’s claims that BWSC’s technology took too much space, saying 6,600 square metres were available for the Delimara extension, and BWSC’s solution would require 4,940 sq.m.
It said toxic waste from the BWSC engine would be retrieved and disposed of in landfills or exported, rather than released into the air. “HFO emissions are higher than gas, but these emissions will be cleaned using emissions abatement equipment, whose cost is included in the capital expenditure.”
It also claimed carbon dioxide (CO2) emissions were “almost the same” for both the Bateman’s gas and BWSC’s diesel engine turbines.
Enemalta’s evaluation committee said that BWSC earned more points when the net present value of its proposed technology was calculated. Bateman came in third after MAN Diesel. The net present value, the committee said, allowed it to analyse “different aspects of the cost of electricity generation such as fuel costs and running costs.”
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