News | Sunday, 20 September 2009

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Enemalta Corporation reacts to Opposition motion

In a rare statement by a public corporation, Enemalta yesterday reacted to the parliamentary motion raised by the Opposition leader on the award of the Delimara tender.
Enemalta denied it had chosen the equipment with higher operating costs than gas operations, and that this had forced an increase in power tariffs.
“The plant selected has lower operating costs to the gas turbines offered. The financial analysis carried out on generation costs, taking the capital expenditure and all operating costs into account, for the Bateman gas turbines is €0.16.8c per kilowatt-hour (kWh) whereas financial calculations for the BWSC diesel engines, which also include the additional costs of waste disposal and the cost of conversion to gas, is of €0.12.4c/kWh. All this information is public,” said Claudio Farrugia, business and strategy manager for the Enemalta CEO.
Farrugia said the statement that the power capacity was allowed to deteriorate, to the extent that Malta may suffer power cuts if demand exceeds supply, was “unfounded”.
“The current capacity is well above the demand and the new plant will come into operation in 2011, before the expected demand exceeds supply. It is foolhardy to incur the expense of an additional generating capacity much earlier than it is actually needed especially since it is consumers or tax payers who would have to pay for the unnecessary excess.”
The motion also stated the plant equipment from Danish firm BWSC, based on combined-cycle diesel technology, was selected after emission limits were relaxed through legal changes.
“Enemalta reiterates, as it has done a number of times since the issue was raised, that the current legal emission thresholds are in line with those set by EU environmental directives, which are public. The new plant will be fully compliant with these regulations.”
The motion also stated that for the new plant to be converted to gas, an additional €24 million would be required, whilst equipment which did not need such conversion was available. “Enemalta states that whilst it specified that all plant offered should be able to operate on gas, and in fact all are, there is no suitable gas supply in Malta. The future introduction of such supply may not be feasible or economically viable,” Farrugia said.
“The other gas turbines which were offered carry with them additional costs to operate on gas. They require gas supply conditions which are very particular and would require additional investment in gas compression equipment. Even after taking into account the additional cost of conversion of the diesel engines to gas in 2015, which is the earliest possible date that gas could be available, the operating costs per kWh of the diesel engines will be 26% lower than the operating costs of the gas turbines.”
Labour also said that the chosen equipment would produce at least 31 tonnes of toxic waste per day, along with a tonne of oil sludge every day, leading to higher disposal costs.
Enemalta replied that the costs of the disposal of this waste were included in the operating costs and financial calculations of the diesel engine plant. “From this analysis it was clearly concluded that the operation cost per kWh of the diesel engines are lower than the operating cost of the gas turbines.”
The Labour motion added that the pollution from the diesel technology would require emission control equipment, which in this case was still in prototype stage and could pose a health risk to the neighbourhood.
Farrugia said that Enemalta “assures the public” that the equipment chosen was not a prototype. He said all the parts are well proven and the combination represents the best available technology to reduce emissions. “The use of best available technology is a requirement of the Directive. The plant presents no health or other risks to the neighbours. In fact since it will reduce emissions it will improve air quality in Malta, with the consequent benefits to public health.”
Enemalta also said the Delimara site had 6,600 cubic metres to be used for future phases of the power station’s development, contrary to Labour’s claims that the new plant would occupy much of the limited space at Delimara. The diesel engine plant, which will generate 144MW of energy in summer and will occupy 4,900m3 compared to the 115MW generated by the gas turbines that would occupying 3,800m3.
Enemalta said the tendering process was led by the Department of Contracts and followed procurement regulations. None of the bidders objected to the procedure at any time during the process.
“The final choice was made for the plant which met the mandatory emissions and other requirements and which produced electricity, all costs included, at the lowest cost for our consumers. The evaluation and adjudication teams were comprised of senior Enemalta and other public service officials, who carried out the adjudication and made their recommendations in complete independence of both the Enemalta Board of Directors and the Ministry,” Farrugia said.

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