Higher water and electricity bills are making life more difficult for many families and businesses. We are being made to suffer a drop in our quality of life to pay for government’s incompetence in the energy sector. Government is bleeding us dry and its lack of vision and inability to produce and deliver affordable and clean energy to generate our electricity is set to continue to harm our pockets, health and environment for the years to come.
Four years ago there was a strong indication of a move in the right direction when government declared that new power plants would be fired by natural gas, as this would mean cheaper water and electricity bills, better for our health and natural environment.
But a year ago, government reversed this policy and awarded a contract to a company that offered a plant that will operate on heavy fuel oil and switch to natural gas not earlier than 2016. To make matters worse, the new power plant operated on heavy fuel oil by BWSC will produce electricity that will cost more to the consumer than the electricity produced by the plant offered by Bateman, even if this plant had to operate on diesel and not on natural gas. The electricity produced by BWSC’s plant with 0.7% sulphur heavy fuel oil combined with the costs of controlling the pollution it produces, the price of exporting its hazardous waste and eventually paying at least another €27 million to convert to natural gas will cost more than the electricity produced by the Bateman plant on diesel. The Bateman plant will produce even cheaper electricity when natural gas is made available in Malta.
Government has not kept to its own Electricity Generation Plan 2006-2015 which is based on building the necessary infrastructure to have a natural gas supply by 2012. Government also reversed its policy that from 2006 onwards new power plants would be fired by natural gas using a Combined Cycle Gas Turbine technology. A recent report by the International Energy Agency (IEA) concludes that global gas markets have evolved from a seller’s market to a buyer’s market and there is a glut of supply that will drive down the price of gas in the years to come, delinking the price of gas to the price of oil set which is set to remain high in the years ahead.
Who has gained by government’s decision to reverse its policy in favour of natural gas power plants and go back to a heavy fuel oil plant as offered by BWSC? Government has again taken a decision that will benefit a few and hurt many. For BWSC to be awarded the contract: government had to change the local environmental regulations to redefine diesel engines and permit them to operate at Delimara Power Station. Government changed these regulations. Government had to change its policy that new plants would be fired by natural gas. Government changed its policy. Enemalta had to change tender specifications to permit diesel engines to be offered two thirds into the tendering process. Enemalta changed them. An “independent” technical consulting firm had to evaluate BWSC’s emission abatement equipment to decide whether the technology would control pollution adequately. The consultant, Lahmeyer International, concluded that the technology offered would plausibly function as promised.
BWSC’s agent in Malta, Joseph Mizzi, played a key role in making all this happen. But he could not have succeeded on his own. He needed more than a helping hand from his friends in high places within government and Enemalta. Mizzi will be getting a 2% commission for securing this contract. Another person who is set to gain from this contract is Nazzareno Vassallo who will be in charge of building the plant. Vassallo is another key figure in this contract. His employee, Engineer Alex Tranter was appointed Chairman of Enemalta in mid 2005 and is still its chairman. Vassallo is a big supporter of the PN government and also finances the party and was responsible for rebuilding their headquarters three years ago.
When the Large Combustion Plant Directive (LCPD) of the European Union was transposed into Maltese law (Legal Notice 329 of 2002) under which Enemalta started the tendering process for the Delimara Power Station extension, diesel engines were ruled out. When in 2005 Enemalta wanted to install diesel engines at Delimara the Malta Environment Planning Authority (MEPA) told them that Legal Notice 329 of 2002 did not allow them to operate diesel engines for the new extension.
In 2006 Enemalta and government announced that the new extension and other new plants in the future in Malta would be fired on natural gas. But BWSC started lobbying Enemalta that they could offer a plant operated on heavy fuel oil with emission abatement equipment and it would be acceptable to EU but that Malta had to change Legal Notice 329 of 2002 and redefine diesel engines and allow them to operate. Enemalta asked MEPA to change this legal notice but MEPA disagreed. The tendering process started.
During 2007 Enemalta went ahead with trying to get supply of gas for new extension of power station and even issued call for proposals. Three proposals came in by April 2007. No more work was done at Enemalta to secure supply of natural gas and Enemalta intensified talks with MEPA to get Legal Notice 329 of 2002 changed to allow use of diesel engines. Issue was referred to the European Commission to allow Malta to change Legal Notice 329 of 2002 to permit diesel engines as allowed by LCPD.
By September 2007 the European Commission had not yet given Malta permission to change Legal Notice 329 of 2002 and that is why one Enemalta official in a 4 September 2007 meeting with the bidders said that “unfortunately” the Maltese law was more stringent than LCPD and disallowed diesel engines. As things stood then, BWSC bid would not have qualified. Interesting that BWSC must have felt that they stood a very good chance that by the time Legal Notice was changed, the tender would still not have been decided.
In the meantime no more work was done to ensure a supply of natural gas which should have been secured by 2012 when the extension of power station was due to go into operation. With no available supply of natural gas, Enemalta could build a stronger case that the plant should be combined cycle diesel engine operating on Heavy Fuel Oil but with emission abatement equipment to stay within EU emission levels.
On 19 November, 2007 the European Commission gave Malta the permission to change Legal Notice 329 of 2002. Environment Minister ordered MEPA to change Legal Notice 329 of 2002 into Legal Notice 2 of 2008. The way was now open for BWSC bid to be accepted and selected as Enemalta changed the tender specifications to allow emission levels of the BWSC plant. Enemalta appointed Lahmeyer International as an “independent” technical consulting firm to evaluate the plausibility of the equipment to control emissions. Lahmeyer International, represented in Malta by BWSC’s Joseph Mizzi and involved in joint projects with BWSC – stated that BWSC’s technology was indeed plausible.
So when the tendering process started BWSC was offering a plant that could not operate under existing environmental regulations in Malta. BWSC used their exclusive agent in Malta to persuade influential persons in Enemalta and Government to abandon natural gas fired plants for the time being and go for a dual firing system plant that could operate on Heavy Fuel Oil and then be converted to gas once natural gas supply was in place.
Eventually all plants in Malta will have to work on natural gas to stay within the national emission ceiling established by EU for Malta. At earliest, this will now perhaps be available in 2016. Had government gone ahead and worked to secure natural gas for Malta by 2012 right now we would be looking forward to cheaper water and electricity and bills and lower pollution. Choosing Bateman’s bid, even though operating it on diesel and natural gas, would also be cheaper and cleaner than BWSC. So why did government choose BWSC over Bateman? BWSC had the right connections in Malta. Bateman did not.
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