European Investment Bank, which will provide €150 million for Delimara extension, confirms it is looking into the Auditor General’s report into the BWSC contract
Karl Stagno-Navarra
The European Investment Bank (EIB) has confirmed it is “assessing” the Auditor General’s report into the shortcomings that have tainted the adjudication of the €230 million Delimara power station extension.
Speaking to MaltaToday, a spokesman for the Luxembourg based EIB – which is financing €150 million from EU taxpayers’ money through a soft-loan for the project – said that “according to the procedures of the EIB we are assessing the report.”
Asked to specify about the procedures, the spokesman stressed that the EIB was not in a position to comment any further. “We are looking into the matter and that is all we can say at this point in time.”
The points highlighted by the Auditor General – so far given short shrift by Prime Minister Lawrence Gonzi and his ministers Tonio Fenech and Austin Gatt – are under the EIB’s perusal, since the bank insists on transparent procurement procedures.
Last Wednesday, a former permanent secretary within the civil service, Paul Mifsud, stressed on One TV that the government ran a “serious risk” of losing the EIB’s financing, as the Auditor General’s report lists a series of shortcomings and dubious activity surrounding the whole procurement process.
Mifsud stressed that for the EIB, it would be unacceptable that a financing beneficiary (Enemalta) would hire the services of consultants Lahmeyer International, who were blacklisted by the World Bank over corruption charges of government officials in other countries.
Should the EIB withdraw its financing of the Delimara project, it would spell serious problems for government as it would need to find alternative financing to the whole project.
“The EIB would probably loan the money at favourable terms of between 3% and 4% while others would definitely loan at a much higher interest rate, thus drastically raising the expense for Malta,” Paul Mifsud said.
In the report published last Monday, Auditor General Anthony C. Mifsud said the choice of Lahmeyer International (LI) as an “independent consultant” in the adjudicating process was “questionable” for three different reasons: its blacklisting by the World Bank; its previous business relationship with BWSC, the winners of the contract; and its previous relationship with BWSC representative in Malta, Joseph Mizzi.
According to the auditor’s report, LI’s advice was “instrumental” in Enemalta’s decision to accept bidders that had quoted prototype combinations rather than complying with the original tender, which stipulated the requirement for “tried and tested solutions” backed by references to international sites operating the same equipment as those being proposed. It was only thanks to this decision that BWSC remained in the running for the Delimara contract.
In December of 2008, EIB President Philippe Maystadt had traveled to Malta and met with Enemalta Chairman Alex Tranter and Finance Minister Tonio Fenech.
Maystadt had led an EIB board of directors meeting in Valletta that approved the €150 million loan that was signed and forwarded to Enemalta.
The funds were put forward for the construction of a “new and less-polluting” power station at Delimara, that would substantially increase Malta’s electricity production by 2010. The new thermal generation capacity would replace the ageing generators at the Marsa power station, which itself is due to be decommissioned sometime between 2012 and 2015.
Another portion of the funding will go toward the refurbishment and extension of the national electricity distribution network. The refurbishment is to include the construction of new sub-stations, underground cable networks and the installation of digital reading meters.
In previous years, the EIB has co-financed other projects in Malta, namely the Valletta harbour regeneration, the Valletta rehabilitation programme, and the water treatment plant in Gozo. ksnavarra@mediatoday.com.mt
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