The findings of the National Audit Office on the building of the gas power station were discussed in Parliament on Monday in an emergency debate during which the opposition highlighted shortcomings identified in the report, and the government insisted that those shortcomings had no material impact on the selection of the best bidder.

The proposal for the debate was made by Labour whip Byron Camilleri, after both the PN and the PD had indicated they would request the debate. By so doing, Dr Camilleri ensured that the debate, in terms of procedure, would be concluded by the government.

At the opening of the debate, Opposition leader Adrian Delia said questions about this project were raised right from its inception when the evaluation committee to choose the bids was headed by Brian Tonna, better known as the accountant to then Energy Minister Konrad Mizzi. Mr Tonna had also been engaged by the minister to set up his secret company in Panama. He also set up a secret company for Keith Schembri, the prime minister's chief of staff, and for somebody else who the prime minister had said was not himself.

The auditor in his report confirmed that the selected project bore many similarities to a proposal made before the 2013 election to the Labour Party by a Dutch company, DNV KEMA. He expressed serious concerns about how the government had issued a €360m euro bank guarantee to the winning bidder after denying it would do so. 

Dr Delia said the audit report showed how bidders had not enjoyed a level playing field. While none of the submissions were fully compliant, some enjoyed a more lenient approach while others were eliminated.

"There were different measures to identical shortcomings," and "an inconsistent approach in the assessment of submissions by the evaluation committee," according to the audit report.

How could the government claim that this report was a certificate of correctness Dr Delia asked. 

He said the NAO had also expressed concerns about a €20 million shortfall in the project financing by the selected bidder, Electrogas.  And yet this bidder was allowed to proceed. 

Concerns were also expressed about the inclusion in the Electrogas consortium  of Socar, from Azerbaijan, a country known for corruption. NAO had asked how it was included as a lead partner despite its dire financial position and despite its business being in oil. Why was it included when its departure, later, made no difference?

The auditor had rightly also raised concerns about how the government had agreed to buy 85 per cent of the Electrogas production, whatever the cost, for 18 years, even tough energy could be sourced at a cheaper rate elsewhere. As a result Malta was ending up paying €200 million more every two years. This was a disgrace.  

The auditor had also been scathing in the lack of proper due diligence in the assessment of the bids. 

Dr Delia, who throughout his speech read chapter and verse from the auditor's report, observed how the auditor himself had said that Electrogas had no experience whatsoever in the LNG sector. 

Dr Delia then spoke about the 17 Black 'facts listed black on white'. The secret companies set up by Brian Tonna, he observed, had arrangements to receive funds from 17 Black, another secret company owned by one of the directors of the power station.

Government denials have become irrelevant. The people have realised that this power station is a money laundering machine that is stealing from the people's pockets- Adrian Delia

"Government denials have become irrelevant," Dr Delia said. "The people have realised that this power station is a money laundering machine that is stealing from the people's pockets."

And then, he observed, the prime minister had said the auditor's report was a 'certificate of good practice'. Which meant he had no qualms about the €200m being stolen every year or every two years from the people's pockets. 

Concluding, Dr Delia said he was sure there were serious people on the government benches who could no longer tolerate this state of affairs, with one contract after another undermining Malta's reputation and robbing the people.

Konrad Mizzi needed to assume his political responsibility and resign immediately, Dr Delia said. 

Replying, Prime Minister Joseph Muscat said Dr Delia had spoken about money laundering. There was no better person to speak about this than a person under investigation for money laundering, according to media.

Dr Delia said the prime minister should substantiate his claim.

The Speaker said the prime minister had quoted the newspaper.

Dr Muscat said that if he wished, Dr Delia could sue The Sunday Times of Malta. He had no other information. 

Dr Delia said the prime minister could make that declaration outside, and he would then sue him.

Continuing, Dr Muscat said the leader of the opposition had zero credibility, personally and as head of the Nationalist Party with regard to its energy policy. 

He recalled that the PN had said power tariffs could not be reduced and a gas power station could not be built, for various reasons such as gas storage. Now they were saying that the building of the power station was agreed before the election. And if there was such prior agreement, why had there been so-called inconsistencies, which were natural as a project evolved?  

Despite the inconsistencies, the Office is of the understanding that there was no significant impact on the evaluation process and no effect on the final outcome of the selection process.- Audit report quoted by the PM

What Dr Delia had omitted to quote from the NAO report was that "despite the inconsistencies, the Office is of the understanding that there was no significant impact on the evaluation process and no effect on the final outcome of the selection process."

Why was the criticism of Azerbaijan by the Opposition leader? Would Dr Delia now tell EU countries to end their partnerships with Azerbaijan? Could those countries have contracts with that country, and Malta not? 

Dr Muscat said the government did not agree with some price comparisons made by the audit office regarding electricity prices from the interconnector and the gas power station. The costs of the interconnector had been omitted from that calculation.  The costings also ignored EU directives on redundancy needed in energy supply. Furthermore, the NAO costings did not quote the power station prices at their most efficient.

Nonetheless, the audit report showed that Malta still needed the new power station for Malta to have security of supply from a mix of sources.  

Dr Muscat said the Opposition was still showing itself to be an amateur in energy policy, leading the people to fear that a return of a PN government would mean a return of higher tariffs. 

Concluding, Dr Muscat said the audit report had confirmed that the choice that was made was the proper one.

Tourism Minister Konrad Mizzi, formerly energy minister, said the government had transformed the energy sector. Tariffs were now among the lowest in Europe and heavy fuel oil had been replaced by a clean gas operation. The financial situation of Enemalta had also been turned around. What had stopped the PN from doing all this? The EU Commissioner for energy had been among those who praised the power station project as 'best practice' which enjoyed 'legal certainty'.

Dr Mizzi said he had welcomed the NAO report. Despite some shortcomings, the report said that there was 'no material impact' on the final selection of the winning bid. The auditor had also said that Nexia BT had no conflict of interest. How different from the situation under the former PN government, when the former Enemalta advisers became advisers for BWSC. 

Due diligence on the power station project was made by 11 banks, Dr Mizzi said. It was Dr Delia's appointment which had no due diligence.  

The audit report, he said, confirmed the need for the new power station because of lower costs, improved infrastructure, reliability and environmental impact. Conversely, the report had said Malta could not be reliant on the interconnector for political and practical reasons.  

Dr Mizzi defended the bank guarantee given to the successful bidder, saying they had paid for it the equivalent of a new school. 

"Had we not invested in the project, we would have had to raise tariffs," Dr Mizzi said, pointing out that interconnector costs were up 40 per cent. 

This is a matter of credibility- Chris Fearne

Other speakers included Nationalist MP Marthese Portelli and deputy prime minister Chris Fearne. The latter said that despite the many allegations made, the institutions of the country were functioning and investigations were carried out by those responsible to carry them out. Now that the NAO report had been issued, it should be respected. The report showed that despite some discrepancies, they had no material effect on the outcome. 

"This is a matter of credibility," Mr Fearne said. He asked if Dr Delia was prepared to resign if he was under investigation for money laundering.

Dr Delia had asked others to resign while under investigation. Would he do the same? Only then would he be credible. 

 

Godfrey Farrugia (PD) also hit out at the government. Who would pay for the shortcomings and incompetence the auditor had identified, he asked. Prices were cheaper from the interconnector than the new power station, and, significantly, while the power station was privately owned, the interconnector was owned by the people. Konrad Mizzi should assume his political responsibility, he said. 

Other speakers included Robert Abela (PL), Jason Azzopardi (PN), Alex Muscat (PL), David Agius (PN) and Joe Mizzi, current energy minister.

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