Liquigas aims to begin offering autogas, liquefied petroleum gas for vehicles, at petrol station pumps in Malta within two to three months, company chief executive Roberto Capelluto told The Malta Independent on Sunday.

While the company has already identified the petrol stations, contacted specialised garages for the conversion of vehicles to run on LPG, imported four storage tanks and a dedicated road tanker, the development will get off the ground once a number of garages able to carry out professional vehicle modification have been authorised by the Malta Environment and Planning Authority and the Malta Resources Authority.

Autogas represents a far cleaner energy source than traditional petrol, and would go a long way towards reducing the high levels of PM10 pollution on the country’s roads. The increased use of LPG in a number of other applications the company is eyeing, including the introduction of autogas, would also help Malta reach the EU’s 2020 pollution abatement targets.

“For Liquigas Malta,” Mr Capelluto explains, “the main challenge in the Maltese market will be to promote a culture of new uses of LPG. We would like to make present and future LPG customers aware of the financial and environmental benefits of this energy source.

“Autogas, which is environment friendly and EU recommended, is one of the new products we would like to introduce in Malta,” he adds. “It is cheaper than other fuels and also more efficient in terms of consumption.”

The means of car conversions from petrol to LPG being proposed for Malta are based on a technique that has been well consolidated in many countries. On average, and depending on the type of car in question, the cost runs at about €1,000 and allows for the dual use of both petrol and LPG.

For environmental reasons that are abundantly clear, Mr Capelluto points out, the use of autogas is recommended by EU authorities, and some European governments even grant incentives of up to 30 per cent on such conversion costs.

In addition to the introduction of autogas, the company is also looking at the prospects of the direct piping of LPG to homes and businesses, as well the use of LPG for air-conditioning – a major source of power consumption in the summer months.

“Over the past 18 months, Liquigas has concentrated on establishing its presence in Malta, and Liquigas Malta customers will be witnessing increased levels of service as the company consolidates its operation,” Mr Capelluto comments.

“This initial period was an opportunity for Liquigas to get to know the Maltese market and better understand the requirements of Maltese consumers.

Eventually, Liquigas will progressively change the way LPG is used.

“So far, Liquigas Malta’s main goal has been to guarantee continuity of service. It was very important in a market where LPG is a fundamental source of energy. Liberalisation means an open market where fair prices and competition can lead to innovation, investment in safety and improvement of services.”

Last week the company said it was considering the introduction of the network piping of LPG to businesses and perhaps to homes as well, through an LPG piping network made up of a central storage connected through canals to customers, and with consumption measured individually by the mean of meters.

Mr Capelluto adds, “Liquigas also believes there is a future for piped gas on the islands but the infrastructure requires high investment.

“This distribution system is very convenient for customers since only the real consumption is charged and no actions have to be taken by the customer – no orders, no level controls and no maintenance issues.”

Such a system, he adds, would provide for a “one shot connecting fee and small management costs related to the meter are charged to the customer such as for other utilities services”.

“This system could be applied to new and existing households as well as where there is a high concentration of certain business activity, such as restaurants for example, which makes such network piping a feasible and viable option. Paceville is one such area.”

Mr Capelluto cites internal Liquigas studies which show that, even at current utility rates, LPG is 50 per cent cheaper than electricity, but since the product had been subsidised by the government, interest in increasing sales had been scant.

Since their removal, however, the company sees more potential for LPG use for applications such as air-conditioning, and it will aim to eventually encourage individual consumers to also use LPG for water heating and for industry to convert their current oil installations to LPG.

To convert an existing air-conditioning unit for LPG use, all that is needed is an alteration to the air conditioning system while the existing piping can remain intact – and results in higher energy efficiency and more silent units.

He adds that some hotels have expressed interest in using LPG to power their air-conditioning systems, particularly after Liquigas’ own calculations revealed savings of up to 30 per cent could be attained through the use of LPG, plus a resulting free supply of hot water.

The relevant information and studies, he says, have been supplied to the Malta Hotel and Restaurants Association for dissemination to members.

Gasco Energy Ltd, meanwhile, is a 50-50 joint venture between local company Multigas Ltd and Italian company Liquigas SpA. Gasco’s sister company Liquigas Malta Ltd, which has an identical shareholding structure, took over the gas sales and distribution business from Enemalta on 1 February last year and as from 1 July, Liquigas Malta also began purchasing LPG for the local market.

The company is investing in all safety regulations as per EU standards and regulations, Mr Capelluto explains, including the retesting and inspection of each cylinder, while improving the distribution system and creating new fixed points of sale. Liquigas will also be training and certifying LPG installers.

While Enemalta currently maintains responsibility for the gas storage and cylinder filling operation at Qajjenza, under a concession agreement, Enemalta will be transferring the industrial operations of its LPG activities to Gasco Energy.

“Birzebbuga Local Council, Mepa and the Malta Resources Authority are all satisfied with our plans for the new Benghajsa plant.” Mr Capelluto comments. “In the meantime, we have already started talks with Enemalta to submit, as soon as possible, a Mepa application for the dismantling of the old plant at Qajjenza.

“Gasco Energy would like to have this Mepa permit in hand so that, once the new Gasco Energy’s Benghajsa plant is ready, we will start immediately the dismantling project of the Qajjenza plant which is situated in an urbanised area.

“Gasco Energy has already committed €500,000 in bank guarantees imposed by Mepa to remove all traces of the plant at Qajjenza. On completion of the dismantling project, Enemalta will have a cleaned and safe site ready for any future use.”

But in 30 years, as per its contract with the government, Gasco Energy will hand over the Benghajsa to the government, but Liquigas will remain in Malta, to stay.

Mr Capelluto explains, “The distribution and commercial structure of Liquigas Malta will be in place and consolidated with all the investments such as bulks, piped networks and autogas installations. These assets will continue to belong to Liquigas Malta to handle the business.

“After 30 years, the government will be able to select the more qualified player to run such a specialised and strategic industrial plant.”

The total investment at Benghajsa, including plant and equipment, amounts to around €20 million. Mr Capelluto confirms that international tenders have been issued for all the aspects of the construction of the new plant such as civil works, storage tanks, filling centre, pipelines and equipment.

Earlier this month, an order for the tanks, worth over €6.5 million, has been placed.

“This is a complex project as well as an important one for Malta,” Mr Capelluto observes, “as it will ensure that shortages will be avoided when there is heightened demand or when unloading is made difficult by weather conditions thanks to an over 70 per cent increase in tank capacity compared to that at present.”

Construction work at Benghajsa is planned to start in September. When completed in about 30 months’ time, the plant will occupy 23,000 square metres of a designated 77,000 square metre area in a disused quarry close to the Malta Freeport.

It will include a gas terminal connected by a pipeline to a jetty, a storage capacity of up to 4,800 metric tonnes and an administrative block. Its central filling plant will be able to turn around 1,200 cylinders an hour.

In terms of the liberalisation of Malta’s gas market, Mr Capelluto observes, “Liquigas believes that in Malta there should be a normal market price that allows the company and the investors to guarantee good service, safety, and quality for consumers – with international market prices and competition defining the end price.

But, he says, “all these things have a price”.

“If prices are low, private investors will have little interest in directing funds into the service. With a market price situation, it will be possible to have competition. Liquigas is not against competition.

“As soon as the price is fair, there will be competition which is healthy for price, service and choice in the LPG sector.

“With a market requiring a total 22,000 tonnes of LPG, it is large enough to allow some competition in the cylinder sector and the bulk business.”

Recent cylinder developments

• While promoting new uses of LPG, over the past few months Liquigas has striven to increase safety features on cylinders consumers have in their homes.

• New patented Liquigas regulators manufactured specifically for the Maltese market have been made commercially available.

• Cylinders now bear safer seals.

• Up to 45,000 new valves have been fitted on cylinders.

• In 2009, Liquigas began the retesting process of the 500,000 cylinders in circulation in Malta. The company intends to retest up to 50,000 cylinders per year: cylinders need to be retested every 10 years.

• Over 25,000 new green cylinders have been introduced to the market, bearing collar tags with details on weight and testing results.