German, Azeri and Maltese consortium ElectroGas Malta has been chosen by Enemalta to build a new gas power station and supply electricity to the corporation.
German firm Siemens will be lead developer, and the other companies are Socar of Azerbaijan, the UK’s Gasoil and GEM, a group of Maltese investors who include Gasan and Tumas Group.
The winning bidder was announced yesterday by energy minister Konrad Mizzi, who said that the PL government had delivered on one of its most important electoral promises in just six months.
The winning consortium will convert the Delimara BWSC extenstion to run on natural gas, construct an onshore re-gasification facility and a floating storage unit by 2015, when the country will no longer be dependent on oil.
However, household utility tariffs will decrease by 25% a full year before, as the government will sell a holding company for €30 million, which is “more than enough to reduce tariffs.” The decrease in tariffs will be announced in the upcoming budget. Tariffs for businesses and industry will be reduced in March 2015.
ElectroGas Malta will also provide electricity to Enemalta for 18 years and will procure natural gas at a fixed price for the next five years. After that, gas will be bought at the “most advantageous price, and tariffs will still be much lower than they are now,” according to Dr Mizzi.
Rigorous selection process
Dr Mizzi explained that soon after the March election, the government had issued a call for expressions of interest in the project. 19 companies had submitted their bids. These were eventually shortlisted to nine, then to six and finally to three bidders: ElectroGas Malta, Yildirim and Endevour Energy and Exodus Crossing. The Yildirim consortium was eventually eliminated because it did not satisfy administrative requirements. Dr Mizzi said that the price offered for the production of electricity was one of the main contributing factors when Enemalta came to choose between the final two bidders.
Dr Mizzi said that the winning bidder is of “world class” and said that having Maltese investment in the consortium was a positive thing.
The plant configuration
The government had invited the bidders to come up with different solutions and configurations. ElectroGas opted for an onshore plant and re-gasification unit and a floating storage unit which will be moored alongside the jetty. The latter will have a storage capacity of 126,000 cubic metres of gas, which is significantly less than the 180,000 cubic metres outlined in the permit. Dr Mizzi said that the power plant would need between 10 and 12 shipments of fuels a year.
ElectroGas will now build a new gas-operated plant that will generate 200mw of electricity. The existing Delimara 144mw extension will be converted to also run on gas. The consortium will sell electricity to Enemata “at an advantageous price.”
Works related to site preparation have already been carried out. The energy minister said that the bidders were asked many questions related to their projects and the Environmental Impact Assessment that had been carried out and he was satisfied that it would be adhered to.
Training to Enemalta employees
Asked if Enemalta Corporation employees had any experience in working with gas, Dr Mizzi said that some had experience because the Delimara extension was a gas-turbine that was currently burning oil. But the relevant workers would be given training on how to operate the new plant. A number of Delimara employees will be seconded to the new company but they will be retained on Enemalta’s books. Their current work conditions are being guaranteed. Dr Mizzi said that new employees, however, will be directly employed with the consortium.
Price of energy to be announced later on
Dr Mizzi said that the price at which the consortium will sell electricity to Enemalta will be announced later on, after the appeals period closes. However he insisted that the rates were very advantageous. The contract will be signed as soon as the consortium gets hold of the required finances.
What’s important is that families will have their bills reduced in a few months. Dr Mizzi said that the Enemalta subsidiary Malta Gas and Power will be sold to the consortium for €30 million and this will generate more than enough revenue to reduce the bills by an average of 25% a full year before the new plant comes into use.
Enemalta would pay for the conversion of the BWSC extension to run on gas, and the consortium will pay ground rent at the normal commercial rates.