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01 October 2014

Parliament approves Bill to turn Enemalta into a plc

 - Friday, 18 July 2014, 09:17
Update 3

Parliament today approved the 2nd reading of a Bill of law to turn Enemalta Coporation into a public liability company. The act will transfer all the assets, rights, liabilities and obligations of the corporation. There were 33 votes in favour and 27 votes against. 

Earlier, PN Deputy Leader Mario de Marco said the government needs to convert the running of the BWSC plant from heavy fuel oil to gas.

Dr De Marco mentioned the criticism a PN government received on the investment into the BWSC from Labour when in opposition, highlighting that it is now saving Malta over fifty million euros each year. “The BWSC was meant to be temporarily run on heavy fuel oil, but it was meant to be changed to gas in the long run.

“Today you can’t just look at fuel, but also at the technology operated by that fuel. With modern technology, the heavy fuel oil would not be that harmful to the environment”.

Through studies, with the use of heavy fuel oil, “we were well within the limits of environmental factors. We were saving money and it wasn’t very harmful. I will mention that we must never be satisfied with this. The government has a commitment to change the BWSC to gas and we completely support this”.

Dr de Marco said that Parliament is speaking about the privatisation of Enemalta even though the government is saying otherwise.

The PN Deputy Leader tried to explain what the government is attempting to do by enacting the bill in discussion, saying that the Minister for Energy was not present in today’s plenary session. “It would be wrong for us not to look back and learn from mistakes made in the past. You always say we are over critical towards this government, and every now and then you are right, however we have a right and obligation to criticise the government”.

Dr De Marco wants to focus the discussion on the principle of this Parliament, the interest of the Maltese and the interest of the Maltese economy. “I would say that over the past few years we have made progress on energy, but there are still problems which need to be solved.

"This government has done well to try and solve these issues but it doesn’t mean that the solutions proposed by the government are a step in the right direction.

"We, as the Opposition, are here to give our views and criticise issues which are not suitable for the country.

"I appeal to the government to take our criticism as being genuine and not as being constantly negative”.

Dr De Marco said that the interconnector is the cleanest form of energy Malta can have as the energy is being processed abroad, not here. “This will have zero emissions. Some people say that the best solution for energy would not have been to build a power station, but to build a second interconnector. We understand this was discussed but the idea was dropped. We are not saying this to be negative”.

Enemalta with BWSC and the interconnector will be more efficient economically and diverse in its fuel gathering. “We need to close the Marsa power station to help keep Malta clean; there are ones who say that this plan should have been finalised years ago.

"I live in its proximity so I know how un-environmentally friendly it is. I’m positive and support the promise to close down this plant”.

We cannot vote when we are short of relevant details – Dr Marco

He addressed Enemalta’s debt, adding that the government did not just wake up one morning and choose to change the company into a PLC.

Enemalta will be acquiring the new BWSC plant, Dr De Marco said, so Shanghai Electric Power will have a 30% stake of the new Enemalta corporation which will be distributing energy to Malta, but will also control part of this new plant.

All we know is that an MOU was made by Shanghai Electric, we don’t know what it says and we don’t know if any agreements to sell other portions of Enemalta were made, the PN Deputy Leader said. “Now we have to discuss the transformation of Enemalta into a PLC and we don’t have the relevant information. The government thinks that we would vote in favour of something when we don’t have the relevant information. This is not acceptable. I cannot agree with a position if I don’t even know what’s going on. The government wants us to vote in favour of a bill when no documents with regards to the agreement have been presented.

Shanghai Electric owned by China – De Marco

Dr De Marco said he was not necessarily against the privatisation of Enemalta, but the facts need to be presented.

“We are not here to discuss the reinvention of the wheel. We have the advantage of seeing other countries that have passed through similar incidents. We need to have a more open discussion with the help of technical people”. He mentioned that prior to the last election both parties agreed that the generation of energy should never privatise the distribution of energy. “While in opposition, the PL were against this, but it seems they have changed their minds. It may be a step in the right direction, it may help solve the financial problems of the company, but we can’t be sure as we have no details of agreements made. I cannot say for sure it would be a positive step, Dr De Marco argued.

Dr De Marco said that regardless of the fact that the company is Chinese, French or American is beside the point. “The fact is that Shanghai Electric is a company controlled by the Chinese government, so this is not privatisation. Part of Enemalta will be partially controlled by a company owned by another government,” he explained.

Enemalta workers to be transferred to Engineering Resources Ltd

The Deputy Leader added that the workers of Enemalta would no longer be workers of Enemalta. Mentioning the proposed law, he said that the workers would be transferred to a company called engineering Resources Ltd, and not the new proposed Enemalta Plc. “Who are the shareholders of Engineering Resources Ltd? Will it be a company controlled by the government or not? Who are the directors, what capital does it have? To have a serious argument we need to say that this company has enough capital to ensure that the conditions of the workers will be observed. These are questions which need to be asked!”

Dr De Marco mentioned that under the new law, energy can be reduced on a whim. “We cannot say we are reserving legal right that distributor of energy can reduce the amount of energy whenever he wants to the consumer”. In addition, he said that Malta is saying that the operator of the distributor will not be responsible for the loss of energy brought in. “The government needs to review the legality of what is being said in this law. Is the government on the side of the consumer or operator? If he is on the side of the consumer than this proposed law should be amended”.

“On what basis will the watchdog authority approve the prices prescribed from operators of distribution of energy”, he asked. He asked for more transparency on the methodology on how Malta will approve these prices. “They need to be competitive but we have no information as to how Malta would approve these prices”.

A massive economic impact

PN MP Claudio Grech said that what is being proposed by the government will leave a massive economic impact on Malta’s economy.

This proposed law will see massive assets from Enemalta transferred to the PLC without establishing basic information. “For example, on what basis is this transfer taking place? One must establish the value of these transactions. This Parliament doesn’t have any information as to the snapshot of the balance sheet that the new company would launch operations with. All we are being told is that all the negative and positives found on the balance sheet will be transferred to the PLC”.

The PN MP mentioned the transfer of land, which according to law would need to be presented in Parliament. “Why aren’t we going through the normal process?”

Mr Grech reiterated that the government has not mentioned any of Enemalta’s assets but only debt. “The government doesn’t take into account the assets of a company,” he said. “The government said that an injection of €300 million will be made, but not where this money would come from. Will we get it from selling a power station? Will we sell assets? That’s not an injection, that is a sale!”

The PN MP said that the method as to how this is being organised is being mishandled. “You cannot come to create a vehicle to privatise Enemalta without transparency. We’re not selling a bank or an airline; we are selling a unique asset which we cannot replace”. He emphasised that all disclosures need to be made and a proper discussion should have been held with the opposition. “What is the problem, if this proposal is so positive, for the agreements and information to be tabled in Parliament”.

The government has ignored the structures in place which would allow for sensitive information to be discussed with the opposition, he said. “The PN isn’t opposed to foreign investment we are opposed the method by which this has been implemented”.

One of the largest assets in Malta is going to be transferred without Parliament having the basic details which include the balance sheet of funds this new company would start with, Mr Grech argued.

No Enemalta financial statements presented since 2012

PN MP Kristy Debono explained that the PN’s interest in this law is due to the fact that it would change the way energy is handled on the island. “It would affect all important aspects of the maltese economy. This sector is fundamental

Shanghai Electric will invest €320 million euros. People are saying that Enemalta is bankrupt, however why would Shanghai Electric invest so much money if this were so, she said. “These investors are seeing potential for Enemalta. I appeal to the government to stop solely mentioning the negative aspects of Enemalta and realise that there is potential”.

She mentioned that is 2012 Enemalta had a billion euros in assets. “The last financial statements published on the company are from 2012 during the PN administration. We should have the financial statements and annual reports over the past two years,” she argued.

“It’s crazy to think that a director of Shanghai Electric on the other side of the world knows the future of Malta’s energy company, yet the people of Malta have no idea of what was written in the MOU,” she argued. “Will written assurances be made to the unions promising that they would still be relevant after this deal? Can the government promise that written assurances will be made to the Enemalta workers assuring their jobs are safe? Can the government promise that the workers allowances would remain within the same parameters as found today? What about working hours, will there will be an interviewing board, are interviews needed?”

90% of energy to be bought from private sector – Kristy Debono

The PN MP mentioned that 66% of shares in the PLC will remain with the Maltese government, adding that the company will be responsible for the distribution of energy. The ex-petroleum ltd will be wholly made privatised and the BWSC will be controlled by Shanghai electric. Electricity from Delimara 4, by Electrogas, will take precedence for distributing energy, she said, adding that Shanghai electric will own the solar panel plant. “This would mean that the government will only control one of the energy sources in Malta. The government should not say it would remain a majority shareholder as this is not giving the full picture”.

“90% of energy will be bought from the private sector, so the government will only control 10% of energy in Malta”, MP Debono added. “Can the government promise that the 66% of shares will not be sold to Shanghai Electric later on?”

PN MP Stephen Spiteri focused his speech to Engineering Resources Ltd, mentioning that a certain Union so vocal during other privatisation schemes has gone silent.

A large number of Enemalta workers, aside from basic pay, used to work shifts and receive overtime, he said. “One must be open and honest to the workers who will be transferred that, aside from the basic pay, their whole financial package and the extra allowances through work they received be honoured. This bill gives no guarantee on this information”.

He asked about the conditions for those workers who will be sent to the BWSC and will work under the Chinese, and for those transferred abroad whilst working with this company. “The government has promised that collective agreements for these workers will be promised, however what will the imposed working conditions be, what guarantee regarding differences have been made?,” he asked.

Dr Spiteri mentioned the injection of money into Enemalta, adding that the government must reassure the workers and address their uncertainties about being transferred to Engineering Resources Ltd. Shanghai Electric owns several companies around the world so it is a possibility that workers could be transferred and these workers must be assured that conditions are protected and that a proper method of organising who would go abroad be in place, he added.

PN MP Frederick Azzopardi mentioned the agreement with Electrogas said that as an opposition, if no amendments to the proposed law will occur, then the PN will vote against.

According to media reports, Joseph Muscat had promised the workers of Enemalta, prior to becoming Prime Minister, that he would not privatise Enemalta, the PN MP said.

PN will become the party for the dead – Joe Debono Grech

PL MP Joe Debono Grech brought up Malta International Airport, Air Malta and the dockyard, and how the PN had promised that they would not lose their jobs. “Time passed and the PN laughed at the workers when they started losing their jobs”.

He defended the GWU adding that it fought hard for the rights of workers. He mentioned the children allowance, saying that PN had voted against it. “Whenever it suits you, you say the PL is anti-democratic. You’re going to become a party for the dead. You received two thrashings over the past two years,” he yelled.

“The PL moved and worked for laws to defend the workers. We have not abandoned them. The PN had promised 10,000 jobs at Smart City and they did not deliver. If it wasn’t for the PL we wouldn’t have risen above this,” he bellowed. “The workers know that the PL and the GWU fought for them”.

Strategic European Investments - Konrad Mizzi

Energy Minister Konrad Mizzi mentioned that strategic investments in Europe will be announced later this year.

Minister Mizzi mentioned that the government found a huge amount of debt when coming to office, “a dockyard in the making where it didn’t have the money to pay its workers”.

“When taking over, we had a smart meter programme that was behind, an over-budget interconnector, a BWSC station working with heavy fuel oil and the Marsa station still operating,” he argued.

The Minister mentioned a strategy which was in place from day one, arguing that investment came from both the public and private sectors.

“Irrespective of everything, we have control of operations and we have been rolling out operational improvements. We caught out a scam, and helped increase the earnings of the company. The government was clear that Enemalta will save millions through an agreement signed with Electrogas”.

Dr Mizzi discussed the value of Enemalta and admitted that Shanghai Electric is partially owned by the Chinese government, however is also partially owned by private individuals. “We have an open dialogue with them and they understand that it is a long term investment not a short term investment”.

He said that an agreement with the European Investment Bank has already been reached to repay the loan from Enemalta this year.

He mentioned that Shanghai Electric must guarantee 33% of the Enemalta debt.

Dr Mizzi said Enemalta was insolvent and a plan was made to inject money from different sectors. He mentioned the problems of transport which will be solved over time and the emissions from the plants will also decrease.

“We appointed project managers to close down Delimara 1 and the Marsa plant, adding that an environmentally friendly project will occur in Marsa and the chimney at Delimara will be removed”.

A number of strategic investments will be announced over the coming months, he said. With regards to the staff, he told Shanghai Electric that the human capital are the most important resource. “Enemalta has kept working for so long thanks to the workers hard work,” he emphasised.

Engineering Resources Ltd is 100% owned by Malta, he promised. “The conditions from all collective agreements will be honoured. Nobody will be forced to go and work abroad, but there will be opportunities for those who do,” he added.

With regards to those working in plants which will be controlled by the private sector, they will be working there on secondment.

Discussing the regulator, he mentioned the Malta Resources Authority Act, adding that the MRA will approve changes to tariffs and will act as a watchdog.

Discussing the Petroleum division, he said it will not be sold to the Chinese.

 

1 comment

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Joe Martinelli says:
18 July 2014 13:12

Is this an achievement by Sai Mizzi, her husband and the government are anxious to hide?
The die is cast, Enemalta employees bargaining power is gone and once the 'current collective agreement' expires, those seconded to the Chinese entity will start enjoying a longer work week, no overtime, Chinese wages and the only benefits they will have is the choice of either accepting their pay or take a hike.
Was the GWU, the protector of workers' rights, not constantly complaining about low wages and 'precarious wages' up to a year and a half ago? What has happened since?
Has Toni Zarb's mouth been super-glued by Jo-Jo? Or is he being polite by not speaking with his mouth full of doughnuts?

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