Former resources Minister George Pullicino denies any wrongdoing in the €35 million PV panel contract given by the previous administration. He says an audit firm actually recommended a feed-in tariff of 29c per electricity unit, while the final feed-in tariff was set at 22.5c In this question and answer session, he is grilled over the issue by Jacob Borg

 

As a starting point, can we agree that someone messed up over these inflated feed-in tariffs?

No. We had appointed one of the big four audit firms to come up with a cost model to encourage investors to invest in solar panels on government buildings. The conclusion reached by the study carried out by the audit firm was for a feed-in tariff of 29c per electricity unit.

Let me explain why. This is not just a feed-in tariff for electricity generated. It includes a number of obligations. The operator would have to have a capital outlay to put the structures on the roof, and if need be prepare the roofs for such structures.

Were all this conditions listed in the tender document?

Yes, yes, of course.

And in the contract as well?

I did not go in to the contract, I never did. I know all these conditions because when we issued the letter of intent Labour MP Leo Brincat had asked about it. I had asked for an explanation from the adjudication team in the contracts department which falls under the Finance Ministry. They are not in my own secretariat, because in this country you have to be careful how you say certain things.

They had explained these six conditions that the company would have to honour. This is not about putting a simple PV system on your home. This is not the usual feed-in tariff. This is a concession of about 70,000 square metres of roofs. One of the other conditions is the operator will be responsible for maintaining the roofs for 25 years, as well as their waterproofing.

The operator also had to guarantee a minimum level of electricity generation, otherwise it would be liable to pay fines. When you install a PV system on your home the government does not fine you for having an inefficient system.

How much were these fines?

I do not know the details, one can ask. I do not have access to the files.

Back in the day as a Minister you would have had access.

Of course. At that time yes. Today I am doing this homework after two years and I don't have access to the files.

How did you manage to get all this information then?

Because I had it. I had this because I had spoken about it in Parliament and explained the difference in the amount.

So once again you are saying the original 'target' feed-in tariff was 29c?

The audit firm told us 29c. From this money, the operator has to pay rent of €140,000 per year. Also, the operator would have had to take out insurance covering not only the structures, but the buildings as a whole. The operator would also have been responsible for health and safety on all the sites.

Therefore the government was not paying for the energy generated, the government is paying for that and all the other conditions. This had to be factored into the operator's costs. With normal agreements for feed-in tariffs with the Malta Resources Authority all these conditions do not exist.

Let me show you have serious the whole process was by the people involved, I was not involved as a Minister.

15 companies were initially shortlisted. Three companies were shortlisted for the process two years after the expression of interest. Others said they can build a power station in two years. We took two years to choose from these 15 who should make the final shortlist.

These three were then told to submit a tender. Politically this is important. For a power station of €400 million the government only issues an expression of interest. For a project of €20 million we did not only go on an expression of interest but also a tender.

Let's not get sidetracked, we are here about this.

No, no, no. It is very, very important. If you are going to make comparisons then the same metric has to be used. Even for a project of €20 million we went to tender, for a €400 million project the government chose on the basis of an expression of interest.

Point taken, let's continue on the main issue.

The tender was issued by the department of contracts, which set up an adjudication team. I did not choose the operator.

Why did you feel the need to present the award letter to Alberta personally then?

Because the project was an initiative by my Ministry. It does not mean I was leading the process.

So there was some involvement on your part. Ultimately you knew what was in the contract.

No, you are wrong. I as a Minister, all I did was give instructions to identify the roofs to offer private companies to invest in PV panels on them.

Ultimately you signed off on it and you were happy with the contract with that feed-in tariff.

Yes, I did not decide the feed-in tariff...

But with your presence there by association you were endorsing the contract.

Till this day I defend the process. Konrad Mizzi is hitting out at my permanent secretary at the time. My permanent secretary was not involved in the process.  It was the adjudicating team made up of technical people from the University and people from the civil service.

Yes, but the letter of intent was signed off by the permanent secretary.

Yes of course. Isn't that how letters of intent are done!  I never involved myself in the process. From the three companies shortlisted, one did not make any submissions, and one wrote to the Prime Minister copying me in the email.

They said they were pulling out because the onerous conditions placed too much risk on the bidder. They said for these prices there is too much risk.

This is where Konrad Mizzi lied. He said the other bidders were dropped on the basis of administrative shortcomings and left one bidder. It is not true. Konrad Mizzi is lying. From 15 three were shortlisted. One submitted the tender document, one did not and the other said the conditions were too onerous.

Do you have a copy of this email?

I do, but seeing the Police are involved I want to keep it for now. But I can vouch for it.

Which company was this?

Mizzi group together with their French partners. I remember the email. Mizzi group said their French partners were worried that too much risk was being placed on the bidder.

Even the name feed-in tariff is wrong. Thinking back, there should have been a clear feed-in tariff for the energy generated-'X', plus the payment for all these other conditions - 'Y'. We should have called it an obligation of services. X+Y would have added up to 22.5c. And it is 22.5c by the way not 23c.

If you ask me today what was wrong, I would say this. This was the first contract of its type, not contract, call. It was not done in a rush. It was done by our people asking an audit firm to come up with a cost model.

So how did it come down from 29c to 22.5c?

The adjudication team analysed the cost model and contested the benchmark figure of 29c. They reduced it to 22.5c. One has to understand that it was not just about by 'X' megawatts of energy, there were all these other conditions.

The fact that one of the three shortlisted companies pulled out on the basis that the tender favoured the government and put too much risk on the private sector. This goes to prove that the amount was not generous, on the contrary it was not generous enough for the company.

How much would all these other conditions cost the company?

I don't know. It is not the Minister who decides.

You have information in front of you now.

Of course, but I do not know how much these conditions cost, I did not go into it. This process was done under the contracts department. I handed over the letter of intent three years after the call on 7 September 2012.

Konrad Mizzi is lying. What makes it worse is that he has all the documents and today I do not, yet he spreads all these lies.

To this day, one person who was on the adjudicating team is still a consultant to Konrad Mizzi.

Who?

The engineer Antoine Riolo, who I have the utmost of respect for. I mention these people not to try and tarnish them. On the contrary I know him to be an honest person. I mention him to explain what serious people we had on the adjudication team.

If Minister Konrad Mizzi kept him on as a consultant I know that he has a very capable person by his side.

If everything was done by the book as you are saying, how to you explain the bank letter, which for all intents and purposes appears to be a forgery?

No one has called it a forgery. Has anyone asked Alberta? The person who has the most to answer to are the people who submitted it, it is not the Minister who has to check these things.

Granted, but an unsigned bank letter should raise a few alarm bells.

Slow down. I am not a banker. People in the banking world say that protocols are not the same everywhere.

But you were just vouching for the whole adjudication team and you were saying how rigid the whole process was.

I am saying I had faith in the team. If there were shortcomings it does not mean they should be gotten rid of. Let's say the letter was unsigned and there was a mistake. The first person who should be answerable is the company that submitted it.

Granted, but it was up to the Ministry to flag shortcomings.

No, not the Ministry. There was an adjudication team. Someone has to ask the team not me.

But you were just defending the team.

Who am I to accuse them? Why should I accuse them?

Ultimately you are being held responsible for this.

No, sorry. I should be held responsible had I interfered in the process. I should not be accused because I did not interfere in the process. This is rich. In this country you have a Minister going to Spain...

Let's keep on track..

No, No. Excuse me. So a Minister who does not interfere in the process is condemned..

You were just defending the team now..

If there were shortcomings it was not for me to see, it was the contracts department to see this letter.

But you were just taking the credit for the process being so serious, yet you don't want to take any responsibility for shortcomings.

Excuse me. As a Minister I did my bit to make sure everything was transparent and just for everyone. I do not oversee the nitty-gritty of the process. Now I am coming in for flak as if it was my responsibility to see whether the letter was forged or not. This is not the Minister's job.

The first thing that should have been done by who filed the report was to send for the company who submitted the letter and demanded an explanation. If there was fraud I hope action will be taken.

This was all a deviation tactic to remove attention from the Prime Minister who said the power station would be ready in two years.

If there were irregularities, if I was Minister I would have proceeded long ago and not waited all this time to bring it up.

Something else I would like to mention, when the adjudication process was done they gave their recommendations to the department of contracts. The department accepted the recommendations.

My permanent secretary then issued the letter of intent on 7 September 2012, three years after the expression of interest. I then presented it formally in September. There was nothing covert about this. A DOI press release was issued and I even wrote in my personal blog about it. It is all public. I did not hide anything.

A letter of intent is not a contract. It shows that a company has been selected as the preferred bidder. Now that you have been chosen as the preferred bidder, the MRA has to approve the recommendations of the contracts department on the feed-in tariff. It did not have to agree with the tariff. It could have said no to 22.5c and set it at 20.5c I have no doubt that probably they would have pulled out.

Secondly there was the long process of the power-purchase agreement with Enemalta.

This will then result in the final text for a contract. A letter of intent shows the intention to continue the relationship. It is not a signed contract. It is not the first time that a deal has fallen through at the letter of intent stage.

This is what I know and I was never involved in the process apart from when I formally presented the letter of intent. I am clean in this whole story. I did nothing wrong.

So you take no responsibility at all, not even for this bank letter?

How can I take responsibility for a letter issued by a company?

You are politically responsible, you presented yourself there as evidenced by the photo

I gave the letter of intent. I bear responsibility for all my actions. I do not bear responsibility for things that are not my responsibility. With all due respect, do you think it was my responsibility to check the letter, to make sure this Spanish company has enough capital to enter the venture?

Ultimately that's what political responsibility is, if one of your underlings messed up you are responsible.

This was not one of my underlings. This was a ministry initiative..

Yes and you were the minister..

With all due respect, it is the contracts department that has responsibility.

You just said it was a ministry initiative..

It was a ministry initiative

If the initiative goes wrong then ultimately the Minister is responsible

The initiative did not go wrong.

It ended up getting cancelled.

My question is, was it cancelled for that? If that was the issue he should have called the company Alberta, seen whether the letter was falsified or not. After reaching this conclusion, he should have proceeded against the company and issued a new expression of interest.

He did not even do that. He slept. He was more concerned with mudslinging instead of making sure the renewable targets are hit.