Around 680,000 files from the Electrogas consortium had been leaked to journalist Daphne Caruana Galizia in the months before her assassination on 16 October, The Times of Malta as part of 'The Daphne Project' has revealed.
The documents allegedly reveal that Malta is found to purchase €131.6 million worth of LNG from Electrogas ever year, who in turn has entered into a $1 billion deal with Azerbaijan's state-owned company Socar.
It was also claimed by the Daphne Project journalists that taxpayers are potentially losing tens of millions of euros from the deal, given that Enemalta and Electrogas will purchase the gas from Socar at a fixed rate of €9.40 per unit up until April 2022; and that the gas Electrogas buys from Socar, is initially purchased at a lower market price with Shell.
According to energy experts who have spoken to The Guardian, the country would have had a better deal had it negotiated directly with Shell, in fact, Enemalta appears to be paying a much higher rate than similar deals in Greece, Italy, Turkey.
Simon Pirani, one of the experts who spoke to The Guardian, said:
"If I were a Maltese taxpayer I would want to know why such a poor deal was signed and why a Socar subsidiary had been brought in as a seller of LNG. Socar is not supplying, and could not supply, these contracts from its own production."
Anonymous energy analysts also said that is paying the double market rate.
The Times of Malta also claimed that the leaked documents also show Electrogas' own advisers questioning the deal, with UK Consultancy Poten saying that it expected Shell to deal directly with the project.
Socar started supplying LNG to the new plant last year, after its original March 2015 deadline kept being delayed.
The emails also allegedly show that Minister Konrad Mizzi continued to remain the main contact point for Electrogas despite him being removed from the portfolio in April 2016. It should be noted that the Minister at the time was serving with the OPM, and was looking after Capital Projects.
Speaking to The Daphne Project, a spokesman for Mizzi rejected the claim that Enemalta was paying double the market price for LNG, saying that the price included a five-year fixed price, given the volatility of the oil market.
Reacting on social media, PN Leader Adrian Delia asked: "In whose pockets did the $40 million for the first year alone go?"
Government statement
The government in response to the Times of Malta story, said that contrary to the allegations being made, the Maltese consumer today is paying significantly lower energy tariffs than they did under the previous administration
They said that the evidence presented by the Times "clearly misrepresented the nature of the transaction that has been entered into between Enemalta and Electrogas Malta Limited."
"The starting point to any evaluation of the project, and the related contractual relationship, is the model and structure which was determined by Enemalta and which formed the basis of the competitive tendering process. The project is based on a Power Purchase Agreement and Gas Supply Agreement, which means that the contractor (Electrogas) is responsible for the provision of both the infrastructure and the supply of electricity/LNG. Having assessed a number of possible models and structures, for the changeover to natural gas as a cleaner source of fuel, Enemalta opted for a 'final product' procurement (as opposed to the procurement of infrastructure or LNG themselves). This decision was based on the information available to Enemalta at the time."
"The article is erroneously decoupling these two elements which would change the nature of the competitive process and lead to the creation of completely different set of risk dynamics for the project as a whole. That would put Enemalta in a position of having to manage and administer LNG supplies for which it does not (either now, or at the time of the tender process) have the necessary capacity or technical capabilities to do itself."
They said that the contract was awarded following an open competitive process. "The offer of Electrogas Malta Limited was 20% cheaper than that of the second-ranked bidder"
Government said that Enemalta plc exceeded the previously estimated €143 million annual cost-savings emanating from the project. "These savings include €80 million which was used to reduce electricity tariffs by 25% for all residential and commercial customers, and an additional €85 million, offsetting the 2012 losses of €48 million and leaving Enemalta with a profit of €37 million for 2017. In total, this represents cost savings of €165 million."
As for hedging, they said Malta is not comparable to other larger countries which have the benefit of diversifying their energy generation capacity across a number of operators each of which would have its own hedging profile and policies. In the case of Malta, the LNG to be delivered to Electrogas would supply around 65% of Malta's Energy Requirements such that fluctuations in the price of LNG would have a significant and direct impact on Electricity Tariffs charged to consumers.
PN statement
The PN said that people are want to know where the €40 million lost in the first year of the 10 year gas purchasing deal went.
They said that The Guardian reported that the bad purchase deal with CAR led Enemalta to pay double market price.
"This led to someone making a €40 million profit." The PN said that the allegations must be taken in the contest of other revelations by the German media, that $200,000 were transferred to 17 Black from the company of the local agent who supplies LNG gas to the new power station."
Fellow MPs Simon Busuttil and Jason Azzopardi have also reacted on social media: