Soon after it had blown the candle on its birthday cake, and in the vain hope that it could retain some festive mood, the government announced that it was lowering electricity tariffs as of this month. Of course, there was no way it could resist breaking the news without the accompanying jibes at the Opposition.
Yet, the way the measures the government has taken so far on energy generation is turning out to be a justification of pre-electoral scepticism. We were never told that the government would be taking considerable liberties in choosing the means to achieve its ends.
What we weren’t told
Indeed, if we, the doubting Thomases, are guilty of anything it’s granting the government the benefit of the doubt. We never imagined that to skirt around the challenge of installing massive storage structures on ground that is unlikely to take the weight, the government would, willy-nilly, store LNG in a huge, ageing vessel in the middle of Marsaxlokk Bay.
We never imagined that, to solve Enemalta’s financial difficulties, the government’s solution would be part-privatisation. Yes, that’s what it’s called when you sell publically-owned assets: privatisation. And the Government didn’t just sell any asset. It has also effectively given away our country’s energy sovereignty. That’s one big surprise coming from a party that, in the past, made a huge fuss over the privatisation of a bank.
The deal we got ourselves into
The storage issue has drawn attention away from the other issue of fuel procurement. Although we had been promised a 10-year fixed price guarantee agreement before the election (with Labour unable to come up with one example where such an agreement exists anywhere in the world), we got a price guarantee for only five years.
An analogy here would be helpful to realise just what the Labour government has got this country into. Just imagine if the owner of the gas station close to where you live would make you an offer. For five years you pay a below-market price for your fuel on condition that for the following 20 years you only buy your fuel exclusively from him at the price that he requests.
A raw deal
Would you take up that offer? Of course not. Not unless you don’t plan to be driving a car in five years’ time, in which case your transport fuel costs would be zero. If you think that is unlikely, think of how far lower the chances are that in five years’ time we will have no need for a power station.
The gas station owner is, in fact, offering you a very raw deal. He’s ready to suffer losses for five years (a very short time in investment terms) with the prospect of not only recouping the losses but making a guaranteed profit for two decades. That’s the kind of deal Labour said “yes” to. There will be the opportunity, after 25 years, for the Maltese government to buy the plant and be freed of the millstone tied to its neck. But considering that it will be buying technology that’s a quarter of a century old, it will be a very expensive exit.
When it happens
Last Tuesday, a tank containing carbon dioxide exploded aboard a yacht berthed in Manoel Island. Six persons had to be hospitalised. Fortunately, only one was found to have suffered slight injuries.
Carbon dioxide is non-flammable. Yet, there was an explosion and we’re talking here of a tank small enough to fit on a yacht. Worth keeping in mind all those “experts” who pooh-poohed the concerns about the massive storage of LNG aboard a ship in Marsaxlokk Bay. You see, you take out insurance against accidents based on their consequences, not necessarily on their frequency. With Labour’s decision on LNG storage we need only be unlucky once to find ourselves in really deep water.