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Simon Busuttil tears up Electrogas contracts in criticism of the amount of redactions

Neil Camilleri and Kevin Schembri Orland Thursday, 16 February 2017, 09:33 Last update: about 8 years ago

Today's fiery Parliamentary debate over a PN motion relating to government contracts related to the Delimara power station saw both sides take quite an aggressive stance, with Opposition Leader Simon Busuttil, who was the last to speak, tearing up the contracts because the redacted parts were the most important, and members from the PL hitting out at past PN government deals.

Towards the end of the debate, no portfolio minister Konrad Mizzi said that the fines accumulated by Electrogas for delays have thus far surpassed €10 million.


Prime Minister Joseph Muscat hit out the PN over the contact that had been signed with for the privatisation of the Malta International Airport contract. “We would have liked to discuss the Malta International Airport contract. But the contract includes a clause that prohibits its publication,” he said.

The first to speak was PN Deputy Leader Mario de Marco, who said that when Prime Minister Joseph Muscat was the Leader of the Opposition five years ago, he had stood up in Parliament and said that contracts like the ones related to Electrogas should be debated in Parliament before they are signed, "otherwise Parliament would just be conducting an autopsy".

"That is what we are doing today, an autopsy, yet we don't even have the whole cadaver. We have bits and pieces of it, and we are meant to conduct a full autopsy on it. This is what the Prime Minister wants to do today. How quickly pre-election promises are forgotten," he said.

He spoke about the censored sections of the contract, and urged everyone in government to read what was published, and say how much energy will be purchased from Electrogas, and for how long did government tie itself to do this. "The basic understanding of what we have come to discuss today, there was an absolute blackout on the contracts."

Meritocracy promises made by this government have now become a joke, he said.

"We asked for this debate to be postponed, not because this side of the House was not ready as we have been waiting for it for over a year and a half. We wanted it postponed as we believe it not right to debate contracts with hundreds of pages which were literally published a few hours before the debate, some of which were published last night."

He asked whether government is holding its promises that resulted in their election. He referred to transparency and accountability, "yet when one publishes more blacked out pages than white ones then they are laughing behind peoples' backs." He questioned how much Enemalta would purchase Energy from Electrogas from, as it is blacked out, stating that the energy and electricity tariffs were redacted. Turning to the section called consequences of termination in the implementation agreement, he said that it is redacted, and asked government to explain what the consequences are.

Dr de Marco said that two days ago, the PN asked for the debate to be postponed, yet the Prime Minister stood up and said that the motion was not needed as government published all that was requested in the motion.

This motion, he said, "was presented more than a year and a half ago, on 25 June 2016. It asked then Energy Minister Konrad Mizzi to table the expression of interest and request for proposals, and today I ask the Prime Minister, where are they?" He said the publication of contracts occurred a day and a half ago. He held up copies of the contract, highlighting the amount of redacted parts.

"The power station as meant to be complete in March 2015, he said, yet till today, two years after the deadline, the station is not yet done. They say, month after month, that it will start functioning, yet it still is not producing any energy". Dr de Marco said that thanks to work by the past government, the BWSC plant was always able to be converted to gas. "A government that promised to stop using heavy fuel oil is still using it till today."

"We also asked through the motion, what financial impact the two-year delay would have, who would pay for the energy tariff reduction given that the station is not yet built. We know that the reductions were thanks to the Interconnector and the BWSC." He also asked whether the bank guarantee by government for the Electrogas project was offered to others during the request for proposals or expression of interest stage.

"The security of supply agreement is still not published. Why is this essential document not yet published?" 

Government, he said, has signed the agreements on behalf of the Maltese people, and what was negotiated are not the assets of a government minister, but are assets that belong to the people. 

He said the government will be removing the advantage of flexibility in this sector "that can have repercussions on families and businesses. The reality is that over the past two years, government imported a quantity of energy through the interconnector, and thus had the choice to buy or import energy, and not just generate it. 80% of the energy needs were imported over this past year, thanks to the interconnector. According to an article published in The Malta Independent, we were purchasing the imported energy for 4c per kilowatt, and what was reported shows that government will buy energy from the new power station for 9c5 per kilowatt.”

“Can government say no to purchasing energy from the new station? Will we still have flexibility?”

What is the government hiding from - Marthese Portelli

 Shadow minister Marthese Portelli said that the government should explain why he heavily redacted parts of the documents which has important information that the public has the right to know.  

"What does the government want to hide, who is he protecting?" she asked.
The Minister who set up this deal had opened a secret company in Panama, she said. Dr Portelli said that Minister Mizzi had also intervene in the oil procurement from Azerbaijan, costing the country €14.1 million. 

Government revolutionised the energy sector – Environment Minister

Environment Minister Jose Herrera said that government revolutionised the energy sector, which resulted in energy tariff reductions, will see gas used instead of heavy fuel oil etc.

The Environment and Resources Authority, he said, closed the chapter on Heavy Fuel Oil, by giving the permit for the new plant to start operations.

The Authority is independent, and with eight votes against one, the permits were approved. Not only government representatives on the board voted in favour, but so did the representatives of the environment NGOs, and Professor Alan Deidun.  The Opposition was alone and voted against. Today, the PN still seem to be opposing the change-over to gas, if not directly, then indirectly.

The work done on the IPPC permit began soon after the general elections. It involved a public consultation, and the public was able to attend the decision meeting.

This was a transparent process, he said.

The ERA IPPC process moved forward according to law, he said, and said that through this project, Malta will take steps forward.

He said that government is taking decisions today that previous governments did not, such as establishing ERA. “The Opposition Leader wanted things to remain the same, and if it were up to him, the Marsa power station would still be in operation.”

Tourism Minister Edward Zammit Lewis said that while the PN says the published contracts are a whitewash, "under the PN we had a blackwash. The first opportunity the PN government had to use clean energy, they chose to go for heavy fuel oil.”

"Minister Konrad Mizzi had said in 2014, over a year before, that in due course the contracts will be published. Way before this motion was put forward, we were always going to publish these contracts. As for the Expression of Interest contract which the PN said was not yet published, it is on the Parliamentary website.”

He criticised past contracts by the PN government, and said that in the Maltco contract,” if it is published one would be fined, and the Malta International Airport contract was also never published. We are doing more than them. Yes there are parts redacted, but there is commercial sensitivity, for both the consortium and for our country.”

Contracts 'the mother of all evils' - Edwin Vassallo

PN MP Edwin Vassallo said the power station contracts were “the mother of all evils” – the government’s dirty dealings in the power station deal were the start of its “corruption experience.” 

“These are barcodes, not contracts. The information that really matters is all blacked out.”

PN MP Ryan Callus, who pinned one of the redacted contract pages to his jacket, said some of the documents were published yesterday at 8pm. “We did not have enough time to see them. This reminds me of what happened when the government published 15,000 pages related to the LNG risk assessments and gave us just three weeks to go through them. This is not the hand of friendship, as the government describes it, but the hand of hypocrisy. The PM does not respect us. He does not want a civil debate.”

Mr Callus said this was nothing but an attempt by the government to deviate attention away from damaging issues, such as the Panama Papers scandal.

The PN MP said people were eager to have their questions answered. These included the price at which Enemalta would buy energy from Electrogas. But the government only published redacted documents, missing the most important parts.

Some parts, including the energy tariff section, were whited out, giving to give the impression that the information was not redacted.

People wanted to know whether it was cheaper to buy energy from the gas power station or the interconnector. Mr Callus said government MP Etienne Grech, who spoke right before him, had confirmed that electricity from the interconnector was cheaper. “At least one PL MP had had the courage to say what Konrad Mizzi has been trying to hide.”

He accused the government of binding the country to buy energy at more expensive rates for the next 18 years, warning that someone would someday have to answer for this.

The Labour Party’s criticism of the BWSC plant was unfair, he said, pointing out that Malta was currently only generating energy from gas from the so-called ‘Yellow Pages’ power station. 

Economy Minister Chris Cardona said the whole issue could be explained in a number of points. The project led to cheaper bills, security of supply and the introduction of an energy mix and the continuation of the Malta-Sicily pipeline project. The project was approved by the European Commission, which showed that this was a transparent government. The investment has also saved Enemalta and strengthened the economy.

Dr Cardona said he was perplexed at how PN MPs were complaining about the redaction of commercially sensitive parts. What counts is that Malta has cleaner air and cheaper tariffs, he said. 

Prime Minister Joseph Muscat said the PN was criticizing the government for publishing redacted comments. “We are publishing all major contracts. This is unprecedented for Malta.”

He said this was different to what successive PN administrations did. “We would have liked to discuss the Malta International Airport contract. But the contract includes a clause that prohibits its publication.

There are many restrictions on the gas cylinder sector privatization. Practically nothing from that contract can be published. There is also the Maltco concession contract, which will have to remain secret even if the company decides to give up the concession.”

Dr Muscat said the government’s energy business model is clear. “We managed to anticipate the savings and reduce tariffs before the power station was completed. The Opposition says that the reductions were possible without a new power station. So why did they not reduce energy bills themselves when they were in power?”

He warned Opposition Leader Simon Busuttil over the Egrant claims. “If you are going to imply that I have a company in Panama you better come up with proof to substantiate your claims.” Dr Muscat said it was unacceptable for the PN Leader to lie in an attempt to tarnish his (the PM’s) reputation. “I will not allow you to do that.”

Independent MP Marlene Farrugia said the government was elected by the people so the people should be told what the government was negotiating. “If this was a good deal than the government should have nothing to worry about.”

But people were asking questions about the power station which was supposed to have been constructed within two years. “People want to know whether they have been taken for a ride by this government which sold our power station and issued guarantees for a private company,” Dr Farrugia said.  

The PM, she said, said the PN could have reduced energy tariffs. “Do you think people out there are idiots? The tariff reductions were possible mainly because of the drop in the price of oil, the efficiency of the BWSC plant, which you said was a cancer factory, and the interconnector.”

This was not the result of some supposed two-year project which has bound Enemalta to buy energy at higher prices for 18 years. Dr Farrugia also said there was nothing in the contracts to say that Electrogas should offer cheaper prices in case of higher-than-expected profits. 

Justice Minister and Opposition leader go head to head over this morning's court case

Justice Minister Owen Bonnici spoke of a motion presented by the PL when in opposition, for energy tariffs to reduce. “Today, things have changed, and we don’t have an opposition filing motions to reduce energy tariffs, as they have already been reduced, but rather questions regarding the operation of the energy sector.”

“I remember a time when the Prime Minister at the time said he would vote from his heart to keep tariffs high, when the then Finance Minister would say that people needed to get used to high energy tariffs.”

He said the EU Commission read the contracts, and questioned whether the PN was also questioning the European Commission. 

Dr Bonnici said that the Opposition Leader was in the court room this morning over a libel case instituted by OPM Chief of Staff Keith Schembri. “Keith Schembri’s lawyer asked Dr Busuttil to take the witness stand, yet Dr Busuttil said he did not know what he said that made Mr Schembri feel defamed. You call him corrupt out of court, and then use legalisms in court.”

At this point, PN Whip David Agius called a point of order, and said that the minister was lying. Opposition Leader Simon Busuttil also said that the Minister was lying, and explained that the libel case of Keith Schembri against him began being heard earlier today. “Keith Schembri asked me to testify, with him never saying what he felt defamed by. That is the truth of the facts. I told the courts; ‘how can I defend myself without knowing what I am accused of?’. The constitution grants everyone a right to a fair trial, and the courts did not accept Mr Schembri’s request. If someone is accused of something, then he has the right to know what he is accused of. For the Minister to try and lie about something so basic is extreme.”

Dr Bonnici said that for Dr Busuttil “to come here calling everyone corrupt, then appear in Court and use legal procedure not to testify is something that shows how low he can go. You had a chance to prove your claims before the courts, yet this shows tat you run instead of facing the trutg.

In response, Dr Busuttil said that the Court said that Mr Schembri cannot expect the Opposition Leader to testify without presenting the speech that he felt defamed by. Dr Busuttil said it is a black day when the Justice Minister speaks like this about a right safeguarded by the constitution.

Minister Konrad Mizzi said that the amount Electrogas will need to pay for delays is more than €10 million.

Minister Mizzi spoke about the bidding process for the contract which had occurred. “There were 18 bidders originally, and eventually Electrogas was chosen. Electrogas is formed by Siemens Project Venture, GEM and SOCAR. “

He proceeded to describe the project, and said that it won an IJ award as well. Turning to the Shanghai Electric power deal, he said their investment saved Enemalta and halved Enemalta’s debt.

“A set of the contracts were signed with Electrogas, another set by Shanghai Electric Power, which included the sale of the BWSC plant, an energy contract etc.”

“We also introduced the security of supply agreement and all tenderers knew about it. We notified the EU Commission and sent them the whole set of contracts. For the project to keep going until the EU checked the contracts line by line, we as government gave a temporary guarantee to Electrogas (up to 80%). To protect the public, if the Commission did not approve the project, then government would be able to take over the project. After their scrutiny, the EC approved all the contracts tied with Malta Power and Gas. The EC also said that the process which led to choosing Electrogas was fair.”

“Where is the corruption? There isn’t any. The EC said the contracts were fair and transparent. The EC also approved the state aid aspects, and also concluded that the price Enemalta pays Electrogas for gas is reasonable and has a fair return. The EC also said that this is a needed project to close down the Marsa station and the Delimara 1. Without this project, we would have needed the fuel oil infrastructure. The Interconnector is not enough on its own, but is good for the energy mix. You have to see it as part of the wider mix. “

“Simon Busuttil is not credible, and he said that he would remove the Floating Storage Unit if elected. This would mean Malta would only have Delimara 2 and the interconnector. Malta would be without energy. He would need to raise tariffs and have power cuts. This is reckless politics. “

“We as a party respect the EC, who certified this project, and all the contracts are published.”

The agreements that exist are complicated and were scrutinised by KFW HSBC BOV banks. Enemalta has the dispatch rights, and can decide on where to use energy from. The contract has a number of performance measures for both Shanghai Electric and Electrogas. “

He said that the 30 million development fees from Electrogas were paid, and in addition there is an €18 million performance guarantee.

The Opposition did not criticise a single clause in the contract, he said. Turning to Delimara 3, he said Shanghai Electric Power paid €170 million for the share transfer, and a further €70 million investment to change it over to gas. He said the Electrogas plant will soon start providing energy into the grid.

He said that the security of supply agreement while approved has not yet been signed, but will pass through internal processes to be signed, and once this happens, we will table it immediately.

He also said that renewable energy targets are being met.

Simon Busuttil tears up the contracts

Opposition Leader Simon Busuttil tore up the power station contracts which were published by government today during a Parliamentary sitting, saying that they are worth nothing as the important bits were redacted.

Opposition Leader Simon Busuttil said that the power station is a symbol of government’s hoax. “It''s a confusion from beginning to end. “

He spoke about transparency, a pledge made by the Labour government. “After two years of begging for the contracts to be published, they published them two days ago. Dr Mario de Marco asked for this debate to be postponed so that a prepared debate can occur, but the Prime Minister didn’t want this. When we saw the contracts, we saw nothing but blacked out clauses. Your idea of transparency is a total blackout.”

“The most important parts of the contracts are blacked out. The amount government will pay for energy from Electrogas, through the power purchase agreement, is blacked out. One after another, they are blackouts.” He tore up the contracts, saying they are worth nothing as nothing is seen.

“The PL was elected by saying the power station would be built in two years. The Prime Minister also pledged to resign if this didn’t happen, and then once the deadline passed he switched things around.”

“He said the PL had pledged not to privatize Enemalta. “They lied. This is the symbol of government’s hoax. The biggest lie was announcing this project to reduce energy tariffs, when the tariffs were lowered and the plant is not yet completed.”

“You reduced tariffs four years ago, then how on earth can you say that this was made possible thanks to this station, which is not yet completed.”

He said that oil prices had reduced by 66%, yet tariffs stayed at the 25% reduction price.

He said that there are people who have come knocking on his door crying, as government cut off their electricity as they struggled to pay the bills. “They close their eyes for people with accounts in Panama, but not for the little people, who struggle to pay bills.”

Turning to Brian Tonna, he said that he opened up companies for a person who was employed with Shanghai electric Power, and not just Minister Konrad Mizzi and OPM Chief of Staff Keith Schembri. He also said that Brian Tonna has his office next to the Prime Minister’s, thus the Prime Minister knows who owns Egrant. “We ask the Prime Minister and his response is to tell me to tell him who it belongs to.”

He said that the PN will investigate all contracts signed by Keith Schembri and Konrad Mizzi “as for us they are suspect. We will renegotiate these contracts, as we work in the national interest. We will ensure that the gas tanker is taken out of the Marsaxlokk bay as quickly as possible. In addition, a government led by me will purchase electricity from the providers that it makes most sense for us to purchase from.” 

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