PN - PL's proposal will cost twice that estimated
The recommendations of DNV Kema’s confirm that a gas pipeline as proposed by PN would be cheaper than the PL’s proposal, Minister of Finance, Economy and Investment Tonio Fenech, told the media this afternoon.
Tonio Fenech continued that a minimum of a further €200 million would need to be invested if the proposed infrastructure was to be developed locally. This proves that the proposals put forward by PL are based on gimmicks and cannot be sustained nor finalised in under two years.
Addressing the 10 year agreement as proposed Mr Fenech held that hedging agreements over gas do not exist anywhere in the world.The price of gas is rising, the Minister said. "The World Bank's template for this kind of Public-Private Partnership shows that the private sector will base their price of energy based on the price of the fuel. With gas prices rising, how is it possible to set the flat amount for ten years. What private company would agree to this, let alone when they are saying that the price of electricity will go down". In addition, quoting the BG Group chief’s comment made on the Financial Times, the Minister said; “By 2025, there will be a 175 million gap between the demand and supply of gas. So then how is it possible, to offer lower energy tariffs, when the price of gas will rise?"
Further issues rise from the fact that DNV KEMA neither prepared Labour's tariff reduction proposals nor sanctioned them and the PL asked the company to give an estimate of the cost of electricity with possible usage of gas together with building of the needed infrastructure."Labour assumes the private sector is going to assume the risks of the capital costs of this project and I wonder which private company is going to be our Father Christmas? That's why I have called this proposal an 'Alice in Wonderland' idea," the Finance Minister claimed.
"When in 2014 the interconnector will be installed, we would use the new Delimara turbine for 25% of our needs, 70% of energy purchased from the interconnector, and the rest from renewable energy,” Tonio Fenech continued, riddling holes in the PL’s proposal to generate double the needed electricity almost totally from a gas powered power station.Minister Fenech claimed the total project costs at least €600 million amounting to twice the estimate included in the PL proposal."Labour's proposals will have us build a new 200 megawatt powerstation. In August, the height of Summer, we used 433 megawatts and right now we produce 730 megawatts. The PL have no viable reason to want to spend money on a new 200 Megawatt station," he explained.
The European Union has a plan to connect all the countries in Europe, through a gas pipeline, Minister Fenech explained. "This is why the EU, in principle, said they would give us funds for a gas pipeline as even the EU has realised that the price of energy is a problem. The Labour Party's proposal, will isolate us from the EU and, because it will go against the plans of the EU, will have to be implemented without any EU funding". When asked how much a pipeline would cost, the Minister did not give a number.
The Minister stated that if the PL tries to implement these proposals, Malta will be rammed into a wall and the national debt will skyrocket. "It will affect jobs, health and stability in this country". In addition, he explained, that when dealing with the private sector there are bound to be delays (in Mepa etc,) and the PL are not taking this into consideration.
Speaking about the good reactions on the PL proposal from various pressure groups, Minister Fenech explained that these same groups also said that more research needs to be done before undertaking such a large project. "Why then, if their proposals are so good, have they not published their studies, allowing us to debate them publicly?" he asked.