Issue link: https://maltatoday.uberflip.com/i/193056
11 BUSINESS & FINANCE maltatoday, WEDNESDAY, 16 OCTOBER 2013 From Baku to Portomaso: the makings of Labour's energy plan JAMES DEBONO explores the political ramifications of a deal which links the towers dominating the skyline of two distant cities, the SOCAR tower in Baku and the Portomaso tower in St Julian's Labour's 2013 energy timeline 8 Jan Labour announces energy plan, which envisions buying gas at fixed price for 10 years from a private company 9 Jan Labour excludes public tender for project 12 Jan Joseph Muscat confirms interest from both local and foreign companies in Labour's energy plan 12 Mar Labour wins general election 11 Apr Government launches bid for expression of interest, which foresees fixed-price agreement for first five years of an 18-year agreement 10 May Government received bid from 19 companies, including 'mysterious' ElectroGas consortium 4 Jun List whittled down to 11 16 Jul MaltaToday reveals shareholding of ElectroGas 10 Aug List whittled down to six 20 Sep List whittled down to three 13 Oct ElectroGas wins energy contract When announcing plans in January 2013 Muscat said he was "confident" that there was "strong interest" from the private sector. "It is a safe investment for the private sector," he said, denying there was a done deal with any company. "This is not a proposal belonging to any one company. Any company can come forward to "Before the election, current Education Minister Evarist Bartolo, in a series of articles highlighting the company's questionable record, repeatedly questioned the participation of the company in the BWSC bid" submit its proposal," he said. On 12 January Muscat confirmed that "local and foreign companies have shown interest in the Labour Party's energy plan." Three months later, a consortium involving two leading Maltese businessmen, a company belonging to the Azeri government, a British oil company with interests in West Africa and German multinational Siemens was already in place to answer the first call for expression, issued in April, just a few weeks after the general elections. The only consortium involving more than three individual companies among the original 19 bidders, ElectoGas emerged victorious over a number of multinational giants, including the Anglo-Dutch Royal Shell, Russian Gazprom, the Italo-French Edison, South Korean Daewoo and French Soffimat-Gestamp, among others. The agreement will see the ElectroGas consortium providing Enemalta with gas at a fixed price for the first five years and at a yetto-be-agreed price for the next 13. The consortium will also own a private power station, from which Enemalta will be obliged to buy energy. The pieces in the puzzle ElectroGas Malta was the only one of the original 19 bidders which included direct Maltese participation, through GEM Holdings – owned by Gasan Group Limited and Tumas Group Limited. With Enemalta being partially sold to the Chinese government, the Maltese shareholding becomes particularly significant. GEM Holdings is owned by CP Holdings Limited – an import company owned by MEPA board member Paul Apap Bologna, also a director in GEM, Gasan Group Limited and Tumas Group Limited (owned by George Fenech). The fourth shareholder is Yorgen Fenech, also a director of GEM. Tumas Group is no stranger to joint bids with foreign companies. In 2006, Tumas Group teamed up with Portek Group of Singapore to form Valletta Gateway Terminals, which won the bid for the liberalised port services. In 2009, Tumas Group teamed up with Arriva to win the bid for the liberalised public transport system. Tumas Group was instrumental in securing Arriva, the Chinese-built bus fleet, but sold its shares a few months after the company started operations in Malta. From BWSC to Electro Gas Siemens, a German multinational engineering and electronics company, was the manufacturer of the 132kV switchgear for the BWSC plant in Delimara. Before the election, Evarist Bartolo, in a series of articles highlighting the company's questionable record, repeatedly questioned the participation of the company in the BWSC bid. The company's track record included the conviction of a former manager by a Munich court in 2008. The man was sentenced to two years probation The Portomaso tower in St Julian's and fined €108,000. In 2009, the World Bank Group announced a comprehensive settlement with Siemens AG in the wake of the company's acknowledged past misconduct in its global business and a World Bank investigation into corruption in a project in Russia involving a Siemens subsidiary. The settlement included a commitment by Siemens to pay $100 million over the following 15 years to support anti-corruption work, an agreement to a debarment of up to four years for the company's Russian subsidiary and a voluntary two-year block from bidding on bank business for Siemens AG and all of its consolidated subsidiaries and affiliates. As part of the settlement, Siemens also agreed to cooperate to change industry practices, clean up procurement practices and engage in collective action with the World Bank Group to fight fraud and corruption. Azeri interests SOCAR – the state-owned energy company of Azerbaijan – produces oil and natural gas and operates the country's two oil refineries and the running of oil and gas pipelines throughout the country. The company is also becoming a major international player. In Romania, SOCAR is planning a petrochemical refinery complex to supply European countries with oil products. Greece is set to agree to the sale of its natural gas grid operator DESFA to SOCAR. Caspian natural gas fields are located relatively far from export markets, requiring expensive infrastructure to move oil to ports where it can go to world markets. Exporting liquefied natural gas (LNG) to offshore terminals is one way of doing away with this isolation. But SOCAR has also faced allegations of lack of transparency. In Transparency International's 2011 report, the Transparency of Global Oil and Gas Companies, SOCAR performed particularly badly, keeping company with the likes of Angola's SONANGOL and Nigeria's NNPC at the bottom of the rankings. SOCAR fares particularly badly relative to companies that report on their anti-corruption programmes. The worst-performing companies in this regard were Gazprom, GEPetrol, NIOC, NNPC, SNPC, Sonangol, Sonatrach and SOCAR, which scored zero for the entire section. "We strongly encourage these companies to publicly disclose their codes of conduct and other similar corporate regulations concerning anti-corruption programmes on their corporate websites. Such disclosure demonstrates public commitment