Issue link: https://maltatoday.uberflip.com/i/546399
maltatoday, SUNDAY, 26 JULY 2015 News 3 PN accuses Labour of negligence in selection of ElectroGas JURGEN BALZAN THE Opposition yesterday lam- basted government for ignoring the financial troubles of the major- ity shareholder in the ElectroGas consortium, which was entrusted with the gas-powered power sta- tion project at Delimara. The Nationalist Party described Gasol's exit as "the latest in a string of worrying developments that are plaguing the project". On Friday, the West African en- ergy firm Gasol, which had only recently delisted from the Lon- don Stock Exchange, pulled out of the Labour government's flagship LNG project, citing financial dif- ficulties. The PN called on government to explain why the company's trou- bles went unnoticed in the bidding process. "The new power station was a cornerstone of Labour's electoral campaign. Joseph Muscat has pledged his political future on de- livering this project and delivering it within a two-year timeframe. In order to meet this unrealistic deadline, government cut corners in the procurement process and in the development application proc- ess," the PN said. Noting that the procurement process had been solely based on an expression of interest and was not subject to a full tendering process, the PN said: "the evalua- tion of the bidders failed to pick up the fact that Gasol, one of the part- ners of the consortium, was facing financial problems." On Friday, the ElectroGas con- sortium said that Gasol was re- moved to "maintain the long-term stability of the project company which will supply energy and natural gas in accordance with its commitments to Enemalta and all stakeholders". The most recent financial state- ment of Gasol – which held a 30% stake in ElectroGas – reported a negative equity of €12.8 million and accumulated losses of €96 mil- lion, with independent auditors warning that the company did not hold enough cash or liquid assets to meet its commitments. "This fact should have been picked up by those assessing ElectroGas's (Malta) bid. Govern- ment chose to ignore this reality and pressed ahead with selecting ElectroGas (Malta) despite this very serious shortcoming," the PN charged. Rules governing public procure- ment, the PN said, stated that all partners in consortia were bound to remain in the consortium until the conclusion of the contracting procedure and must include the same partners for the whole per- formance period of the contract. "The performance period of this contract has not elapsed. There- fore the departure of one the lead partner should not have normally been considered and approved." The PN also asked who had ap- proved the significant change in the consortium's formation and whether the Director General of Contracts had been involved in the process. It also called on government to publish all legal and technical ad- vice it might have received and questioned whether government received detailed submissions from the consortium explaining how it will cover Gasol's functions and financial obligations. Minister reassures project is 'on track' In an attempt to claw back gov- ernment's dented credibility on the LNG power plant, energy minister Konrad Mizzi said that despite Gasol's exit, the project remains on track. Referring to Gasol's exit as the "recent consolidation", Mizzi reas- sured that the change will have no impact on project timelines, con- struction and provision of power and gas to Malta and the Maltese people. "ElectroGas Malta's recent con- solidation of its structure dem- onstrated commitment by world class organisations to the project. These include engineering and power plant giant Siemens and gas specialist SOCAR," Mizzi said. He also insisted that the spe- cialisation, skills and knowledge required to implement and oper- ate the power and gas facilities had not changed and were still vested in ElectroGas through Siemens and SOCAR, the Azerbaijani state energy company. "Construction, operations, main- tenance and all other contracts re- main unchanged," Mizzi added. The LNG plant was originally scheduled for completion by March 2015, before the govern- ment delayed the deadline to July 2016. The government explained that this delay was due to the reo- pening of negotiations with Elec- troGas following Shanghai Electric Power's acquisition of a 33% stake in Enemalta in March 2014. ElectroGas 'committed' to deliver project ElectroGas has said that Gasol was removed to "maintain the long-term stability of the project company which will supply ener- gy and natural gas in accordance with its commitments to Enemal- ta and all stakeholders". The three remaining partners – Siemens Financial Services, Socar Trading SA, and GEM Holdings Limited – are now equal share- holders, with Siemens the new lead member. "We remain fully committed to its obligations to deliver the project that will introduce natu- ral gas for power production in Malta, and all the environmental benefits associated with it, within the agreed timeframes," Electro- Gas said. The government has controver- sially granted ElectroGas an €88 million state guarantee to cover the consortium's €101 million loan from Bank of Valletta. Mizzi has argued that the guar- antee was necessary "in the na- tional interest" until the govern- ment receives clearance from the European Commission that the Security of Supply Agreement it entered into with ElectroGas satis- fied EU requirements and does not constitute incompatible state aid. PN calls on government to explain why Gasol financial woes went unnoticed during bidding process for new power plant project Gasol's exit from power plant project sparked a war of words between government and opposition