Independent MP Konrad Mizzi has insisted that he still retains the support of Labour Party voters during a meeting of the Parliament’s Public Accounts Committee currently discussing the Electrogas contract.
Mizzi appeared before the committee for a second time and continued with an “oral presentation” about the project and the findings of an Auditor General report.
Last week’s sitting descended into a shouting match as PN MPs on the committee challenged Mizzi about the contents of his presentation.
The first hour of today’s meeting proceeded without interruption, but it quickly descended into chaos after the committee’s chair, PN MP Beppe Fenech Adami, interrupted Mizzi to ask why the Labour Party had expelled him, given that, according to what he was saying he had only done good for the country.
PN MP Ryan Callus brought up the Montenegro wind farm project – the reason for Mizzi’s expulsion – prompting Mizzi to go on the offensive.
He accused PN MPs of being arrogant and uninformed, insisting that the feedback he had received following last week’s sitting was overwhelmingly positive.
“The people of this country overwhelmingly voted me into Parliament twice,” he said. “I can assure you that I still retain the support of Labour Party voters.”
He said he was proud to form part of former Prime Minister Joseph Muscat’s government, describing the former prime minister as being a gentleman who had changed the face of Malta.
Mizzi pushed back against assertions that he was corrupt, insisting that he had never received any kickbacks during his time in politics.
Bank guarantee and security of supply agreement
The former minister referred to a guarantee given by the government to Electrogas for the project to be able to go ahead. He said that while the PN had tried hard to ensure that the European Commission would reject the project but had not been successful.
He said the government at the time wanted to avoid having to offer bidders a permanent guarantee and had come up with the “innovative solution” of implementing a security of supply agreement.
Mizzi said that when the Freeport was privatised under a Nationalist administration, its debt was carried by the government. “Today if you open the financial estimates, there is a vote for the interests on the refinancing of the Freeport loan. We’re paying €25 million a year just to pay interest instead of investing the money elsewhere.”
The security of supply agreement was between the government, Enemalta and Electrogas and was drawn in this way to allow the government to step in and continue to provide the country with electricity in the eventuality of a problem with Electrogas meeting the terms of the contract.
He also noted that prior to the shift to gas, Enemalta would buy fuel through permanent guarantees.
Ultimately, Mizzi insisted, the guarantee was temporary and had no impact on the government’s finances. He said the government had also imposed a fee of €12 million as compensation for the loan.
Electricity price comparison not representative of reality
Referring to an analysis by the Auditor General of the price of electricity from the interconnector and Electrogas, Mizzi noted that the analysis had ignored the cost of building the facility, which had cost Electrogas €300 million.
Moreover, he said the comparison had looked at interconnector prices when they were low and therefore the analysis was not representative of reality.
He pointed to the fact that electricity prices across Europe had skyrocketed recently making the interconnector far more expensive than natural gas.
“Do you have a response for this, because this is the reality?” Mizzi charged. “Thanks to this project the government was able to keep prices stable… 70% of the time, electricity from Electrogas was cheaper than the interconnector.”
Why turn to the private sector?
Mizzi referred to concerns raised by the auditor general about whether it would have made more sense for the project to be divided into smaller projects.
He said there was “no doubt” that the project was necessary since the demand for electricity had already started to increase and it could not be satisfied with just the interconnector.
The government, he said, had turned to the private sector because Enemalta had roughly €1 billion in debt and was losing €100 million every year.
“It wouldn’t have been able to raise the financial capital and financing for this project to be implemented,” he said, adding that banks had told the government that in order to speak to Enemalta, it would have needed a government guarantee.
“The government wasn’t even in a position to undertake the project itself because Malta was in an excessive deficit procedure and couldn’t take on any more debt.”
Moreover, he said, Enemalta did not have the necessary expertise at the time to handle natural gas. He said it was possible that at some point in the future it might make sense for Enemalta to purchase gas directly itself.
Splitting the project into smaller ones would not have been feasible, he insisted, especially when considering the difficulty in sourcing the natural gas and converting it into a usable form.
Turning to the hedging agreement signed, which tied the government to purchase natural gas at a fixed price, he insisted that if Enemalta could, today it would choose to purchase more gas at that price.
At the end of his presentation, Mizzi told the committee that he was roughly two-thirds of the way through.
He is expected to conclude his presentation during next week’s sitting when the committee will hopefully have the opportunity to start asking Mizzi its own questions.
Tag someone who needs to read this