Minister urges Enemalta not to pay for gas cylinder consignment

Public Investments Minister Autin Gatt said yesterday he had instructed Enemalta to ask its lawyers to consider ways how it could stop payments for the consignment of gas cylinders found defective late last year. He did not know if any payments had in fact been made.

The minister was replying to parliamentary questions by Opposition leader Alfred Sant and Labour MP Joe Mizzi.

The minister said the cylinders were found defective after independent checks commissioned by Enemalta at Malta Drydocks and in Italy. The cylinders were found to have inadequate fusion of the welds and the corporation was advised to withdraw them from the market. Some 21,000 of the 24,000 cylinders had since been returned by customers.

Asked who would pay for what had happened, Dr Gatt said Enemalta should do everything possible not to pay for the cylinders. However he could not understand how the corporation's Disciplinary Board had not found whoever drew up the specifications or whoever accepted the cylinders as being responsible. So, the obvious question now was, were those standards acceptable? If yes, were those who carried out the double checking wrong?

The whole argument revolved around what standards to apply. The board, it seemed, had found the standards to be acceptable while the independent tests reached a different conclusion. Politicians could not decide on technical standards.

He said that after the cylinders were withdrawn, Enemalta had blacklisted the supplier when a call for tenders for a new consignment of cylinders was made. The supplier appealed before the Contracts Board, which took 89 days to decide the issue. As a result, the new consignment, which was to have arrived by November, only started to arrive at the end of January. The corporation, however, imported 10,000 cylinders after being given authorisation by the Finance Ministry to place a direct order.

Asked by Dr Sant whether this was the first time that independent tests were ordered, the minister, after consulting Enemalta officials who were in the House, said the tests were requested since the supplier was new.

Speaking later during the debate on the estimates of Enemalta Corporation, the minister said there were three elements which had come together to cause the gas shortage.

He said that Enemalta calculated there were between 400,000 and 500,000 gas cylinders in Maltese homes, apart from commercial establishments. In September, Enemalta, on technical advice, withdrew 24,000 cylinders and immediately started procedures to import new ones, but the importation was delayed because of the procedure lodged by the blacklisted supplier before the Contracts Committee.

However, thanks to the direct order placed by Enemalta for the emergency supply of 10,000 cylinders and the other consignments which had since been imported, Malta now had the highest number of gas cylinders ever.

The second issue was the supply of gas.

The agreement with Total had been for delivery between February 12 and 14, but the ship first suffered bad weather and then was delayed by strike action in France. The ship therefore arrived in Malta five days late, on February 19, just one day after supplies of gas ran out. If this had not happened there would not have been the one day without any gas supply.

In view of the delay, Total had sought to buy gas from Sicily but none was available because of the cold spell.

The other compondent of the problem, though not the main cause of it, was production.

The supply of gas had risen this year compared to last year, but demand was higher still. The production could also be higher, were it not for outdated work practices. The gas plant could refill 800 cylinders an hour and in 12 hours it could turn out 9,600 cylinders. Indeed, one wanted to work round the clock. But the old mentalities would not accept this.

It was still unacceptable that in this crisis the old practices had been continued.

For example, workers worked 30 minutes on and 30 minutes off. This harked back to the time when gas cylinders were manually hung onto the carousel. Even when new equipment was intoduced and the cylinders were not carried, this practice had been continued.

Furthermore, a rod was being inserted in the equipment so that only 650 cylinders were being refilled every hour.

He said the management had started talks with the GWU in order to raise efficiency and productivity, especially in the months of peak demand.

Unofficial talks had also been started with the distributors in order to improve distribution to homes and sales from fixed points.

It was true that equipment was old and needed modernisation. Dr Gatt said applications submitted by Enemalta to Mepa for the gas depot to move to Benghajsa was still pending. An application for temporary measures at Qajjenza was also still pending before the Occupational Health and Safety Authority.

Dr Gatt pointed out that the gas market would be liberalised on January 1. Enemalta should regard gas as a commercial service. This, however, would not affect whether the government continued to subsidise the price of gas.

Nonetheless, the people should realise that Enemalta lost Lm1.50 from every sale of a 12-kilo gas cylinder. Last year gas imports cost Lm3.3 million. Production cost Lm700,000, and yet revenue from sales was Lm3 million. The price of gas was artificial and being supported by an annual government subsidy of Lm1 million. In the end, it was the people who were paying for this.

Mr Mizzi asked how this consignment of gas cylinders was tested but previous consignments, bought under the same specifications, were not. There could therefore be a danger that other cylinders could also be defective.

The minister had said he had advised the corporation to consider not paying the supplier. He had been informed that payment had already been made for the new cylinders.

But what was even more serious was that even as the gas shortage started to bite, the minister and Enemalta had said nothing about the rapidly dwindling gas reserves, blaming the shortage of cylinders and work practices. But clearly, this was an issue of poor planning. Enemalta's new management had not factored in the increased demand for gas brought about by the higher cost of kerosene. Eventually, when supplies ran out, Enemalta blamed poor weather and industrial action abroad for the late delivery.

Enemalta had long known it could not continue to operate from the Qajjenza gas depot beyond this year. So why had planning for the new depot at Benghajsa taken so long? And why was Mepa now coming up with problems for the Benghajsa site, which had previously been used for oil storage?

It was also shameful that the gas problem was continuing to persist, with many localities still waiting for distribution, causing hardship particularly for the elderly.

The minister had called on Enemalta to apologise to the people. But what the people expected was accountability from those who had bought the defective cylinders and those who had not ensured there was a constant gas supply. The minister, along with the Enemalta board he had appointed, should assume their responsibilities and resign.