Enemalta's hands when it came to hedging the price of oil were tied by the "political direction" given by then minister Austin Gatt, according to the company's chief finance officer.
Antoine Galea was testifying this evening before Parliament's Public Accounts Committee that is probing the National Audit Office (NAO) findings on how the State company bought oil in 2010-2011.
Mr Galea, who has been employed as chief finance officer since April 2009, said Dr Gatt's email of November 2009, establishing the $81.80 per barrel benchmark, conditioned how the company bought oil.
Even though hedging at a lower price was possible, Mr Galea said in practice it tied the company's hands. "We did not want to risk waiting until the price went much lower because if the market suddenly took an upward turn the minister would have been disappointed."
Mr Galea said the minister's direction was intended to lock the price of oil with the intention of keeping utility tariffs for consumers fixed for a whole year.
He noted that the risk management committee did not study the developing scenarios and associated risks given the political direction.
Asked what savings could have been done had Enemalta hedged the price of oil after carrying out the proper risk assessment, Mr Galea said that with hindsight the corporation could have saved some €4 million.
However, he refused to give a technical assessment of the political direction. "It was a political decision and the judgement has to be political... I accept whatever the shareholder decides."
The CFO also noted that the minister's political direction came on the back of what he described as "a rollercoaster" trend in the international price of oil that created instability.
'DUBIOUS' BIDS WERE CHEAPEST AND WITHIN SPECIFICATIONS
Mr Galea disagreed with the NAO's doubts about five contracts and said they were the cheapest bids, and within specification.
The issue had been raised by Mr Galea's predecessor Pippo Pandolfino when testifying before of the PAC a couple of weeks ago.
Mr Pandolfino explained how the NAO's conclusion was incorrect since it overlooked the purchase of security stocks, information that could have been easily accessed had it been passed on by Enemalta.
PAC chairman Jason Azzopardi asked Mr Galea whether he had withheld any explanation that led the office to conclude that oil was not bought from the cheapest bidder.
Mr Galea, who was the corporation's point of contact for the NAO, said he had given the necessary explanations but the NAO was not satisfied. "I confirm that the five bids were the cheapest and according to specifications."
DINNERS WITH OIL COMPANY REPS
Mr Galea admitted having been present for dinners with oil trader George Farrugia - who acted as agent for Total and Trafigura - in the presence of foreign oil company representatives and former Enemalta CEO Karl Camilleri.
Mr Farrugia was earlier this year given a presidential pardon to tell all on corrupt practices and bribery in the Enemalta oil scandal that erupted at the start of the year.
Mr Galea said he could not remember how many such dinners took place, insisting "there weren't many".
Asked by Parliamentary Secretary Owen Bonnici whether he felt such dinners were ethical, Mr Galea insisted oil procurement was never discussed but the issues at stake revolved around "outlooks and oil specifications". Mr Galea said these dinner meetings now no longer took place.
He acknowledged being uncomfortable with Mr Farrugia being an agent for two competing oil companies. "I cannot understand how the companies accepted this."
Mr Galea is expected to continue testifying next Monday.