Enemalta chairman and CEO Fredrick Azzopardi had flagged ‘evidence of unreliability and faults’ in the construction and operation of the new Electrogas plant, as reported in the Times of Malta a few days ago. But he told Vanessa Macdonald that the issue has since been resolved.

You described the Electrogas plant as unreliable and said Enemalta was reserving all its rights. What are your rights? Is this the first step towards finding grounds on which to cancel the agreement?

As Enemalta chairman, there is no way I would not take action when a problem arises in operations. In the past, there were regularly issues with a plant. The e-mail which was quoted in the Times of Malta was referring to a particular instance when they asked for our permission to do some tests.

My team and I did not feel that it was the opportune time to do those tests, as they had some problems. These have since been solved, and in fact the tests were done and all went well, also approved by independent engineers.

Heaven forbid every time there was a problem with an electricity provider, I would go out shouting about it. But I do feel that as a chairman, if there are issues, it is my duty to draw attention to them so that they can be tackled.

For example, we had issues with the interconnector overnight between Saturday and Sunday on the same day the story about problems with Electrogas appeared [in The Sunday Times of Malta on December 3]. We discussed them with our counterparts so that the cause could be identified.

It would not be fair to give the impression that a plant is bad just because there was an issue.

You are the one who used the word ‘unreliable’…

In the circumstances, I felt that the equipment was not reliable on that day, which is why I wrote what I did. But the issues were rectified.

As far as I was concerned, I was satisfied with the outcome.

Are there any other problems? Can you say it is reliable?

Yes, the overall plant is reliable. We gave figures over the past days in a parliamentary question which indicated that over the past six months more than half our electricity – excepting that from renewable sources – was from Electrogas’s Delimara IV.

It is worth remembering that we had issues with the interconnector when Delimara IV was still in the testing phase. We would have been stranded, but they provided electricity to pass on to our consumers.

In any operations, issues have occurred, do occur and will occur. It is up to Enemalta’s management to react and safeguard the consumer’s supply

In any operations, issues have occurred, do occur and will occur. It is up to Enemalta’s management to react and firstly safeguard the consumer’s supply. Recently there was a particular contract where the contractor did not deliver and was fined more than €200,000.

Electrogas was fined €10 million for late delivery. Has it been fined for anything else?

The figure of €10 million was not the final figure, and it is actually much higher.

And fines for operational shortcomings? You are saying the problem was limited and quickly solved.

The contract says that when there are shortcomings – from any side, including Electrogas – yes, there could be financial implications. My work is to make sure that these are imposed when merited.

Were there fines or not?

The €10 million figure is now higher, and there were instances when Electrogas had to pay for certain operational shortcomings.

And you cannot tell me how much they were?

No. But I can tell you that Delimara IV is now fully operational, offering 205 megawatts.

In fact, the LNG tanker has been refilled eight times this year, without any complaints. There is no issue at present.

In 2016, the interconnector provided 67.9 per cent of electricity, but this went down to just 27 per cent between May and October. When I interviewed you a year ago, you assured me that Enemalta had a team which would buy electricity from the cheapest source.

Why did the share of the interconnector change so much? Are you under pressure from Electrogas to buy its output?

When we ‘dispatch’ [decide from what source to buy], there are three elements: price, contractual obligations and security of supply.

We have to balance all these and ensure that Enemalta does not take any risks. For example, it may be financially more advantageous to go for the cheapest source, but then there are issues of security of supply. For example, if you are using the interconnector for a large percentage of supply and it disconnects, you will have a total shutdown.

If you have issues with a plant which does not supply as much as the interconnector, other generating sources will be able to take up the slack and there will not be a total shutdown.

If we got 100 per cent from the interconnector, there would be much more ‘security of supply’ risk. And it does not mean that the more you use the interconnector, the more you save.

We often hear people talk about 3c and 6c per unit. But today, the cost was almost 12c at the times that we most needed it: in the evenings.

But even at that price, I would get some of my electricity from there, so just as I would not get 100 per cent from there, I would also not get zero per cent from there.

It is important to add, however, that we are also still learning the best mix, and it is dynamic and always improving.

One thing is certain: that on any particular day, all three sources are being used. And if any of them needed to be shut down for maintenance, for example, the mix would be revised.

You mentioned contractual obligations.

I have asked before and will keep asking: is there a minimum amount of output that you need to buy from Electrogas’s Delimara IV and from the BWSC plant, Delimara III?

There is a gas supply agreement. And yes, there is a purchase agreement. They made an investment, and there is a contractual obligation for a certain amount of electricity and of gas to be bought from Electrogas.

But I am not able to tell you the amount. That is a commercial agreement.

And what about the security of supply agreement and the loan guarantee?

That agreement is between the government and Electrogas. These questions should be addressed to the government.

Azzopardi to step down as CEO but will stay on as chairman

Fredrick Azzopardi will be stepping down as CEO of the company as from January 1, 2018, but will be keeping his position as non-executive chairman.

Mr Azzopardi’s term runs out in summer 2018.

A CEO designate has been selected, although he declines to say who it is.

“In the past four years, the team has worked well and I think I have the respect of both shareholders.

“The decision to step down as CEO was discussed with them, and they both wanted me to stay on as chairman. I am convinced that whoever comes after me will look after the company.”

Energy mix

Delimara IV is now fully operational, offering 205MW.

The LNG tanker has been refilled eight times this year. In the last six months, more than half of Malta’s electricity has come from Electrogas’s Delimara IV power plant.

All three sources of power are being used: Delimara III (BWSC), Delimara IV and the interconnector.

Attached files

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