The as­cend­ing power of spin

When on Wed­nes­day the re­port by the Au­di­tor Gen­eral was tabled in Par­lia­ment, we, at least in this news­room, im­me­di­ately re­al­ized some­thing big was hap­pen­ing.

The Malta Independent on Sunday - - DEBATE & ANALYSIS -

Within min­utes, we (and the pub­lic out there) were in­un­dated by gov­ern­ment spin and spin­ners. Tweets from the staff at Castille com­peted with tweets by Min­is­ter Kon­rad Mizzi who went on to hold a press con­fer­ence re­joic­ing that the re­port had not found him guilty of cor­rup­tion.

That was rather pre­ma­ture as by then no one in any news­room had had the chance to read and ab­sorb the 600-page re­port.

Pre­dictably, given the abysmal state of broad­cast­ing in Malta, by the time the news bul­letins came, the two main news­rooms – PBS and One News, ac­count­ing for let’s say three-quar­ters of Malta’s view­ers fol­lowed the gov­ern­ment line.

By the next day, although the is­sue re­mained alive in com­ments and re­ac­tions, es­pe­cially by the PN leader, no­body was talking about it in the bars, shops and on the streets.

The think­ing part of the elec­torate mean­while had had time to an­a­lyse the re­port and ques­tions fol­lowed. The gov­ern­ment then at­tempted to douse the flames with a joint press con­fer­ence by Min­is­ter Ian Borg and MP Robert Abela (leav­ing peo­ple to ask them­selves why these two and why not other min­is­ters). Then, when the roar of ques­tions be­came too loud to be ig­nored, the Prime Min­is­ter him­self who, for­get­ting his usual de­fence of the in­sti­tu­tions, crit­i­cized the con­clu­sions of the NAO say­ing ba­si­cally that it had not come up with a proper es­ti­mate of the power sta­tion sit­u­a­tion v the In­ter­con­nec­tor.

This is how The Shift News an­a­lysed the re­port: A “con­ser­va­tive es­ti­mate” by the Na­tional Au­dit Of­fice found en­ergy gen­er­ated by the new Elec­tro­gas power plant to be on av­er­age €50.64 /MWh more ex­pen­sive than the Malta-Si­cily in­ter­con­nec­tor, re­sult­ing in mil­lions over­charged to tax­pay­ers.

In a 600-page re­port on the power sta­tion pro­ject tabled in Par­lia­ment, the NAO was highly crit­i­cal of a num­ber of as­pects of the pro­ject, in­clud­ing eval­u­a­tion, due dili­gence, as well as the “risky” and “un­prece­dented” State guar­an­tee of €360 mil­lion given to Elec­tro­gas.

The gov­ern­ment im­me­di­ately is­sued its counter nar­ra­tive, say­ing the NAO con­cluded the “process of ad­ju­di­ca­tion was fair and trans­par­ent”. In re­al­ity, the re­port raised a num­ber of ma­jor con­cerns.

The NAO re­ferred to the “in­con­sis­tent ap­proach” adopted by the eval­u­a­tion com­mit­tee in its as­sess­ment of sub­mis­sions.

The fi­nal as­sess­ment of com­pet­ing bids was over­seen by Brian Tonna, the man­ag­ing part­ner of firm that set up the com­pa­nies ex­posed in the Panama Pa­pers be­long­ing to Tourism Min­is­ter Kon­rad Mizzi and the Prime Min­is­ter’s chief of staff Keith Schem­bri.

The re­port con­cluded the as­sess­ment was not eq­ui­table, and that the eval­u­a­tion cri­te­ria should have been uni­formly ap­plied across the board. The re­port slammed the lack of due dili­gence.

Op­po­si­tion Leader Adrian Delia said the re­port was “a clear con­dem­na­tion show­ing the deal was tam­pered with from day one.”

“Tax­pay­ers paid an ex­tra €200 mil­lion per year than PN’s in­ter­con­nec­tor. We are all pay­ing for their cor­rup­tion,” he said.

he pro­ject is at the cen­tre of a

Tma­jor scan­dal af­ter leaked emails writ­ten by Nexia BT said the two Panama com­pa­nies were to re­ceive pay­ments to­talling $2 mil­lion from 17 Black, a Dubai firm re­cently re­vealed as be­ing owned by Elec­tro­gas in­vestor Yor­gen Fenech. The NAO also deemed the €360 mil­lion gov­ern­ment guar­an­tee to be “ir­reg­u­lar”: “The State guar­an­tee was with­out prece­dent and was not in­cluded as part of the con­di­tions in the call for ten­ders is­sued by gov­ern­ment”. The re­port states that, “the guar­an­tee pro­vided to Elec­tro­gas went against gov­ern­ment guide­lines, as such guar­an­tees can only be pro­vided to gov­ern­ment en­ti­ties, and not pri­vate com­pa­nies”. The NAO ex­pressed con­cern on the risk the gov­ern­ment un­der­took with €360 mil­lion guar­an­tee. The re­port notes: “The NAO main­tains se­ri­ous reser­va­tions re­gard­ing the risk that gov­ern­ment was ex­posed to when the guar­an­tees were in ef­fect”. Apart from short­com­ings in the fund­ing guar­an­tees sub­mit­ted by Elec­tro­gas, the re­port noted a €20 mil­lion short­fall in the re­quired to­tal in­vest­ment and “lim­ited ev­i­dence” of a firm com­mit­ment from sup­pli­ers to pro­vide gas dur­ing the term of the pro­ject. The ten­der­ing process was dis­torted by the late in­clu­sion of the se­cu­rity of sup­ply agree­ment, and there­fore it could not be as­sured that the se­lected bid rep­re­sented the least cost to con­sumers, the re­port notes.

The NAO also slammed the trans­fer of shares from Ga­sol to the other share­hold­ers of Elec­tro­gas, per­mit­ting Ga­sol’s exit from the con­sor­tium when it went in­sol­vent.

The as­sess­ment also ques­tioned the de­ci­sion to go for a long-term agree­ment with Azer­bai­jan’s SOCAR (part of the Elec­tro­gas con­sor­tium) to de­liver the coun­try’s en­ergy needs. “De­spite re­quests for doc­u­men­ta­tion in sup­port of the op­tions iden­ti­fied by Ene­malta, the NAO was not pro­vided with ev­i­dence of anal­y­sis un­der­taken prior to the com­mit­ment to pro­cure power and gas from one sup­plier”.

The NAO deemed the re­sponse by Ene­malta on this is­sue as “su­per­fi­cial”.

The Au­di­tor Gen­eral also noted that Cab­i­net au­tho­rised Kon­rad Mizzi to ap­pear on the agree­ments to ter­mi­nate the LNG Se­cu­rity of Sup­ply agree­ment, even though he was not the re­spon­si­ble Min­is­ter.

I have cho­sen to quote from The Shift News be­cause I found the re­port to be fair and ex­haus­tive. None of the tweets, press con­fer­ences, and so on, held later out­weigh the se­ri­ous­ness im­plied in the NAO re­port. Iron­i­cally, it proves Mus­cat right: if the in­sti­tu­tions are al­lowed to work, they do their work prop­erly; un­less we hear of heads rolling at Notre Dame Ravelin.

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