The TransGas pipeline, otherwise known as the Melita pipeline project, has been included on the European Commission’s 6th PCI list, meaning it will be eligible for EU funds, despite protests from environmentalists and civil society over its links to corruption and murder and concerns over its viability, according to a leaked document seen by The Shift.
The pipeline would link Malta to Sicily and replace the current LNG tanker anchored off the coast of Delimara. With an estimated cost of €400 million, the Maltese government has asked the European Commission to contribute.
From day one, the project has been mired in controversy due to the pipeline linking to the Delimara Power Plant, operated by Electrogas.
Yorgen Fenech, the man imprisoned pending trial for involvement in the assassination of Daphne Caruana Galizia, remains an ultimate beneficial owner, and others involved in the project are suspected of money laundering and corruption with several investigations ongoing.
Although the EU’s Trans-European Networks for Energy (TEN-E) rules place emphasis on renewable energies and electricity interconnections, Malta obtained a derogation, and the project was included on the 5th EU list of projects of common interest (PCI) in 2022, making it eligible for EU funds.
Frida Kieninger, director of EU affairs at Food & Water Europe, told The Shift that this derogation allows top EU priority status for clearly over-dimensioned fossil fuel projects and “ridicules the aim of the recently renewed rulebook (TEN-E regulation) based on which Union List projects are selected, namely to exclude classic fossil gas projects.”
The family of Caruana Galizia and various MEPs and environmental NGOs sounded the alarm over the project and called for it not to be included on the sixth list.
But according to a copy of the list seen by The Shift, the pipeline project has again been included.
Under a heading stating “Projects that maintain their status of project of common interest (Article 24 derogation)”, the pipeline is listed along with one in Cyprus.
“All member states should be serious about the urgency for a just transition, and the least our pockets – and global climate – needs is another brand new fossil fuel infrastructure project,” Kieninger added.
Food & Water Europe have been clear that the rest of the projects on the list, 68 in total, have been proposed by big players in the fossil fuel industry, such as RWE, Shell and BP.
They say that the promise of climate-friendly hydrogen has turned into a “multi-billion jackpot for the fossil gas industry”, and only a handful are credibly green hydrogen projects, Malta not included.
The Maltese government has argued that the pipeline would be used for environmentally friendly hydrogen power in the future, but this is not commercially used or available at present, and there is no certainty over whether and how it can be used.
Despite this, in the recently announced budget, the government announced fundinng to initiate work on a strategy to introduce the use of hydrogen locally.
Furthermore, most hydrogen is currently produced using fossil fuel, meaning it cannot truly be considered green or renewable under EU taxonomy.
A sinister deal
But aside from concerns over its viability in terms of the green transition and Europe’s commitment to moving away from fossil fuel energy, the project has received significant criticism due to Fenech’s involvement.
Months after Malta’s Labour party came to power in 2013, a major public contract was awarded to a consortium of companies, including Fenech’s and Azerbaijani State energy company SOCAR.
A similar project had been pushed by Fenech since 2007 but had not got off the ground, the Daphne Caruana Galizia Foundation said.
But the new deal, described as “sinister” by Council of Europe rapporteur Pieter Omtzigt, was struck with the help of ex-minister Konrad Mizzi, ex-chief of staff Keith Schembri, and disgraced former prime minister Joseph Muscat.
A 600-page National Audit Office report found a series of irregularities as well as stating that taxpayers had been overcharged to the tune of millions of euro.
Journalists then discovered that the Maltese state energy company, Enemalta, would pay twice the market rate for natural gas through the deal, giving SOCAR at least $40 million in profit.
Omtzigt’s 2019 report stated that the “facts have given rise to widespread suspicions of corruption and money laundering”.
under the terms of the contract, the Maltese people are bound to buy from Electrogas, despite the gas being supplied by someone else. This means, they will have to compensate Electrogas, and by default, Fenech who remains a shareholder, by up to €85 million.
Caruana Galizia was investigating the Electrogas deal and Fenech’s involvement at the time she was assassinated.
Funding still not guaranteed
While the project is included on the sixth list, this does not mean it is guaranteed to receive EU funds.
When asked about the concerns over Fenech and his connection to the project, an EU official told The Shift that while inclusion on the list makes it eligible, financing is subject to a separate evaluation process by experts contracted by the executive agency CINEA.
When asked if an investigation was carried out during its inclusion on the fifth list and what the findings were, the EU official did not answer.
They did, however, note that the Malta-Italy project has received CEF financing for preparatory studies but has not received a cent for constructing the pipeline.
As for the controversy surrounding those involved with the pipeline, the EU official said, “According to EU law, funds must not be awarded to project promoters, operators, or investors convicted for fraud, corruption or conduct related to a criminal organisation.”
When pressed, they clarified this could include funding anyone directly or indirectly benefitting from any such offence, or even “before a final judgment or decision, the facts supporting a conviction have been established” or “Facts are not yet established, when investigations are still ongoing.”
The EU official also explained that aside from an independent evaluation of the entire project and those involved directly or indirectly, the EU budget is also protected by the anti-fraud office of the Commission (OLAF), the European Public Prosecutor’s Office, the Court of Auditors, the European Central Bank, European Investment Bank, European Investment Fund and other international organisations.