Powering the Economy

The recent total power failure which was due, it was reported, to a fault in the distribution system, served to remind Members of the difficulties suffered by virtually all businesses in Gibraltar. It highlighted just how exposed we all are to such a systemic failure in our overstressed infrastructure. As we all know, power failures are not an uncommon occurrence in Gibraltar, but not of this magnitude.

The Government has plans to construct a new power station at Lathbury, together with associated upgrades to the infrastructure, at an estimated cost (to the taxpayer) of some £100 million. You will have read in the press recently how this project has been facing difficulties over planning and environmental issues, as well as, apparently, some technical challenges with what is a complex site for the purpose. While these issues remain to be played out, should we not question the magnitude of this proposed expenditure especially on outdated technology?

Gibraltar, for a variety of reasons involving security and connected issues, has always insisted on generating its own electricity. For what is essentially a town of 30,000 people, this is a huge cost burden on the economy, funded by electricity tariffs for both domestic and business users, as well as a Government subsidy. In other words, a very costly business altogether.

When this expenditure is added to other recent commitments on major capital projects such as the airport terminal, new frontier approach road and tunnel, the works to Devil’s Tower Road and others, most would agree that Gibraltar is entering into an unprecedented level of publicly funded capital projects at a time when the overall economic scenario remains uncertain. In Gibraltar, several major private sector projects are on hold until a better economic climate prevails. Outside our borders, the major concern is a rising worry about sovereign risk across the Eurozone, reflected in the capital markets by plunging stock exchanges and rising yields on government bonds.

Against this backdrop, should we not look at alternatives for our power generation? In these days of pan European markets in energy supplies, could we not plug in to the European ‘grid’ and contract with some European Electricity Authority / Energy Company for the supply of power? Is the price of ‘independence’ on energy terms worth paying, now and for many years to come, particularly in an era when cross border energy supply is a common occurrence? If we were to ‘plug in’, then we could channel resources into upgrading Gibraltar’s power delivery system, allowing us the benefit of a relatively cheap and reliable power supply. Existing plants could be upgraded and kept as back up in the event of any cuts in supply. No country or system is immune from power failures.

This simple analysis should serve to start a debate on this fundamental issue, a debate that needs to be had before we plunge Gibraltar into further and significant debt in the face of an uncertain future. Surely there are lessons to be learnt from the huge public debt issues affecting many countries across the globe?

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