Wednesday, August 12, 2015
Never-ending energy story
Times of Malta, 10 August 2015
Gasol, one of the companies originally involved in the new power station project in Malta, recently announced it is no longer involved in this project.
Its official website, however, still states that it is providing 30 per cent equity for the project, as “Gasol is part of Electrogas Malta, which was recently awarded preferred bidder status for the Malta LNG-to-power project”.
Gasol’s most recent financial statement declared a negative equity of €12.8 million and accumulated losses of €96 million.
The company has also been delisted from the London Stock Exchange and independent auditors have warned that it does not have enough cash or liquid assets to honour its commitments.
The remaining companies in the Electrogas consortium now are Siemens, the Azerbaijani State company Socar and GEM holdings, the latter being owned by the Gasan and Tumas groups.
In the meantime, the government of Malta is acting as guarantor for the Electrogas power station to the tune of €88 million on a substantial €101 million loan that Bank of Valletta is providing to the consortium. (Post-publication note: It has now been revealed that the State guarantee has shot up to €360 million [80% of the financing needed - The full loan of €450 million is 20 per cent financed by the consortium’s shareholders and is being provided by four banks: BOV, KFW IPEX-Bank Gmbh, HSBC Bank plc and Société Générale])
The government, which owns 25 per cent of the bank and appoints its chairman, is stating that its protection of Electrogas is in the national interest. Energy and Health Minister Konrad Mizzi recently stated that the [€88 million] bank guarantee is temporary, pending clearance from the European Commission regarding State aid.
True to his ‘road map’ discourse, Mizzi added that the remaining companies in Electrogas would provide “a world class infrastructure” for Malta. Mizzi, however, did not say that if Electrogas fails to deliver it will be the Maltese taxpayer who will have to make up for the loss.
Mizzi’s Labour government has also refused to uphold requests by the media, in conformity with the Freedom of Information Act, to provide more information on this agreement.
Needless to say, the Malta Resources Authority has been publicly silent all along, despite its role as regulator.
If one puts things into perspective, one should keep in mind that the power station project was a flagship proposal of Labour’s electoral strategy in 2013.
Prior to the election, Joseph Muscat had promised that the power station would be completed by March 2015. However, once the Labour Party was in power and it became even more evident that this promise was unattainable, the goalposts shifted to July 2016.
In the meantime, Shanghai Electric bought 33 per cent of Enemalta in 2014. The government had also declared that Electrogas would provide 50 per cent of Malta’s energy, through a fixed price for five years, yet never explained what happens when this contract expires.
For example, if such energy is costly and is in excess supply, who will buy it?
Will the government step in to protect the consortium once again?
Neither did the government ever explain whether Malta risks playing an excessively high price for such energy in the eventuality that it can be obtained at cheaper sources from elsewhere, such as the interconnector.
Comprehensive impact assessments, which are supposed to be a basic necessity for risk and opportunity evaluations, are conspicuous by their absence. This only increases suspicion of political obligations rather than rational policymaking.
Indeed, it seems the government is protecting and guaranteeing private and foreign State interests against public concerns on a public project. Its excessive interference in what should be commercial matters, coupled with its lack of transparency, is only adding to the confusion to the never-ending power station saga.
It is therefore no surprise that the Opposition has called for an investigation by the National Audit Office into the contracts which the government signed with Electrogas over the power station in Delimara. Anyone who believes in transparency, due diligence and good governance should consider this to be a blessing, especially when, so far, the National Audit Office is one of the few remaining State institutions which have not been colonised by the Tagħna Lkoll quasi-feudal policymaking in Malta.
The power station saga is truly one in the national interest.
The provision of reliable, clean and sustainable energy is much more important than partisan interests and electoral obligations. Let us all hope that Malta is not locking itself into an unsustainable energy dependency path.