Finance Minister Tonio Fenech told Parliament it was only with the current utility tariffs that Enemalta Corporation had started to recoup hundreds of millions of euros in debt by including return on capital employed. He disagreed with Opposition Whip Joe Mizzi that the previous tariffs had ever included the corporation’s debts. They had only included production costs.

The minister was answering a number of supplementary questions by Mr Mizzi, who asked how the power stations’ book value was down to less than €100 million when €200 million were still owed on the Delimara power station alone.

Mr Fenech said book value decreased with depreciation. By end 2010, the true figure for Enemalta’s debts stood at €500 million, excluding proposed outlays for the power station extension and the cable connector. The return on capital employed included in the current tariffs foresaw the recuperation of those debts in 30 years.

The corporation could not postpone starting to recuperate those debts if it was to reach agreements with banks for new loans, including those for the power station extension.

Mr Mizzi insisted that the current tariffs also made up for several inefficiencies and bad decisions at the corporation, and said their costs should not have been included in the tariffs. He cited as an example the case of a contractor who was paid for sub-standard gas cylinders that had then been allowed to rust, with the corporation forking out new capital for a subsequent consignment. Mr Mizzi asked Mr Fenech whether he was shouldering the responsibility for such inefficiencies.

Mr Fenech said the Malta Resources Authority allowed only generation costs to be included in utility tariffs. Enemalta kept segregated accounts to distinguish between generation costs and capital employed. It was only with the current tariffs that the corporation had started to recuperate its debts.

Opposition Leader Joseph Muscat asked the minister to confirm whether Enemalta was considering a special-purpose vehicle (SPV) to offload its debts. Mr Fenech confirmed this was the case.

Fielding more questions by Dr Muscat, the minister said such an instrument would normally have government or Enemalta assets as collateral, but those assets would always belong to the country. Only operating plant would be considered as collateral, so this did not apply for the land on which the Marsa power station stood after it was decommissioned. The collateral would be Enemalta’s obligation, so it would not figure as part of the Maastricht criteria.