Finance Minister Tonio Fenech has given details in Parliament on a financial special-purpose vehicle (SVP) model being drawn up to keep Enemalta Corporation’s long-term debts sustainable and help the corporation repay them over a period of time.

Answering a question by Opposition Whip Joe Mizzi, Mr Fenech said the SPV was being drawn up to address the corporation’s heavy investments for its generation and distribution of electricity over the years. Such investments had led to an accumulation of debts, which had been crucial for the corporation to keep up with the ever-increasing demand to cope with the country’s economic development and progress.

Moreover, sustaining these investments was an essential means to guarantee the provision of electricity in keeping with the expectations of a growing economy. Security of continued provision was one of the fundamental aspects that potential foreign investors considered before setting up shop here.

Mr Fenech said the power station extension project was just one part of the plan for continuous investment. The corporation was investing €165 million on the extension, as well as €18 million on the services contract over a period of five years.

Another heavy investment would be the underwater interconnector cable that would join Malta to the European power grid through Sicily. The laying of the first cable would cost €150 million.

Another substantial investment was the distribution system. The past few years had seen investments in distribution centres such as the one at Mosta, while three others had been commissioned in Valletta, Kirkop and Marsascala. All four centres cost more than €10 million.

Other important investments included €5 million in SCADA, a centralised control system for the corporation’s networks, based at Marsa, wherefrom the corporation would be able to control and supervise its primary substations. This would make the provision of electricity more reliable and enhance the rapidity of interventions in case of faults.

The installation of two eight-kilometre-long 132 Kv cables in an underground tunnel between the power station and the Marsa Industrial Estate had cost €5.8 million.

An investment of €20 million was made in a distribution centre at Kappara, which involved the digging of underground tunnels earmarked for completion next year. This would be a focal point of energy distribution in the northeast of Malta and would eventually link up to the interconnector with the European grid.

Malta and Cyprus were the only two countries in the EU that needed to import their energy sources. As a result of this, in spite of the fact that the government had subsidised Enemalta heavily for several years, the corporation had not always been able to recover the costs of oil purchases through utility tariffs, especially taking into consideration the accelerated increases in oil prices during the past few years.

This was why, following intensive discussions with the Malta Resources Authority, a structure had been agreed for the working of tariffs incorporating the costs inherent in the generation of electricity and the return on capital employed (ROCE).

This would help Enemalta to recover incurred debts over a number of years.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.