Enemalta made a profit of €21.6 million in 2010

Enemalta Corporation, the electricity supplier, registered a profit of €21.6 million in 2010 when compared to a loss of €45 million the year before.

Meanwhile, the corporation recorded a hedging gain of USD64.36 million in the first 10 months of 2011.

Details of the corporation’s profit were given in the annual report and financial statements for 2010 tabled in the House of Representatives by Minister for Finance Tonio Fenech last night.

It said that Enemalta’s external borrowings increased to €678.4 million in 2010 from €526.5 million in 2009.

The Electricity division reported an operating profit of €33,215,000 in 2010. This contrasted sharply with a loss of €29,544,000 in the previous year. These significant profits were brought about by hedging gains on the USD/EUR currency exchange and in increase in revenue.

Enemalta said it had hedged its position both in relation to US currency exposure and its oil requirements. The strategy permitted it to limit its losses when faced with fluctuations in the monetary exchange rate and in the price of oil.

It recorded a hedging gain whenever the market rose above the agreed fixed cap level and incurred a loss whenever the market level fell below the floor price.

In 2010 Enemalta hedged 100 per cent of its fuel exposure providing an element of stability by locking prices through swaps. The hedging losses on Brent for 2010, which amounted to €3,274,000, was offset with a hedging.

The annual report said that the present tariff mechanism allowed the corporation to invest in the necessary capital expenditure programme without risking its financial capital base.

In 2010, it experienced the second strongest demand growth over the past 30 years and the second highest annual price average ever.

For the first 10 months of 2011 Enemalta recorded a hedging gain of USD64,360,000 using the swap mechanism. This was recorded even though oil prices oscillated because of political instability and violent protests in the Middle East and North Africa.

The Petroleum division also increased its operating profit from €583,000 in 2009 to €9,092,000 in 2010. The corporation attributed this improvement to natural hedging practices.

The Gas division remained loss making with a decreased operating loss of €750,000 compared to €2,344,000 in 2009. The lower loss was the result of improved purchasing costs of liquefied petroleum gas and commissions to distributors. The transfer of the gas distribution business from the corporation to Liquigas Malta Limited meant that operating costs decreased and contributed to lowering losses over the year.

Direct costs relating to the Delimara power station extension project amounted to €103.9 million in 2010.

The corporation said that infrastructural projects were funded through bank financing and internal sources of net cash flows. The corporation’s external borrowings increased from €526.5 million in 2009 to €678.4 million in 2010. The borrowings were sanctioned by local and foreign banks and financial institutions.