Energy Minister Konrad Mizzi last night repeatedly assured the Opposition that the agreement the government had entered into with Chinese company Shanghai Electric, which will invest €320 million in Enemalta, would become effective only after parliamentary approval.
Answering questions after a statement about the deal in Parliament, Dr Mizzi said the government aimed to conclude the process by next September, when the full disclosure of a new Enemalta plc would be subject to approval by Parliament.
Enemalta’s board of directors would be appointed by shareholders. However, the corporation would have a government-appointed chairman.
Earlier, the minister said this was a strategic investment because it was long term and responsible. The government could not leave Enemalta insolvent.
The corporation would retain its dispatch rights, over where it would purchase electricity. The petroleum division, the only profitable section in Enemalta, did not feature in the present deal.
Dr Mizzi said the due diligence process had been carried out by both parties and the government would present its proposals before the final contract was signed.
Of Shanghai Electric’s €320 million investment, €100 million would be injected into Enemalta’s capital, €150 million to acquire the majority shareholding in the BWSC plant and €70 million to convert the BWSC plant to gas.
Answering a question by Opposition deputy leader Mario de Marco, Dr Mizzi said Shanghai Electric would assume part of Enemalta’s existing debt.
He told Tonio Fenech, the former finance minister who was responsible for Enemalta, that this was not a refinancing project but an investment by Shanghai Electric and it would help Enemalta reduce its debts.
With the BWSC plant operating on gas, energy prices would fall drastically. There were indications that energy created by a gas-operated BWSC plant would be cheaper than buying energy from the interconnector.
However, Enemalta would remain free to buy the cheaper energy if prices varied.
Dr Mizzi said that in the past, Enemalta was insolvent and had phenomenal debts.
However, it would now be in a position to invest.
Opposition leader Simon Busuttil asked the minister whether the government had fixed the price of energy that Enemalta would purchase from the BWSC plant.
The government would have “the luxury” of a five-year power-purchase agreement that afforded the certainty of cheaper prices, Dr Mizzi replied.
He said the agreement would put Enemalta in a position to generate revenue. The government would be able to fulfill its promise of reducing tariffs to households by an average of 25 per cent at the end of March and of reducing €50 million in utility tariffs for commercial entities next year.
This investment would also help reduce emissions. Carbon dioxide emissions would be cut by more than 100 million tons while sulphur would be practically non-existent.