China’s €320 million injection into Enemalta, including Delimara’s outright sale to Shanghai Electric, was described by Finance Minister Edward Scicluna as the island’s solution towards the reduction of debt.
During a presentation on the state of Malta’s public finances to the Malta Council for Social and Economic Development, Prof. Scicluna revealed that Enemalta’s dues in excise duty to the government soared to €135 million by the end of April.
€135 million
– the total Enemalta owes in excise duty to the government
However, although admitting that the situation could not go on forever, he said the government was seeing a solution through its plan to sell a 33 per cent stake in Enemalta.
“We envisage that through the Chinese injection of funds Enemalta’s dues will be paid for by the Chinese. This is a plan which is crucial and we should be in a position to finalise the deal by the end of this year,” he said.
By the end of 2012, Enemalta had already withheld €65 million in excise duties that were due to the government’s coffers.
However, according to Prof. Scicluna, the energy provider continued to sustain losses and was not in a position to pass on the €135 million owed to the government.
He said the European Commission would not permit this postponement of dues much longer, but said the corporation would now use the Chinese investment to pay the money owed while the country reduced its deficit.
According to a preliminary agreement reached between Malta and China, Shanghai Electric will buy a 33 per cent stake in the State company for €100 million and will also buy the current Delimara power station, better known as the BWSC plant, for €150 million. Another €70 million will be invested to enable the plant to be converted into gas.
On the state of public finances, Prof. Scicluna said the government had managed to lower its deficit to 2.7 per cent of GDP last year and was planning on cutting it further to 2.1 per cent this year.
However, he warned this would not be easy as the government would need to reduce its expenditure by around €40 million.
He said that during the first three months of the year, the government had increased its revenue by €30 million over its projections, while expenditure increased by €22 million.
Despite the criticism levelled at the government for increasing the number of employees in the public sector, he said this only accounted to an increase of €3 million in public emoluments.
He also admitted there had been pressure, both before and after the general and European Parliament elections, to recruit people with the government.
Prof. Scicluna also sounded warnings over Malta’s competitiveness saying the island had to ensure it could continue to compete.
Although countries like Greece, Italy and Portugal were currently undergoing tough reforms, they would emerge stronger and Malta had to make sure it could continue to face the competition.