An agreement with a Chinese State-owned energy company to invest €320 million in Enemalta is close, but the Energy Minister, who returned from China yesterday, is still refusing to confirm the deal will be sealed by the end of 2014.

“Our target is to sign the agreement by the end of the year. We will be making an announcement shortly – we have wrapped up almost all aspects of the agreement,” Konrad Mizzi said yesterday.

Dr Mizzi was replying to questions from a Times of Malta journalist who was waiting at the airport’s VIP lounge on his arrival from Beijing, where he held talks with Shanghai Electric Power.

Enemalta’s head office at the Marsa power station. Photo: Matthew MirabelliEnemalta’s head office at the Marsa power station. Photo: Matthew Mirabelli

The urgency to conclude the agreement stems from the fact that the proceeds would go towards settling some €150 million in excise duties that Enemalta owes to the government.

Doubts have also been cast on the government’s ability to cut tariffs for industry in March 2015 after it became apparent the gas plant would not be ready by then.

However, the Prime Minister is committed to delivering on his pre-electoral pledge to slash utility bills and yesterday insisted the country could afford this energy plan despite the obstacles.

“Of course... you will see it very soon. It is not dependent on just one point, but on a number of other things, such as savings from Enemalta, the transformation of the BWSC plant to gas, and the interconnector. It is a long-term project so a delay of just a couple of months will not make a difference,” he said.

Ironing out the kinks in the deal with China is crucial. Last May Finance Minister Edward Scicluna assured social partners within the Malta Council for Social and Economic Development that “through the Chinese injection of funds, Enemalta’s dues will be paid by the Chinese”.

Cutting tariffs is a long-term project so a couple of months’ delay won’t make a difference

As a result, failure to wrap up this deal by the end of the year could lead to a higher deficit, possibly in breach of the EU regulations on public finances.

Questions sent to the Finance Ministry on this matter remained unanswered by the time of going to print.

The deal was originally planned to be completed by the beginning of last month but on Monday this newspaper revealed it had fallen behind, as the Chinese were seeking assurances that the corporation would buy the electricity produced from the BWSC plant, which it would take over.

Under the agreement first announced in September 2013, Shanghai Electric will invest €100 million to buy a 33 per cent stake in Enemalta, another €150 million to buy the BWSC plant in Delimara, and a further €70 million to convert it to gas.

In return it would gain a foothold in the lucrative European market, through the creation of a company specialising in the manufacture of photovoltaic panels. Another aspect of the agreement involved an energy service centre to cater for regional power stations.

“We are nearing an agreement on all the principles,” Mr Mizzi assured.

He added that both sides were already identifying tangible renewable energy projects in Europe and in the coming weeks there would be technical talks on converting the BWSC plant to gas.

“The most important factor will be the security of supply, to ensure that in the case of a shortage of gas, the plant could be converted to gasoil,” Mr Mizzi said.

The delay has also affected the building of a new gas plant at Delimara, which was originally planned to be operational by next March.

The major stumbling block is to establish how the new LNG terminal to be built by Electrogas would interface with the existing BWSC plant, adjacent to it.

After weeks of speculation Mr Mizzi last week acknowledged the Electrogas project, which incorporates the terminal and a new power station, would not be delivered on time, and said he would announce the new deadline next month.

His declaration came in the wake of the Prime Minister’s remarks that the reduction in water and electricity bills would not be affected by the construction of the new gas plant.

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