The government is still planning to reduce the island’s deficit to 2.1 per cent of GDP by the end of this year despite the delayed deal between Malta and China on the partial privatisation of Enemalta.
Finance Minister Edward Scicluna yesterday told Times of Malta that so long as the deal was concluded, independently of its timing, there should be no impact on the deficit.
“According to our information we are still on track to reach the planned targets,” he said.
In April, during a meeting with social partners, Prof. Scicluna had said that although Enemalta was withholding some €135 million in excise duties it owed the government, this could be eventually compensated for through the sale of a stake in the corporation to Shanghai Electric.
As long as we still receive the money [the timing] won’t really matter
He had assured social partners that Enemalta’s dues would be paid for through the deal, adding that it was crucial to conclude it by the end of the year.
Yesterday he said: “As long as the deal is concluded and we still receive the money [the timing] won’t really make a difference. What’s important is that the money arrives.
“This year’s deficit targets will only be affected if the deal with the Chinese won’t materialise. However, our plans are to conclude in the shortest time possible.” Reminded of his declaration in April about concluding the deal, Prof Scicluna said that he had not meant this year.
“I wasn’t referring to this year as I was speaking in terms of the accrual basis system.
“If we are still expecting the money to arrive, then we will still account for it,” he explained. “It’s just an accounting exercise.”
According to the preliminary deal reached with Shanghai Electric Power, the Chinese will be paying €320 million for a 33 per cent stake in Enemalta, and the ownership of the BWSC power station. It also undertook to invest in the plant’s conversion to gas.
Although the deal originally had to be signed by September the Chinese asked for more assurances from the government first.
Energy Minister Konrad Mizzi, who on Wednesday returned to Malta from protracted talks in China, told Times of Malta that an agreement was close but would not confirm that it would be sealed by the end of this year.
In the meantime, Enemalta has sold its petroleum division for around €83 million to Enemed, a recently created government firm.
The government-to-government transaction was financed through a Bank of Valletta loan.
The deal will mean Enemalta’s books will be boosted by a cash injection even though the entity will essentially remain in government hands.