Enemalta expects to buy its first electricity from gas-fired generating plants in June 2016, Energy Minister Konrad Mizzi said in Parliament this afternoon.
He said that the agreement with Shanghai Electric, which will buy a 33% stake in Enemalta, were being finalised and the agreement would be published in the coming weeks.
Dr Mizzi said the government had last March kept its promise to reduce electricity tariffs by 25 per cent for households. This meant a €30m injection in the economy.
The process would be followed-up with another 25% cut in the energy bills for businesses from next March. Water tariffs would be reduced by 5%. This meant a saving of €50 million for businesses and improved competitiveness for Malta.
He stressed that the reduced tariffs would have no impact on government finances. Nor would new taxes be necessary as the reductions were part of the government's energy plan.
A seven year plan had been agreed with Shanghai Electric Power to reduce the tariffs, and make electricity generation more efficient.
The cost of generation for the next five years had been calculated along with other costs and revenue projections and Enemalta would no longer be a millstone for the government, Indeed, Enemalta had just paid the government €130 million in excise duties.
Enemalta's position had created a real risk to the government's financial position, but now the outlook for the corporation was stable and it no longer posed a risk for the government. Its balance sheet had been improved and its debt would be reduced by half this year.
The future of its workers was guaranteed, the dismantling of the Marsa power station had started and the interconnector would be ready in a few weeks.
The conversion of the BWSC to gas would also be taken in hand shortly.
This turnaround was possible thanks to wise decisions by the government, particularly when it grabbed the opportunity presented by a €320 investment in Enemalta by Shanghai Electric.
The deal was negotiated at the same time as a deal was reached with Electrogas, which would build the new gas power station.
The plans for the new power station (due to have been completed next March) were delayed while these two major investments were aligned with Enemalta's requirements.
Shanghai Electric would thus convert the BWSC plant to gas while Electrogas would build the new power station. Malta would also have the interconnector and retain part of the existing Delimara plant on stand-by.
The deal with the Shanghai Electric was being finalised and would be signed in the coming weeks.
Enemalta expected to start receiving electricity from both the gas plants as from June 2016, Mr Mizzi said.
The company, he said, was under no obligation to buy all its electricity from the BWSC or Electrogas and would retain dispatch rights.
A technical committee would decide the best mix on a yearly basis. For the first year, it would get getting 50 per cent from electrogas, 30 per cent from teh BWSC and 20 per cent from the interconnector.
He said the building of the new gas power station had started with levelling works in Delimara, and equipment had been ordered including LNG conversion equipment. Turbines were being built by Siemens along with other basic equipment. Works on the jetty would start in January.
The minister promised that once the agreement with Shanghai Electric was concluded, it would be published. The company, he said, would have a 33% stake in Enemalta but the government would retain control and appoint a chairman.
Addressing a news conference after the debate, he said the 15-month delay decision had been a responsible one even if it meant taking political flak.
He said that the March electoral pledge had to be amended when the Chinese opportunity came along.
INTERCONNECTOR TESTS ABOUT TO START
On the 200megawatt interconnector, the minister said the project had been badly planned and major changes were needed, particularly to the land route in Sicily. The cable was laid this year and first testing would start over the coming month.
The boring of tunnels for the interconnector in Malta had also fallen back by a year but they were then accelerated and were now practically complete.
The interconnector,, Dr Mizzi said, did not guarantee security of energy supply and it would have been better had there been two 100 megawatt cables instead. The cable, he said, carried risks to security of supply because the land route in Sicily crossed 20 bridges and the switchgear in Augusta was outdoor. Almost 100km of the cable was in the sea, 150 metres deep. A fault would mean months of repair work, hence the need for other generating facilities.
Dr Mizzi insisted that power from the interconnector would cost more than the gas power station when one also considered transmission losses and the so called congestion charge to get electricity to Sicily, as well as transaction charges. One also needed to consider the costs of the project itself.
Dr Mizzi said that during the coming year, the dismantling of the Marsa Power Station and the 31 March installation in Birzebbuga would pick up pace, providing a better environment.
He said significant progress had been made in reining in electricity theft and this campaign would continue. He stressed that the arrangements made for those using boathouses in Armier and St Thomas Bay were temporary and would have to be renewed every year.