Energy Minister Konrad Mizzi, under fire over the time taken to reduce the price of fuel at the pump and now over the unfavourable remarks made in the Auditor General’s report dealing with the negotiation of fuel hedging agreements with an Azerbaijani company, has good reason to be happy about Standard & Poor’s credit rating assessment of Enemalta.

The assessment does not wipe out shortcomings made in certain aspects of the way the energy reform is being carried out, but taking into consideration the massive debt Enemalta had accumulated over the years (over €800 million) and the oil purchase scandals still unfolding from the time of the previous administration, the credit rating agency’s report marks a turning point in the company’s life.

Confirming Enemalta’s decline in “default risk”, the agency reaffirmed the company’s B+ rating with a stable outlook. It also improved its stand-alone rating, which focuses mainly on the company’s performance without taking into consideration its shareholders – the government and Shanghai Electric Power – and the government’s guarantees for its debt.

Describing the turnaround as a milestone, the minister said that up to only two years ago the company was a “dockyard in the making”, a reference to the fact that the ’yard had to be closed down, with the shiprepair part of the enterprise being taken over by a private company.

The previous Nationalist government did have a restructuring plan for Enemalta, but there is no question that the Labour government showed greater determination in tackling the problem, even if in the process it displayed disregard for transparency and accountability.

Standard & Poor’s agrees that the closure of the Marsa power station and the conversion of energy generation to gas (which has yet to happen) will help reduce Enemalta’s costs. “We consider the company’s restructuring is proceeding in line with our expectations and that its liquidity squeeze has subsided considerably… We think Enemalta is on track to realign its cost base.”

The agency is estimating that the process to transform Enemalta into a distributor and supplier of power will be completed by 2016, the time the government has given for the completion of the gas-fired power station.

Originally, the plant had to be commissioned this month but the date was put off till next year as the government had meanwhile entered into negotiation for the involvement of Shanghai Electric in the island’s energy generation mix.

However, as the energy minister beams in the light of the progress made, and as the government honours the second part of its electoral promise and lowers the energy tariffs for business and industry as well, there are still some pertinent questions that need to be answered.

For one, how exactly is the government financing the energy tariff cuts when, according to the original plans, these had to be made possible through a reduction in the cost of energy generation.

Deftly wriggling out of the question every time it is made, the government often argues it is able to finance the cuts through a carefully worked out operational plan. But no details have been given of this plan yet. This lack of transparency and accountability is turning out to be one of the government’s major shortcomings.

The Auditor General expressed concern over this when he analysed the oil hedging agreements reached with the Azerbaijani company. His reservations about the apparent lack of accountability and good governance may have escaped the credit rating agency’s attention, but these are disquieting matters to those who expect greater propriety in the conduct of government business.