The government would not say whether it has an alternative plan if the EU does not approve the €88 million State guarantee given to Electrogas Malta Ltd.
Questions sent to Energy Minister Konrad Mizzi last week remained unanswered despite various reminders.
The Sunday Times of Malta reported that, last December, the government issued an unprecedented €88 million State guarantee to cover the exposure of a €101 million loan by Bank of Valletta to the private consortium building the new power plant.
Finance Minister Edward Scicluna later admitted this was a unique arrangement but explained it was only a temporary measure until the European Commission gave its green light and declared that no State aid was involved in a power purchase agreement between the government and Electrogas. Asked whether the project will be in jeopardy if the EU does not accept Malta’s request, the government declined to comment. Dr Mizzi also refused to say whether it has a Plan B in the eventuality of an EU rejection.
If the EU does not give its approval we will have to call in the loan and ask the government to pay its guarantee. The alternative is that the consortium finds alternative funding
Sources close to Bank of Valletta said that although the lending bank was very optimistic the EU would clear the deal, it would have to turn onto the government if such approval failed to materialise.
“The bank lent Electrogas more than €101 million. If the EU does not give its approval we will have to call in the loan and ask the government to pay its guarantee.
The other alternative is that the consortium finds alternative funding,” the sources said.
Asked what would happen if the EU did not approve the State guarantee, a Commission official said that “our [the Commission’s] assessment is still ongoing and we cannot speculate on potential events”.
Generally, Member States are expected to notify the Commission in advance and wait for its approval before implementing any State aid measures.
The government said that it got the approval of the local State Aid Monitoring Board before Cabinet agreed to grant the unprecedented State guarantee.