Shadow economy minister Claudio Grech.

The government’s declaration that the publication of an €88 million State guarantee to Electrogas for the building of a new power station would have a negative effect on the economy raised more questions than answers, the Opposition said yesterday.

Shadow economy minister Claudio Grech said the Finance Minister’s response to the request for the publication of the bank guarantee was “of concern”. It was unacceptable for the government to continue making excuses not to publish the guarantee, he added.

“The concern we expressed in the past weeks grows when we see a clear declaration by the Finance Minister saying there would be economic turmoil if the guarantee is published,” Mr Grech said.

The Sunday Times of Malta revealed in December that the government issued a guarantee for €88 million to cover Bank of Valletta’s exposure on a €101 million bridge loan facility to Electrogas. Following the report, the government said “all was in order”, despite having previously admitted the arrangement was “unique”.

Mr Grech stressed it was in the public interest that the guarantee be published, for the people to know how their taxes were being used.

Lack of transparency on the issue is compounded by the fact the government has also still not published the contract signed with Electrogas, the private company entrusted to build and operate a new power station and gas-handling infrastructure at Delimara. The State guarantee was deemed necessary for the company to obtain a loan from Bank of Valletta to finance the project.

The building of the new power station within two years was the Labour Party’s main electoral promise. The deadline was not met although, up to five months before the gas power station had been scheduled to start operating, the Prime Minister and the Finance Minister were still insisting everything was on track.

Such an agreement cannot be subject to speculation

This led the Opposition to declare yesterday it was obvious the guarantee had not been planned but was a measure of last resort raising further questions about the due diligence process.

Mr Grech again called for the publication of the contract and full disclosure on the bank guarantee: “This is too important a project. Its lifeline is 18 years, covering four administrations. Such an agreement cannot be subject to speculation,” he said.

Finance spokeswoman Kristy Debono said the project was shrouded in mystery and underhand dealings. She raised a number of questions that remained unanswered, including concerns on possible repercussions if the European Commission considered the guarantee to be State aid.

Ms Debono questioned the real reason behind the government’s decision to take such a major risk. She raised concerns, which, she noted, were expressed in the private sector, that the government should have been clear at the request for proposals stage that it was willing to give such a bank guarantee to ensure a level playing field.

There was lack of accountability, too, because it was still not clear whether the decision was taken by Cabinet, the Finance Minister or the Prime Minister.