The lead company in the Electrogas Malta consortium, Gasol, has pulled out of the project to build and manage the gas-fired power station and has sold its stake to the other partners.

Siemens Financial Services, Socar Trading SA and GEM Holdings Ltd have bought Gasol’s entire 30 per cent shareholding.

In an official statement, Electrogas said the restructuring was aimed at consolidating the company’s structure.

But Times of Malta is reliably informed that Gasol was pushed out of the project due to the serious financial difficulties it has been facing.

Earlier this month, The Sunday Times of Malta reported that questions were being raised over the financial strength of Gasol plc, as data emerged showing a bleak financial situation. Last year, the company reported a negative equity of €12.8 million and accumulated losses of €96 million.

Despite this development, the government and Gasol have always denied that the project or its investors were facing financial difficulties.

However, last December, the government decided to issue an unprecedented €88 million State guarantee to cover Bank of Valletta’s exposure to a €101 million bank loan given to Electrogas. It was only after the approval of this loan that physical works on the project started in Delimara.

We believe that the remaining shareholders are in a good position to take the project to its next stage

In a company announcement yesterday, Electrogas Malta Ltd said Germany’s Siemens, which has increased its stake in the project by 13.3 per cent, will now take the lead in its completion.

Azerbaijan’s Socar Trading also increased its equity by 13.3 per cent, while the only Maltese company in the consortium, GEM Holdings Ltd, increased its shareholding from 30 per cent to 33.3 per cent.

This means the three remaining partners in the consortium now each hold equal equity of 33.333 per cent.

Malta’s GEM Holdings Ltd is owned by the Tumas and Gasan Groups, which already have experience in similar projects.

Its shareholding also comprises CP Holdings Ltd owned by Paul Apap Bologna. The latter was also appointed by Labour as a member of Mepa’s board of directors.

On its part, Gasol yesterday avoided any reference to its financial difficulties, saying it had sold and transferred all its interests in the project “after the successful completion of objectives that are compatible with its customary development-stage role”.

Avoiding any reference to its financial problems, Gasol’s chief operating officer, Alex Buxton, said his company was confident that the project was now moving ahead with a firm foundation and a secure future.

“We believe that the remaining shareholders, two major corporates, together with a local strategic investor, are in a good position to take the project to its next stage, through the construction phase, and that Gasol is better served by redeploying its capital and human resources to the more comprehensive and fully integrated development of projects in its historically traditional, geographic focus on the Western and Central African region.”

Gasol’s declaration was mirrored in a government statement issued by Energy Minsiter Konrad Mizzi.

Welcoming the increased commitment by the remaining three shareholders, Dr Mizzi said that “the increase in shareholding by two world class corporations and a leading Maltese holding company shows the importance these companies attribute to the project”.

On the other hand, the PN called the project “Joseph Muscat’s ongoing farce”.

The PN said now that the project had lost its lead partner, doubts had been cast over the validity of the public procurement exercise conducted by the government and the type of due diligence carried out in the selection of Electrogas to carry out the project.

The PN also questioned the government’s decision to issue a unique State guarantee to cover a private investment.

Sources close to the project told the Times of Malta that with the exit of Gasol, the Maltese consortium was now in a better position to deliver.

The sources said the change in the company’s structure will not affect the completion date.

Before the last general election, Labour had promised that it would build a LNG-fired power station by March 2015. However, the project’s time-frame was derailed and last December an 18-month delay was announced.

The project is now expected to be completed by June 2016.

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