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State guarantee for power station shoots up to €360 million

Sole reason behind guarantee is for Prime Minister to save his skin - Opposition

The State guarantee to cover a massive bank loan for the private consortium selected to build the new gas power station has shot up to €360 million, the government revealed.

The Opposition condemned the decision, which it described as “irresponsible”.

In June, this newspaper had exposed the fact that the government had authorised an €88 million bank guarantee for a private loan needed by Electrogas from Bank of Valletta to finance the power station.

While the government had acknowledged this was “unprecedented”, it has announced this guarantee has quadrupled. The information was put forward during a briefing session today in which journalists from different media outlets were called in separately.

The guarantee for the initial €88 million from BOV has been cancelled and replaced by a guarantee of €360 million – this is 80 per cent of the financing needed.

The full loan of €450 million is 20 per cent financed by the consortium’s shareholders and is being provided by four banks: BOV, KFW IPEX-Bank Gmbh, HSBC Bank plc and Société Générale.

The guarantee is for 22 months. In return for the bank guarantee, ElectroGas paid government a market-oriented guarantee fee of €8.8 million.

When the Times of Malta had revealed the initial temporary guarantee, sources at the Finance Ministry confirmed that a government bank guarantee to cover the loan to a private entity was “unprecedented” as the government normally only issues such guarantees to entities in which it has a shareholding.

The government has no link to Electrogas Malta Ltd as the company is fully owned by private interests, including leading companies – Tumas Group and Gasan.

Sole reason behind guarantee is for Prime Minister to save his skin - Opposition

In a statement, the Opposition said the Maltese would have to shoulder the burden of a decision the government took underhandedly and without any consultation.

After placing an €88 million burden on the people without giving any information, it had now increased the burden to €360 million. This was a guarantee  the like of which had never been given in Malta before.

The Prime Minister, it said, had already failed in its main promise to build a new power station in two years. It was now clear it had also failed in its promise to ensure that this was built through private investment.

Instead, the Maltese and Gozitans would have to finance the project, which was not needed, through their taxes.

The Opposition said the government did not have an electoral mandate to put this burden on the people and it was clear that the only reason behind the decision was for the Prime Minister to save his skin.

It said it would not allow such a grievous act of irresponsibility to go ahead and would see that the government was held accountable.

In a statement later, Media.link Communications, the Nationalist Party's media arm, accused the government of discriminating among the media by not inviting its journalists to a briefing announcing the guarantee.

Instead of holding a news conference, it said, the government opted to give comments about the guarantee to whoever it wanted.

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