Recent energy projects being undertaken in the UK with Chinese investment and in Finland have once again underlined the Maltese government’s woefully inadequate handling of the Electrogas investment.

What should have been a straightforward sequence of events was shrouded in lack of information, misinformation and too much information. The presence of commercially-sensitive information is absolutely no excuse to reject calls to publish all the relevant agreements to clear suspicions once and for all.

The situation was actually quite clear: at the time Enemalta needed a new power station. It was groaning under accumulated debt and could not pay for it. The only option was to entice a private investor to build it.

The return on investment for a power station is not one that would have private investors queueing up, principally because electricity tariffs are tightly regulated, as they have major social and economic impact. It is a classic case of what economists like to call ‘market failure’.

So it is only natural that any investor would want to have a promise from the entity that will purchase its output. It would also want a promise from the government that if anything catastrophic should happen to this entity – Enemalta – it would step in to continue buying the electricity.

When Electrogas first came on to the scene, Shanghai Electric Power was not even a twinkle in Enemalta’s eye, and its debt put a serious question mark over its future. It is blindingly obvious that it would want a fallback position or would have otherwise withdrawn…

The long and complex negotiations involved dozens of lawyers, consultants and accountants, but in the meantime the clock was ticking. Enemalta’s promise to buy an amount of electricity from Electrogas had to be vetted by the European Commission to ensure it is not state aid, just as the Finnish and British one were.

In the meantime, Electrogas put together its financing from four banks (including Bank of Valletta) for €360 million of the €450 million project, but with nothing to offer as security. If Enemalta did not promise to buy the electricity, the banks would basically be funding a very expensive pile of bricks and rapidly rusting metal.

While waiting for the Commission, the government provided a guarantee until the so-called ‘security of supply’ agreement between Enemalta and Electrogas was approved – so work on the plant could go ahead (with a political promise poised as a guillotine over the government’s head).

This was only revealed in dribs and drabs, inevitably raising suspicions that the government then had to try to correct.

Did the government have to issue the guarantee because the banks were wary about financing? No, we were told. It was just a temporary measure until the Commission did its work and the agreement details were worked painstakingly through the stakeholders.

Could the Commission say ‘no’? No, we were told. There is no apparent reason why it should – although it may tweak some of the details.

Ah, Gasol was in financial trouble and had to pull out of the Electrogas consortium, and did this force the government to step in? No, we were again told. The set-up of the consortium had always envisaged that in such a situation, the other two shareholders would buy up those shares.

Was the private investor saving millions by having the government provide this guarantee? No, we were told. Any possible saving was charged to them – an estimated €8.8 million – based on complex models of interest rates, administration fees and so on – and will be reviewed to make sure it is.

Wouldn’t it have been so much easier to have told the full story upfront rather than having to play defence all this time?