The European Commission has not yet given its approval to a security of supply agreement related to the new gas-fired power station in Delimara, even though Minister without Portfolio Konrad Mizzi has pledged that the LNG plant would start delivering electricity by the end of this month.

A spokesman for the commission in Brussels yesterday was tight-lipped about the progress made by the EU executive’s ongoing analysis saying that “the commission is still in contact with the Maltese authorities on the matter”.

The security of supply agreement between Enemalta and Electrogas – the private consortium which was awarded the new power station project – has not been signed yet and will only be concluded once the commission gives its green light.

In its absence, the Maltese government decided to issue an unprecedented €360 million state guarantee so that four banks, including Bank of Valletta, could release the required loan facilities to the private investors to cover their investment in the project.

The EU is analysing whether the security of supply agreement includes any form of State aid.

Although the government has refused to publish the contract it entered into with Electrogas, it is known that Enemalta will be duty bound to purchase all the electricity produced by the private power plant for 18 years.

Last year, when pressed to say what the government’s position will be in case the commission finds State aid problems, Finance Minister Edward Scicluna did not reply. Instead, he insisted that he was sure that the commission would approve the deal.

Although the new power station, a major pledge on which Labour was returned to power, had to be ready by March 2015, the project did not start until December 2014. It was only then that it emerged that the government had issued a unique €88 million State guarantee so that Bank of Valletta could issue a €101 million loan to Electrogas in order to start the LNG project.

In August last year, Prof. Scicluna and Dr Mizzi had announced that the State guarantee had been extended to €360 million so that four banks could loan the necessary funds to the private consortium.

Prof. Scicluna had described the State guarantee as a temporary solution until Brussels gave the green light to the security of supply agreement.

He also said that out of the €450 million required for the private project, only 20 per cent was financed by the shareholders, the rest being provided by BOV, KfW IPEX-Bank Gmbh of Germany, HSBC and Société Generale of France.

Malta’s Tumas and Gasan groups are the main Maltese shareholders in the consortium.

Meanwhile, the Office of the Prime Minster is still failing to give a new deadline for the completion of the power station.

While the Times of Malta has already reported that the second deadline given by Dr Mizzi, of June 2016, will be missed again, the OPM did not reply to questions on when the new power plant is now expected to be commissioned.

In April, Prime Minster Joseph Muscat had said that he was awaiting a state-of-play report on the project.

ivan.camilleri@timesofmalta.com

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