The government has refused to comment on a secret deal allowing it to buy the €450 million power station if the European Commission rejects a security of supply agreement with Electrogas, the private consortium behind the project.
The share call option agreement secretly signed in July 2015 gives the government the option to buy 100 per cent of the shares in the project should the Commission reject the security of supply agreement. The July 2015 deal was revealed by The Malta Independent in April but has not since received any media coverage.
A spokesman for the Commission said it was still “in contact” with the government over the security of supply agreement. The government is seeking the Commission’s approval in order to ensure that it does not fall foul of the EU’s State aid rules.
A request for a copy of the share call option agreement was not answered by the Office of the Prime Minister’s chief spokesman, Kurt Farrugia.
Questions on why the buyout agreement was never made public by the government and the value placed on the Electrogas shares were not replied to.
Apart from selecting Electrogas to build the new plant, the government pledged to enter into a power purchase agreement with the private group, committing Enemalta to purchase all the energy produced by the new plant, at fixed rates, for 18 years.
The security of supply agreement stipulates that the government will step in and buy the electricity if Enemalta reneges on the power purchase agreement.
The agreement secretly signed in July 2015 gives the option to buy 100% of the shares
None of the agreements signed have been made public so far.
Only a one-paragraph reference to the share call option agreement can be found in Electrogas’s annual report and financials. “In the event of a negative reply from the European Commission, it is expected that the government will exercise its right under a share call option agreement dated July 27, 2015, to acquire 100% of the shares of the company and assume full control of the project,” it reads.
The share call option agreement was signed a few days after one of the original shareholders, Gasol (Malta), pulled out, reportedly due to financial difficulties.
The government helped to pave the way for the Electrogas financing of the project last year. It is underwriting 80 per cent of the project’s financing through a €360 million loan guarantee, an amount which shot up from an initial guarantee of €88 million.
The €360 million government loan guarantee was first announced in August 2015. The government at the time refused to say outright what would happen if the European Commission failed to approve the security of supply agreement.
A Freedom of Information request and subsequent appeal from this newspaper asking for more details on the loan guarantee were rejected, on the basis that providing these details “could have a substantial adverse effect on the ability of the government to manage the Maltese economy”.
The new power plant was originally scheduled to go on stream in March 2015, yet is still not operational.
jacob.borg@timesofmalta.com