Enemalta has withdrawn an €18.3 million project to refurbish two existing boilers at the Delimara power station, which was being contested by the European Commission.
A different fuel will now be used in these boilers
The unexpected decision led the Commission to close a state-aid investigation it opened last year to establish whether it constituted unfair competition.
Enemalta had wanted to modify the two boilers to produce less dangerous emissions, such as sulphur dioxide and dust, and come in line with EU rules. It planned to use €15.5 million in EU funds and take out a commercial loan of €2.8 million to complete the project.
Last year, it was reported that Malta risked having to take out a loan for the full amount if the Commission blocked the plans.
However, the Commission and the government said yesterday the issue was now closed because the state-owned electricity generation company had changed its plans and was no longer interested in making the substantial investment.
“The Commission can confirm it is no longer investigating the possibility of breach of state-aid rules with regard to the Delimara power station because the government withdrew its application,” a Commission spokesman said.
Asked for a reason behind the timing of this sudden change, a government spokesman said that, further to technical studies by Enemalta, it decided to abandon the project as its aims could be reached without such an overhaul.
“A different fuel will now be used in these boilers, which, together with ongoing investments, will give us equivalent emission results,” the spokesman said.
Sources close to Enemalta added that the power station extension at Delimara reached a more advanced stage than originally planned and the technology used would give better emission results than thought.
The issue dates back to 2009 when the government notified the Commission it was planning to use EU funds to refurbish two boilers at Delimara to meet stringent emissions levels dictated by Commission rules.
Brussels had objected and questioned whether the use of EU funds for the project was in line with state aid and competition rules.
Under EU rules, member states are only allowed to subsidise such projects up to 15 per cent of the costs. Malta was planning to subsidise Enemalta’s project to the tune of 85 per cent of the costs.
To clarify the issue, the Commission had opened a full investigation, similar to the one opened a few weeks ago on the Air Malta restructuring plan, inviting interested parties for comments and objections.
At the end of this consultation no objections were filed. However, the Commission was still investigating and had not reached a conclusion yet. Originally, the project was intended to lower emissions generated by the old Delimara plant so that Malta could come in line with stringent climate change rules imposed by the EU.
According to government sources, the decision to stop the project was taken following other investments made by Enemalta in recent years to lower the emissions.
Funds to be spent on other initiatives
These include the use of low sulphur fuel oil to fire the power stations, the construction of a €200 million extension at Delimara and the interconnector with Sicily, which will allow Enemalta to import electricity directly from the European grid.
These projects, together with the closure of the Marsa power station, would mean Malta would be in line with emissions’ thresholds without the need to refurbish the boilers at Delimara, the sources said.
A government spokesman said the €15.5 million EU funds originally earmarked for the project would now be spent on other initiatives.