The government’s unprecedented move to provide a State guarantee covering a €360 million bank loan for the private consortium building the new gas power station is discriminatory, according to economy shadow minister Claudio Grech.
Addressing a news conference, he said no Maltese business was ever given the privilege, in public tenders, to have taxpayers guarantee its bank loan. Businessmen had to provide their own financing and provide necessary assets for loans.
“Companies bid on the basis of their financial strength and they have to ensure they own the assets to back up their investment. How can the government boast it is pro-business when it takes such discriminatory decisions?” he said.
Last month the government announced the State guarantee of €88 million had shot up to a massive €360 million, a move the Nationalist Party condemned as “irresponsible”.
Speaking to the Times of Malta, a government spokesman confirmed that the offer of a State guarantee was not in the request for proposals issued for the project. This means other bidders were unaware of the option.
PN commerce spokesman Robert Arrigo said if Maltese companies had known about this option they could have competed for the project. He also claimed the government had completely changed the playing field for Maltese companies with this move. “Maltese investors often have to put forward personal assets, such as their home, to provide security for loans. This is unfair,” he said.
The initial €88 million guarantee was supposed to be temporary and lasted for seven months, from December to July. Yet, the following month, the government announced the guarantee had quadrupled and would last for 22 months.
Mr Grech pointed out the guarantee would last longer than it would take to build the power station, which the government pledged would be completed by June next year.
“This is not a bridge loan. This is project financing,” he said.
PN spokeswoman on financial services Kristy Debono said Electrogas had landed a win-win situation while taxpayers faced a “lose-lose situation”. She said the government had guaranteed a market, an 18-year term, and even the price.
“The risk on the company is close to zero. That burden is being carried by taxpayers. This is not good governance,” Ms Debono said, adding that such decisions would have long-term consequences on families, businesses and the economy.
The Opposition said the €360 million would have been better spent strengthening Maltese enterprises.
The government has no link to Electrogas, as the company is fully owned by private interests, including leading companies Tumas Group and Gasan.
However, the government says no money from public taxes will be spent on the guarantee, which will be withdrawn when the European Commission approves a security of supply agreement with Electrogas. The Commission is making sure it does not fall foul of State aid rules.