Shanghai Electric Power officially became a shareholder in Enemalta yesterday after the Chinese firm advanced the €250 million agreed earlier this month.
The transfer brought into force the contractual obligations and responsibilities under the energy sector and investment cooperation agreement signed on December 12, a government spokesman said.
Shanghai paid €100 million for a 33 per cent stake in Enemalta and €150 million for a 90 per cent shareholding in the Delimara BWSC plant that was hived off to a separate company called D3 Generation Limited earlier this year.
The Chinese firm is bound to invest another €70 million to convert the BWSC plant from heavy fuel oil to gas.
The spokesman said the agreement enabled Enemalta to look forward from being a debt-ridden company facing a chronic lack of investment in distribution to a company of opportunities based on sound finances.
The agreement will also see Shanghai Electric and Enemalta jointly invest in two companies that will focus on renewable energy and maintenance of the Chinese company’s energy plants in the region.
The Shanghai investment is the single largest foreign investment in Malta and will contribute to halving Enemalta’s debt, which was often highlighted as a threat to the country’s stability by credit rating agencies.
Dr Mizzi said there was no obligation to buy electricity produced by the BWSC plant
Energy Minister Konrad Mizzi had said earlier this month, after the agreement was signed, that Enemalta would enter into a power purchase agreement with Shanghai on the BWSC power station.
Dr Mizzi said there was no obligation to buy electricity produced by the BWSC plant since Enemalta would retain dispatch rights, meaning the company would determine from where it bought electricity and in what quantities.
Shanghai had initially asked for a minimum purchase commitment, which Enemalta rejected. However, Dr Mizzi had said that for the first year it was agreed Enemalta would get 50 per cent of its electricity from the new Electrogas power station, 30 per cent from the BWSC plant and 20 per cent from the interconnector to Sicily.
A technical committee would decide the best mix on a yearly basis.
Enemalta is expected to start receiving electricity from gas-fired plants by June 2016, 18 months after the promised deadline.
Electrogas fell back on its plans to build a new power station and gas handling infrastructure following what the government claimed were technical talks with Enemalta and Shanghai Electric.
The delay prompted question marks over the government’s ability to deliver on its promise to cut electricity tariffs for businesses by an average of 25 per cent in March 2015.
The move depended on the gas power station coming on stream but the Chinese investment and a seven-year business plan for Enemalta ensured the energy company would be able to finance the reductions.
Tariffs were cut by an average of 25 per cent for households this year.