The government has insisted that the European Commission will favourably view the security of supply agreement between the government and Electrogas, the company building the gas power station.
“The reviewing of the project is still ongoing by the Commission services but the Maltese authorities remain positive that it will be concluded satisfactorily,” the Finance Ministry told The Business Observer.
“The Maltese authorities have had a number of exchanges with the Commission services, which included a number of bilateral meetings.
“All information and documentation requested by the Commission services in relation to this project under the State Aid Notification process have been provided by the Maltese authorities,” the ministry said, adding that the information and documentation related to all aspects of the project from an energy policy, competition, procurement, internal market, financing and economic point of view.
However, the ministry said that it could not divulge any further information since the State Aid notification process, including the pre-notification exchanges between the Maltese authorities and the European Commission services, “are governed by professional secrecy and confidentiality”.
The government was last year forced to authorise a temporary €88 million bank guarantee for a €360 million loan taken out by private consortium Electrogas last year pending the EU’s approval of the security of supply agreement.
The agreement stipulates that the government would step in and buy the electricity if Enemalta reneged on the deal with Electrogas to purchase electricity produced by the new gas plant.
Electrogas insists the security of supply agreement is “part and parcel of the original competitive process” and that the guarantee was only temporary, to cover a bridge loan taken out with four major banks, including Bank of Valletta and HSBC.
Electrogas has signed turnkey construction contracts worth €296 million and a €30 million contract with Enemalta for development fees and for “the right to supply gas and power”. It also confirmed a bridge loan of €110 million for partial financing of the construction works, which was replaced by full project interim financing of €450 million in the third quarter of 2015.
The shareholders have guaranteed €90 million of the loan and the financial statements say that it was envisaged that this would be replaced by shareholder funding in due course.
The ministry spokesman said that once the project is cleared by the European Commission for state aid purposes, the bridge financing could be refinanced through long-term financing and the government guarantee would be withdrawn.
“As regards the long-term financing, this is the responsibility of the Electrogas – not the government of Malta,” it pointed out.