Credit rating agency Moody’s has given thumbs-up to the Government’s energy reform, including Chinese investment in Enemalta.

Moody’s said building a gas-fired power station by the private sector, converting existing plants to gas and linking to the European grid should “decrease fiscal vulnerabilities” and bolster competitiveness.

The reform aims to lower utility tariffs and put Enemalta on a sound financial footing by attracting a substantial investment from China Power Investments Corporation.

According to Moody’s Malta will benefit from “a less volatile” Enemalta and “more resilient energy sector”. It noted although the plan was still in its infancy, any gradual steps were likely to help reduce exposure to the sector’s liabilities.

Moody’s said the authorities believe the corporation should register a €17 million loss next year, which could shift to profit if it sold assets to a private partner. The forecast for 2015 is for Enemalta to register a profit of fewer than €4 million.

But in a six-page analysis Moody’s also warned of the risks associated with what it described as Government’s “ambitious” reform.

It said the new gas infrastructure depended on identifying a suitable partner and warned Enemalta’s finances could be jeopardised by an early cut in tariffs should “any roadblocks” delay savings. It also warned the planned interconnector could strain Sicily’s electricity grid.