Despite it being pivotal for the government’s economic policy, there was no definite commitment that the deal involving a €320 million cash injection into Enemalta by Chinese State-owned energy company Shanghai Electric Power would go through.
Instead, the Finance Minister limited himself to saying that the relevant timeframes would be announced “in the coming weeks”, referring to the building of a new gas plant.
The new power station and related infrastructure at Delimara were due to be completed by March 2015 but, last month, the government admitted that the deadline would be missed.
The Labour Party’s pre-electoral pledge had tied the reduction in energy tariffs – this year for households and next year for businesses – to the completion of the gas project. Both measures will cost the government a combined €80 million a year.
Since the cash-strapped energy corporation will not be able to rely on cheaper energy from a new power station, it will have to turn to the cash injection from the deal with Shanghai Electric to bridge the gap caused by the delay.
Moreover, even the Budget itself relies on this deal as the government is banking on Enemalta paying €50 million in excise duty it owes.
Under this deal with SEP, the Chinese will be acquiring a 33 per cent stake in Enemalta. They will also purchase the BWSC and undertake to convert it to gas. The agreement also includes a renewable energy joint venture and the setting up of
an energy service centre. The Budget did deal with the longer-term project of developing a gas pipeline with mainland Europe. The government is planning to have a feasibility report in hand by next June. Meanwhile, the electricity interconnector link with Sicily is set to be operational in a few months’ time.
From a wider perspective, next year the government will be rolling out several initiatives to promote renewable energy. As a start, the planning authority will be issuing a solar farm policy to ensure that these installations do not have a negative visual impact.
Households, which invested in photovoltaic panels and benefited from a 50 per cent subsidy, will till the end of April be given the opportunity to increase the number of panels and receive a feed-in-tariff of 22 cents per unit produced.
Similarly, businesses and organisations that are still in the process of installing such systems will be given till the end of April to apply for the feed-in-tariff.