The government has said it was the Cabinet that decided to approve an unprecedented €88 million state guarantee for a bridge loan to Electrogas, insisting the move was in the national interest.
It has still not, however, answered the question of what happens if the European Commission decides the guarantee goes against state aid rules.
The €101 million bridge loan was issued to Electrogas – the private consortium entrusted with the building of the new gas-fired power station – by Bank of Valletta.
To allow it to happen, the government provided a bank guarantee of €88 million, the first time such a guarantee has been issued for a private entity.
There have been calls for more transparency on this deal, including by the Opposition and the Chamber of Commerce and Enterprise, but the government has so far refused to publish the agreements it entered into with Enemalta, Electrogas and the bank.
It has explained that the guarantee was “a temporary solution in the national interest”, until the European Commission decides that the Security of Supply Agreement “does not constitute incompatible state aid”.
A temporary solution in the national interest
Last Wednesday, PN deputy leader Mario de Marco asked the government to say what would happen if the Commission did not approve the guarantee. Did it have a Plan B?
The government did not answer the question but said the €101 million temporary bridge-loan by Bank of Valletta was replacing the Security of Supply agreement. “Instead of it, as part of the bridge financing, the shareholders of Electrogas were required to pledge their equity shareholding and also issue Letters of Credit to the banks as a form of guarantee. On the other hand, the government issued a temporary guarantee to the banks,” the government said.
Replying to a parliamentary question by PN Shadow Minister Marthese Portelli, about who authorised this unprecedented state guarantee, Energy Minister Konrad Mizzi said that it was a Cabinet decision taken last December.
The gas power project had to be ready by March 2015. However, last December, the government announced an 18-month delay.