The European Commission has not yet approved the government’s €88 million guarantee to help power plant builder Electrogas obtain a bridge loan from Bank of Valletta.
A spokesman for the European Commission said yesterday Brussels was still analysing the issue in terms of the EU’s state aid rules and was in contact with Malta on the matter.
“The Commission’s assessment is ongoing and it has not yet taken a formal position,” the spokesman said.
The Sunday Times of Malta revealed that last December the government had to step in to issue an €88 million state guarantee to Bank of Valletta to cover its exposure to a €101 million loan to Electrogas Malta Ltd.
According to sources, Electrogas had failed to raise the required capital from international financial institutions.
Finance Minister Edward Scicluna has admitted a state guarantee to a private company is “unique” but says it is a temporary measure until Brussels clears a gas and energy supply agreement signed between Enemalta and Electrogas.
This will guarantee the company a steady income.
The state guarantee has been approved by the local State Aid Monitoring Board so there was no need to discuss this particular issue with Brussels, according to Prof. Scicluna.
The PN yesterday called for full disclosure by the government on the guarantee, which it said was highly questionable.
It said the government facility was not mentioned in the Request for Proposals on the gas plant, possibly putting other bidders at a disadvantage, being unaware of the guarantee option.
The Prime Minister had tied his political future to the timely delivery of the power plant, and this was what he was guaranteeing.
The PN called on the government to be transparent and publish all the documents relating to the award of the gas plant contract and the guarantee.
Brussels is still analysing the issue in terms of the EU’s state aid rules
The government last night said Electrogas had raised all debt and equity required to build the project on the basis of power purchase and security of supply agreements.
It then sought clearance from the European Commission that the security of supply agreement did not breach EU state aid rules.
Security of supply was part of the original tender and an integral requirement for the banks to finance the project, it said. The bridge financing was only required until Brussels cleared the agreement.
It added that Electrogas was paying a fee to the government for issuing the guarantee.
Electrogas also issued a statement last night, saying it had raised all funding required in line with the contract signed with Enemalta.
It explained the fee was roughly equal to any savings that could result from the guarantee.
“There is absolutely no shortage of funding and long-term financing is readily available following EU clearance of the security of supply agreement.
“The need for the government guarantee is part of the process put in place simply to avoid any delay that would result from waiting for the EU approval process to take its due course,” the company said.