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 from the European Commission said 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 guarantee was revealed by Times of Malta earlier this week and Finance Minister Edward Scicluna confirmed it is unique yesterday.
Electrogas Malta, the consortium building the new power station in Delimara, insisted today that there was 'absolutely no shortage of funds" for the project and it gave its explanation for an €88m loan guarantee given by the government.
In a statement Electrogas said it had raised all funding required to construct and deliver the project in full accordance with its obligations tied to the contract signed with Enemalta.
Project financing debt was provided by a consortium of international and local lenders.
It explained that the financing structure relies on a 'Security of Supply' agreement, under which the government would have the right to step in under certain circumstances and secure the supply of electricity and gas for Malta. The Security of Supply Agreement was part of the original tender.
"Further to consultation with Electrogas Shareholders and the bankers, the government has entered into discussions with the European Commission to seek clearance from the EU that the agreed Security of Supply Agreement satisfies the EU's requirements and does not constitute incompatible state aid.
"The Government and the Electrogas Shareholders believe that it is good practice and prudent business to seek EU clearance and are confident that the Security of Supply Agreement will be approved, therefore until EU clearance is given, all parties agreed to temporary bridge financing"
This arrangement, Electrogas said, was permissible under EU regulations provided that Electrogas paid a fee to the government for issuing the guarantee that was approximately equal to any savings that could result from the guarantee. This was done in December 2014.
The company insisted that there was "absolutely no shortage in funding" for the project and long-term project financing was 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.
PN CALLS FOR EXPLANATIONS
Earlier, the Nationalist Party called on the government to explain how and why it had guaranteed the €88m loan for Electrogas.
The PN said it found this unprecedented step highly questionable and it was seeking adequate explanations, for the following reasons:
"1. The facility was not mentioned in the Request for Proposals issued for the building of the power station. This means that other competing companies have been disadvantaged by this guarantee because they were not aware that it was possible.
"2. The Prime Minister tied his political future with the timely delivery of this project. Consequently, what is really at stake here is the Prime Minister guaranteeing his own political promise at the expense of taxpayers.
"3. The information was made public not by the government but through the efforts of the independent media. The Government keeps resisting all calls for transparency and to publish the documentation relative to the award of contract to build a new power station in Delimara."
The PN asked what led the government to go against precedent and guarantee the financing of works awarded to a private consortium through a public call for proposals
When was the guarantee issued by the government?
Who authorised the issue of the guarantee by the government?
What aspect of the new power station project is covered by the guarantee?
What are the terms and conditions of the guarantee?
Under what circumstances can the guarantee issued by the government be called in by the bank?
Under what circumstances can the government be released from such guarantee?
The PN also called on the government to publish all the documentation pertinent to the commissioning of the new power station, including the documentation relating to this €88 million bank guarantee.
MINISTRY: TEMPORARY LOAN UNTIL SECURITY OF SUPPLY AGREEMENT IS APPROVED BY EU
In a statement issued within minutes of that by Electrogas, the Energy Ministry explained how the Security of Supply Agreement was complimentary to the power purchase and gas supply agreements entered into by Enemalta and Electrogas.
"On the basis of these Transaction Agreements and the Security of Supply Agreement, Electrogas has raised all debt and equity required to build the project."
Clearance for the Security and Supply Agreement - which was part of the original tender -was being sought from the EU to ensure that it satisfied the EU's requirements and did not constitute incompatible state aid.
It said the Security of Supply Agreement was an integral requirement for the banks to finance the project and until it was approved by the EU, Electrogas, the lenders and the government agreed to temporary bridge financing.