When all the fluff is taken out of the controversy over the State guarantee for a bridging loan to a consortium entrusted with the building of a new gas-fired power station, what remains is the government’s political urgency to meet an electoral promise.
Though the government has agreed that such a guarantee is unprecedented, Finance Minister Edward Scicluna insisted that Malta is not breaching any EU State aid rules. However, the manner in which the whole affair has panned out, with the government being caught in a web of speculation fanned by the way it promoted the project is extraordinary.
A sovereign guarantee of €88 million that was first considered quite big by local standards has now grown to a staggering €360 million on a loan of €450 million from four banks.
The government explains the guarantee is only required until the European Commission clears a security of supply agreement with the consortium, a matter that was expected to take some 22 months.
To a question repeatedly asked over the past weeks as to what if the Commission does not approve the security of supply agreement, the Finance Minister has replied that he is confident the outcome would be positive. He has gone on record saying the feedback he is getting from Brussels is that there are no State aid issues involved and that the project is one of national interest. The country hopes this is the case for, if not, the project would have to be redesigned.
Had the government not been pressed for time, the project would have taken its normal course, meaning there might not have been the need to make out the guarantee to private investors. In the words of the Energy Minister, the choice was either to wait for clearance from the Commission or go ahead with the project.
In reality, the government had no choice if it wanted to save face with the electorate, more so in the light of the promise Joseph Muscat made before the election that he would resign if the power station was not completed on time. Well, the power station will take many more months to build than what the Prime Minister had in mind when he made the commitment.
Meanwhile, he has not resigned and, at one time, he even said that he had never promised to do so unless the power station was completed on time but only if the energy tariffs were not reduced. This is not what the people had understood him saying in a State television programme.
Although the power station is a project that can definitely be described as being one of national interest, the government’s intervention is political in nature, as it was well remarked by the leader of the Opposition, Simon Busuttil.
A good point made by Dr Busuttil is that no reference was made in the expression of interest to the possibility of the government being able to offer a State guarantee.
He asked whether the contract was therefore legal since others who lacked financial resources might have also been interested in submitting a bid for the project. The departure of the lead partner in the consortium, Gasol, had also raised quite a number of pertinent questions.
The public is only being informed of what is happening in drips and drabs, a stance that is diametrically opposed to the transparency and accountability commitments made by the government. No wonder that practically every major project is being mired in controversy.