Standard & Poor's has improved Enemalta stand alone credit rating to CCC+ from CCC, Energy Minister Konrad Mizzi said this afternoon.
Describing this as an important milestone for Enemalta, Dr Mizzi said Standard & Poor's said the Maltese government was making significant progress in implementing the energy reform.
The agency gave a stable outlook and said a turnaround was expected in 2017.
S&P said it reaffirmed Enemalta’s B+ incorporating its upward revision of Enemalta’s standalone credit profile to CCC+ from CCC, based on its view that the company’s default risk declined.
“We consider the company’s restructuring is proceeding in line with our expectations and that its liquidity squeeze has subsided considerably.
“We think Enemalta is on track to realign its cost base.”
S&P acknowledged the sale of a minority stake to Shanghai Electric, its divestment of the petroleum division and the closure of the Marsa plant.
“We estimate that the process to transform Enemalta into a distributor and supplier of power would be completed by 2016 enabling the company to recover positive operating cash flows from 2017.
“We could upgrade Enemalta if we thought its ongoing restructuring would enable it to achieve financial stability in the long term. This could occur if Enemalta generated positive operating cash flow on a sustainable basis. However this is not imminent in our view.
“We could lower the rating on Enemalta if we perceived that the full conversion to gas was delayed forcing Enemalta to continue its current generation operations,” S&P said.
S&P's decision was also welcomed by Enemalta.
Chairman Fredrick Azzopardi commended the company’s management team and employees for their contribution to the result saying the rating endorsed Enemalta's efforts in the last few months.
"The results of 2014 are just the beginning of a long-term plan to turn around our financial situation, attain a cost-effective and environment-friendly energy mix, consolidate the electricity distribution network, improve customer experience, boost revenue collection and seek new revenues from other sources,” he said.
Asked about the progress being made by Electrogas, Dr Mizzi said the company was giving a monthly progress report and things were moving ahead as planned.
Extensive works were currently being carried out on the piling system in Delimara as well as offsite -on the power station and the conversion of the LNG carrier into a storage facility.
Socar hedge agreement saved Enemalta €3 million - minister
Asked about the agreement with Azeri company Socar, Dr Mizzi said the memorandum of understanding he signed would be tabled in Parliament.
He clarified that Enemed never bought fuel from Socar, with whom the hedging agreement had been reached. The hedge contract was for €67 million but the premium paid to Socar was of €7 million.
Dr Mizzi said that had he not intervened, Enemalta would have had to pay a further €3 million on its hedges, because according to what it had till then it would have had to pay a premium of €10 million.