State-owned China Power Investments is to inject millions of euros into cash -strapped Enemalta and become a minority shareholder.
A memorandum of understanding signed today between Malta and China provides for the Chinese energy firm to inject 'tens of millions' into Enemalta, which has a debt of €800 million.
Reliable sources close to the Maltese Government told timesomalta.com that around €200 million will go to reduce the corporation's debt.
The announcement was made today following a meeting between Prime Minister Joseph Muscat and his Chinese counterpart Li Keqiang in the Chinese city of Dalian, which is hosting the Annual Meeting of World Champions organized by the World Economic Forum.
The agreement which is set to be finalised in six months' time also includes the setting up of a joint venture company in Malta specializing in the manufacture of photovoltaic panels with the objective being to enter the lucrative EU market.
In return the Chinese company as well as its subsidiary Shanghai Electric Power will be able to service its plants in Europe by calling upon the expertise of Enemalta employees.
A memorandum of understanding signed between Energy Minister Konrad Mizzi and the president of China Power Investments Corporation Lu Qizhou will mark the start of the six-month long negotiations aimed to iron out the details of the agreement.
In his comments to the media, the Maltese Prime Minister said the government will be seeking parliament's green light before signing the agreement.
He said that this agreement will not mean reductions above the promised 25 per cent reduction in the utility rates.
He added that this deal will address Enemalta's financial viability which in turn will mean a better credit rating and easier loan repayment terms in the future.
The deal comes less than a week after the prime minister announced a memorandum of understanding with Libya, which will supply oil and gas to Malta at favourable rates once production reaches satisfactory levels.
Today's deal also recalls how Labour Prime Minister Dom Mintoff secured vital financial credit and investment from China during a visit to that country early in his 1971 legislature.
The agreement was welcomed by the Malta Employers' Association, the Malta Hotels and Restaurants Association, the Chamber of Commerce and Enterprise and the Labour Party.