Unlawful power station aid given to Electrogas in line with EU rules

Malta breached EU rules by failing to notify European Commission

“Unlawful” state aid offered to the new power station consortium without prior notification to the European Commission was still in line with EU rules, a Commission spokesman told this paper.

The Commission last month gave its approval for State aid to be given to the Electrogas consortium, though it said that Malta had breached EU rules by failing to notify it about the intention to do so.

A Commission spokesman told the Times of Malta that, in view of this, “unlawful” state aid was a technical term referring to assistance that had been paid though Brussels had not approved it.

A spokesman for Minister Within the Office of the Prime Minister Konrad Mizzi, who handles the government’s energy projects, said to date, no state aid payments had been made to Electrogas.

Dr Mizzi said in mid-2015 that the government had been advised from day one to seek approval from the European Commission about the security of supply agreement instead of going ahead and signing it.

The Commission, in its decision letter, expressed regret that Malta had put the aid in question into effect in breach of Article 108(3) of the Treaty on the Functioning of the European Union.

The provision says that the Commission should be informed of any plans to grant State aid in sufficient time to enable it to submit its comments.

The organised tender procedure did not guarantee the achievement of the least cost to the community

No mention of the breach was made during a media briefing by Dr Mizzi on the Commission’s decision last month.

The Commission spokesman told this newspaper that under EU rules, members were generally supposed to notify Brussels of State aid measures and await approval before implementing them.

According to the spokesman, “unlawful” State aid could still be in line with EU State aid rules.

The Commission had concluded that the State aid in question was compatible with EU rules, the spokesman noted.

In its decision, the Commission also flagged the fact that when the 2013 expression of interest was published by the government for the power station project, no mention was made of the security of supply agreement. This stipulated that the government would step in and buy electricity if Enemalta reneged on the deal with Electrogas to purchase the electricity produced by the new gas plant.

“Since that element was not known at the beginning of the procedure, the organised tender procedure did not guarantee the achievement of the least cost to the community,” the Commission’s decision said.

It added that bidders had asked at the expression of interest stage whether a security of supply agreement would be put in place. The possibility of a security of supply agreement was made known at the request for proposal stage, once six bidders had been shortlisted, the Commission said.

It said the contract awarded to Electrogas was the result of a competitive procedure involving 18 bidders.

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