Updated at 4pm with government statement

The Minister within the Office of the Prime Minister, Konrad Mizzi, took exception to an article in this newspaper titled ‘€1.4bn in state aid for power station company’ (February 27).

He insists the government will not be paying any money to Electrogas Malta Ltd and argues that the state aid concept should not be interpreted in the sense that the company will be receiving any subsidy “in the classical sense”. Exactly in which other sense Electrogas will be receiving €1.4 billion over the coming years is not clear.

The official journal of the European Union says €1.4 billion is what the company will be getting in “individual aid” through the long-term power purchase agreement and the long-term gas supply deal the government reached with Electrogas. Dr Mizzi says that thinking Electrogas will be given an advantage of €1.4 billion through the purchase agreement is misleading. It certainly does look that way but, apparently, that is too classical.

It is obviously not possible to refer to the energy agreements the government recently published much too late and with a thick black marker to wipe out the important details. What is known is that there is a purchase agreement, binding this government and successive administrations, but, apparently, it should not be called a subsidy.

It is not the only agreement the government signed with Electrogas. It struck a deal promising to buy the whole power plant from them if the European Union did not give its approval to the agreement. Furthermore, it even issued a State guarantee to the company to the amount of €360 million until the EU would decide. In that way, the company could start the works, after the government had already missed its two-year deadline.

The unravelling of the power station project has been anything but classical. Deadlines and promises of resignations apart, the project, the flagship of the Labour Party electoral programme, has been a gruesome and painful experience.

The LNG tanker permanently anchored in Marsaxlokk was never mentioned before the election. All that was mentioned was water and energy cuts, something that was successfully achieved not through the building of the gas-powered plant but thanks to falling oil prices, the BWSC plant and the interconnector.

Yet, the power plant has been built and the government has bound itself to buy energy from it. Presumably, it would be far too classical to think the country should buy its energy from the cheapest supplier. That would mean cheaper prices at the pumps for everyone but that too would mean thinking in the classical sense.

Apparently, the recent deal reached over the transfer of public land in St George’s Bay was not in the classical sense either. That would explain why the Chamber of Commerce, Enterprise and Industry is worried with the way the government transferred a large tract of land to the Seabank Group. The procedure has been described by the government as a blueprint for future projects. The chamber thinks these methods distort the market but, then, the chamber too may be labouring under the plague of the classical thinking Dr Mizzi is out to eradicate.

Dr Mizzi is in no position to preach on classical or any other thinking whatsoever. His shocking decision to open a secret company in Panama and his awful and thwarted defence of that decision only point to one thing, that thinking in the “classical sense” is the only way to make sense of the unending series of controversial decisions he has been involved in.

Government's reply

In a statement this afternoon, the government said the Commission's decision clearly showed that Electrogas Ltd was in no way given any undue advantage.

The Commission concluded that the return that the consortium would be getting was in line with similar investment, and there was no over-compensation.It also confirmed this was a project providing a service of general economic interest to Malta,

It also confirmed this was a project providing a service of general economic interest to Malta, and required to ensure security of supply, reduce emissions, and enable the closure of the old and inefficient HFO-running plants.

The government said it was a pity that Times of Malta chose to appropriate the Opposition’s propaganda arguments with regards to the reduction of tariffs.

The reduction of electricity and water tariffs was only possible thanks to a long-term plan that was being followed, and that also led to a major turnaround in Enemalta, ensuring a healthy mix of clean and affordable energy generation, while ensuring security of supply.

 

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.