The Electrogas Consortium has been given a 50 per cent ‘subsidy’ on the first 18 months of the lease for the Delimara site where the new gas-fired plant is to be built.
The 18-month ‘subsidy’ should see Electrogas through to the completion of the new power station by the revised target date of June 2016.
This means that debt-laden Enemalta will miss out on €168,414 in rent during the first 18 months of the lease thanks to the government ‘subsidy.’
The lease was signed on 16 December 2014, just three months before the original March 2015 deadline set by the government for the new power station.
The site was reportedly leased ‘for free’ prior to the formal lease being signed, although hardly any work was carried out by Electrogas during this period.
Up until October, the government was still adamant that the new plant would be operational by the March 2015 target date, despite not having formally signed the lease agreement detailing how and where work can be carried out on the site.
The 16 December signing date is notable for another reason, as just two days before, Prime Minister Joseph Muscat and Energy Minister Konrad Mizzi went on a mystery visit to Azerbaijan, during which a memorandum of understanding on oil and gas exploration was signed.
Azerbaijan forms part of the Electrogas consortium through Socar, the state-owned energy company. GEM, a group of Maltese investors from the Gasan and Tumas business groups, and Siemens also form part of the consortium together with Gasol.
The consortium has been blighted by rumours of financial difficulties, particularly by its lead shareholder Gasol, which has a 30 per cent stake in the consortium. It was delisted from the London stock exchange last summer, after its share price tumbled by almost 70 per cent from its peak price.
Project coordinator Michael Kunz of Gasol signed the lease on behalf of the consortium. In June 2014, Mr Kunz was still adamant that the new gas-fired plant would be completed according to the timetable set by the government, with a March 2015 completion date.
The 22-year lease, which was obtained by The Malta Independent on Sunday through a freedom of information request, sets out a rent rate of €11.65 per square metre per annum.
A total of 19,275 square metres (equivalent to almost three football fields) will be leased out to Electrogas, meaning a total yearly base rent of €224,553.
The rent is linked to inflation and will be increased annually by the cumulative increase in the harmonised index of consumer prices.
The rent will be reviewed once Electrogas has reclaimed land for the jetty where the LNG tanker will be berthed.
The Electrogas consortium has a one-off option to extend the 22-year lease by a further 12 years.
The consortium shall be responsible for the upkeep of the leased premises, and cannot carry out any additional works other than those agreed, without the written consent from Enemalta.
Shanghai secrets
The government refused a freedom of information request by this newspaper for the full contract signed between the government and Shanghai Electric, which will be investing €320 million in Enemalta.
According to the government, the first €250 million payment was made in December 2014.
The contract was signed on 12 December 2014, four days before the lease agreement with Electrogas.
Energy Minister Konrad Mizzi said the new gas-fired plant was delayed as there was a need to reach an interlocking agreement between Enemalta, Shanghai Electric and Electrogas.
Shanghai Electric has bought a 33 per cent stake in Enemalta, although the government will continue to be the majority shareholder.
The Chinese state-owned company has also taken control of the BWSC plant, which will be converted to run on gas.
Parliament had ‘debated’ the contract signed between Shanghai Electric and the government, without the contract ever being made public.
A freedom of information request filed by The Malta Independent on Sunday for the contract signed between Electrogas and the government was turned down last year.