Six months down the road, and the European Commission is “still assessing” the government’s controversial loan guarantee to a number of banks with respect to Electrogas’ financing of the new Delimara power station.
The first guarantee, for €88 million, was made in June 2015 and the sum was increased exponentially to €360 million the following August.
In a reply this week to a European Parliamentary Question tabled by Maltese MEP David Casa, European Commissioner for Competition Margrethe Vestager said: “The Commission is in contact with the Maltese authorities as regards the measures taken in relation to the financing of the comprehensive energy project, of which the new gas power plant in Malta is part.
“The Commission is still assessing the information submitted by the Maltese authorities. The temporary guarantee provided by the Maltese Government is part of the package of measures being assessed under State aid rules.”
Dr Casa had asked, for the second time, whether the Commission believes that the guarantee creates “a disproportionate and unnecessary burden on the Maltese public” and discrimination towards other potential bidders who could not have known about the provision of a state guarantee.
From the Commission’s reply, it appears that the Commission is not only looking into the state guarantee but that it is also investigating the Security of Supply agreement the government has struck with Electrogas.
In fact, the Commission’s replies indicate that all may not be quite so rosy with the government’s Delimara financing arrangements. And given the Commission’s history of invariably approving state guarantees for private sector power station projects, the delay appears to be somewhat inordinate.
Sources in Brussels, speaking with this newspaper last autumn, had confirmed that the European Commission is “likely” to give the Maltese government the green light to the Security of Supply Agreement for the ElectroGas power station project.
That green light may, however, come with certain caveats that may not go down well with ElectroGas, the company building the new power station and contracted to supply electricity to the country for the following 18 years.
Much, however, hinges on ongoing talks in Brussels between the Commission, the Maltese government and ElectroGas itself.
Energy Minister Konrad Mizzi had previously hinted that the EU may tweak the Security of Supply Agreement, without specifying what tweaks were actually under discussion.
Possible changes to the agreement imposed by Brussels, as applied in other cases, could very well be met with opposition from ElectroGas. Such changes may include assurances that any higher profits emanating from the project, other than those currently expected, including any unforeseen lower construction or eventual production costs, will be shared with consumers and taxpayers.
Once the SSA is given the green light from Brussels, the government will be freed from the state guarantee it has given to the ElectroGas loan, which the government insists is only a temporary measure to satisfy bank requirements.
Last July, the Finance Ministry, in reply to a Freedom of Information request filed by this newspaper, said that publishing the details of the then €88 million state guarantee could have “a substantial adverse effect on the ability of the government to manage the Maltese economy”.
The Finance Ministry quoted a number of opt-outs in the Freedom of Information Act in order to deny this paper’s request for a copy of the €88 million loan guarantee agreement.
Apart from potentially creating turmoil in the economy, disclosure of the document may also “have a substantial adverse effect on the financial or property interests of the government or of another public authority”.
It was also deemed that “the public interest that is served by non-disclosure outweighs the public interest in the disclosure.”
In his Parliamentary Question, Dr Casa had asked: “In view of the planned construction of a power station in Malta, the consortium ElectroGas was selected as the ‘preferred bidder’ to construct the power station and provide for the supply of natural gas. Nevertheless, it was later revealed that ElectroGas would receive a state guarantee to the tune of some €400 million.
“In view of the fact that the provision of the state guarantee was only announced long after the preferred bidder was selected, does this serious irregularity, that creates a disproportionate and unnecessary burden on the Maltese public, amount to discrimination towards other potential bidders who could not have known about the provision of a state guarantee?
“Does this not vitiate the bidding process? Will the Commission investigate whether this irregularity contravenes EC law?”