The maximum amount government could have guaranteed the Electrogas bank loans was redacted in the respective contract, thus meaning that it is not clear whether the €360 million government did guarantee was actually the highest they were willing to go.

Back in 2015, government had told the press that Electrogas took out a €450 million loan from four banks for the construction of the new power station, and the Maltese state guaranteed €360 million of it.

There are two particular clauses of note in the bank guarantee contract that this newsroom has so far come across. The first revolves around the government’s maximum liability, which states: “under no circumstances shall the liability of the government guarantor to the lender under this deed exceed a maximum cap of (redacted).”

This newsroom contacted Dr Ron Galea Cavallazzi from the law firm Camilleri Preziosi (who was present at the media briefing just before the first Electrogas contracts were made public, and delivered the main presentation on that day) in order to ensure a proper interpretation of these clauses. He confirmed that this clause dealt with the maximum amount the government could guarantee through this contract.

He was also asked to confirm whether government’s maximum possible liability was capped at €360 million, he responded that there are EU rules that prohibit governments from giving a 100% guarantee and it has to be, at max, 80%.  

He also said that parties can agree to amend a contract whether the contract says so or not. Pressed again whether the €360 million was in fact the maximum government liability as regulated by this contract, he said he cannot answer this question.

He did say however, that Electrogas could have obtained a bigger loan, more than the maximum government liability the contract allows, although government’s liability would not have increased past the maximum amount which is in the contract.

A separate clause states that, without prejudice to another clause in the contract relating to the waiver of defences, “the government guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of, or to any of the Finance Documents and/or Facility or amount made available under any of the Finance Documents.

“Provided that such extension shall not apply to any variation, increase, extension or addition requiring consent of the government guarantor under clause 2.10 (relating to amendments to the finance documents) where such consent is not properly obtained.”

Asked about this particular clause, and to confirm whether this meant that the parties had the ability to extend the guarantee, Dr Galea Cavallazzi said “only through government’s consent.” He further explained clause 2.10 and said that government has to agree to anything that could increase its liability.

Back in August 2015, then Energy minister Konrad Mizzi had said that the bridge loan was a stop-gap measure until the European Commission issues clearance over the Security of Supply Agreement it entered into with Electrogas. During the Parliamentary debate over the Electrogas and Shanghai Electric contracts last Thursday, now no portfolio minister Konrad Mizzi said that the security of supply agreement, while approved had not yet been signed, “but will pass through internal processes to be signed, and once this happens, we will table it immediately”.

Asked whether the guarantee has now been removed, Dr Galea Cavallazzi quoted Minister Mizzi and said that “once the European Commission approves the Security of Supply, then that would replace the guarantee, and the process to do this has started.” He also said that he is not authorised to give any information other than what is in the released document. 

Last January, Minister Mizzi also said that the guarantee "is to be withdrawn".

In this contract, Bank of Valletta is listed as the Security Trustee, and this newsroom was told that the Maltese bank was acting on behalf of the other banks involved in the loan as the security trustee. The four banks that loaned Electrogas the funds were Bank of Valletta, HSBC Bank plc, Société Générale and KFW IPEX-Bank GmbH – a German bank.

Turning to the Site Lease Deed which was not available through the links provided by government to the contracts, Dr Galea Cavallazzi said that it is a notarial deed and thus is a public document.