They normally say that when something is too good to be true, then it probably is. The issue we are referring to, of course, is the €320 investment by Shanghai Electric Power in Enemalta.
The initial reaction for many is to get confused. Although Malta in the past 20 years or so, has been competing in and become totally exposed to the outside market, there were areas which remained protected, and one of those was Enemalta.
Let us speak plainly. For a great many years, the arrangement of a state-owned power company worked. But in the last few years, we have seen how the system was abused and gross debts have been accumulated. But, the one company provider is something we are used to, it is a throwback to the 1990s ‘self sufficient’ years. It is also a political discourse re-run of the Mid-Med Bank sale. Back then, the PN government was accused of selling it off cheaply by the PL opposition. It evolved into HSBC bank, a main player in our economic motor. Now, it is the PN that has accused the government of selling things off cheaply. Truly, it is a case of ghosts in the mirror. And it is indeed a point in history that we will look back on. It is actually a Socialist government that is bucking the trend. It is bringing in three different companies to run three power sources. One of those is a gas pipeline in the future. The other is the gas plant which will be privately owned by Electrogas.
The Chinese company is buying into the BWSC plant. The government said the €320 will be invested in Enemalta, which will be used in turn to pay off debts.
Energy Minister Konrad Mizzi described the economics as being clear. €100 million will serve as an equity investment, €150 million will be used to buy part of the BWSC plant and another €70 million will be used to convert it to gas. The government said that this will reduce the redundancy problem, insomuch that it will have three options to choose from and it will always be the cheapest option. Again, it begs the question - What’s in it for China.
When we look at things in the world, it all works the same. Everything has a value, everything has a worth. From a commercial point of view, we are sure that the investing company has made its costings and analyses. They will be sure that from a business point of view, they can register a profit and grow. But there is also more to it, China is establishing links in many countries, and where it can, EU countries. It is expanding its portfolio and improving its standards. Many might ask whether it is even worth China’s while to invest in such a small (by their standards) project. And the reason is clear – this is a European Union country and China has a policy of investing in each and every market in the world. So, what do we make of this? Is it a government masterstroke – or are we selling out. That is subjective. But let us look back on history and make an educated decision. Oh, and by the way, Arriva doesn’t count – everyone is happier to pretend it never happened.