The Nationalist Party today called on the government to explain the €88 million state guarantee it issued to cover the exposure of the private company- Electrogas- building the new gas power project at Delimara.

Addressing a press conference, deputy leader de Marco said that it was not acceptable that the government continued to retain the information away from the public."If the government has nothing to hide it should tell the electorate how it is using public fund," Dr de Marco insisted.

Dr de Marco argued that it is not normal for the government to offer such a guarantee to a private company, and questioned what will happen if the European Commission does not approve the deal.

Auguring that this will not  be the case, Dr de Marco said he assumes it was Bank of Valletta that asked the European Commission to analyse whether the guarantee falls fouls of state aid rules.

He said the "unique" deal, as described by the Finance Minister, should not have been hidden behind a wall of silence.

Dr de Marco also called on the government to publish the contract signed with ElectroGas, as it will have an impact on future legislatures.

Shadow minister for the economy Claudio Grech questioned why the government did not say that such a guarantee was on offer in the Expression of Interest for the building of the power station.

"As far as we know it was not mentioned," Mr Grech said.

Shadow minister for Energy Marthese Portelli said the power station was supposed to be up and running this year.

She said instead of ElectroGas investing in the new power station, it is the government that is having to make good for the investment.

Spokesperson for finance Kristy Debono whether such state guarantees will now becomes the norm.

She questioned if it is a "standalone case" or whether other big projects will be open to a government guarantee.

Government: Opposition against lower energy tariffs

In reply, the government this evening remarked how today an important environmental milestone for Malta was marked today as Enemalta commenced the 2nd phase of the dismantling of the Marsa Power Station.

In light of the Opposition's comments with respect to the Electrogas project, which the government said will enable the elimination of Heavy Fuel Oil from Delimara, the Energy Ministry again accused the government of still being against the reduction in tariffs for families and businesses.

"Under the previous government, families and businesses had to pay amongst the highest bills in Europe," the ministry said in a statement.

"The government then voted against the reduction in tariffs and pledged the future of the country on Heavy Fuel Oil."

The €88m bridge loan and the Security of Supply Agreement

The government went on to explain the mechanics of the disputed €88m bridge loan and the Security of Supply Agreement with Electrogas, reiterating verbatim what it had stated on 9 June.

It explained, "The Electrogas Consortium was selected through a competitive process which secured power and gas at a value for money pricing and will result in a reduction of 50% in our emissions and a 90% reduction in particulate matter. The offering also resulted in a massive reduction in electricity prices in Malta."

Security of Supply Agreement was part of the tender

"As part of the competition process bidders were informed that a Security of Supply Agreement would be entered into between Government and the selected bidder. The Security of Supply Agreement would provide the country and the selected bidder with assurances for the provision of power and gas.

"This was complimentary to the power purchase and gas supply agreements entered into by Enemalta and Electrogas.

"On the basis of these Transaction Agreements and the Security of Supply Agreement, Electrogas has raised all debt and equity required to build the project."

Notification of the Security of Supply Agreement

"Following advice received, Government informed Electrogas and its Lending Banks that it would formally notify the Security of Supply Agreement to the European Commission.

"In this respect Government decided to be prudent and follow due process and entered into discussions with the European Commission to seek clearance from the EU that the agreed Security of Supply Agreement satisfies the EU's requirements and does not constitute incompatible state aid."

Temporary Bridge Loan until European Commission Clearance

"The Security of Supply Agreement is an integral requirement for the Lending Banks to finance the project and was part of the original tender.

"Until the European Commission provides clearance for the Security of Supply Agreement a temporary solution was required in the national interest.

"All parties including Electrogas, the Lenders and the Government agreed to temporary bridge financing.

"In the temporary bridge loan the Security of Supply Agreement needed to be replaced. Instead of it, as part of the bridge financing the Shareholders of Electrogas were required to pledge their equity shareholding and also issue Letters of Credit to the Banks as a form of guarantee. On the other hand Government issued a temporary guarantee to the Banks.

"The issue of the temporary guarantee was approved by the State Aid Monitoring Board in accordance with European Union rules. The Guarantee is temporary until clearance is obtained from the European Commission for the Security of Supply Agreement.

"The shareholders of Electrogas Malta in accordance with regulations also incur fees payable to Government for issuing the required guarantee.  

"The project is progressing well and is contributing to the positive transformation of Malta's air quality, competitiveness and the energy sector."

Spygate

Earlier, on the Google group that former shadow finance minister Tonio Fenech allegedly formed part of together with a number of public officials, Dr de Marco questioned how an independent institution like the Central Bank is conducting an investigation into the matter on the basis of a newspaper report and the Prime Minister's declaration that the public officials were spying.