The Malta Independent 5 December 2023, Tuesday
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Enemalta defends Montenegro wind farm’s price trebling

Neil Camilleri & Albert Galea Sunday, 28 June 2020, 08:30 Last update: about 4 years ago

Project had moved from ‘almost dead’ to ‘ready to build’ status

Enemalta has defended the trebling of the price of a wind farm in Montenegro - from €2.9 million when it was first bought by a Seychelles-registered company to €10.3 million when it was acquired by a consortium it formed part of. It listed a number of factors for the price hike, including that, between the first and second time the project changed hands, it had gone from an ‘almost dead’ status to ‘ready to build status.’


The company also insisted that it had only paid €3 million for its shareholding in the project, and not €10.3 million, as reported.

The Mozura wind park deal hit the headlines again last week after it emerged that 17 Black – the company belonging to alleged Daphne murder mastermind Yorgen Fenech – had made a profit of €4.6 million after lending money to the company that eventually sold the wind farm to Enemalta’s consortium. The revelation led to the sacking of Konrad Mizzi from the Labour Parliamentary Group. Mizzi was Energy Minister at the time the deal was brokered.

Both Mizzi and Enemalta have said they were unaware of 17 Black’s involvement in the deal, but no one has so far explained how Fenech had become aware of the project. Enemalta has launched an investigation, and the deal is also subject to a police investigation and a magisterial inquiry.


How 17 Black fits in

The 17 Black link was uncovered in a joint Reuters and Times of Malta investigation.

The Montenegro project was owned by a Spanish company called Fersa Renovables. It was later acquired by a Seychelles-based company called Cifidex for €2.9 million. In order to fund the project, Cifidex, owned by an Azeri who was an executive of SOCAR Trading, borrowed €3 million from Fenech’s 17 Black.

Cifidex eventually paid the €3 million back to 17 Black, plus an additional €4.6 million "profit share."

17 Black made the profit in December 2015. In that same month, accountants for Mizzi and the former prime minister's then chief of staff, Keith Schembri, wrote in an email that Schembri and Mizzi stood to receive payments from 17 Black for services that weren't specified.

Cifidex then sold off the shares to a consortium comprising a company formed between Enemalta and Shanghai Electric Power, which owns a 33% stake in Enemalta, as well as two other companies: Vestigo and Envision Energy.

The consortium paid €10.3 million for the project.

Questions arose as to how the value of the wind farm tripled by the time the consortium and on whether the government was aware of 17 Black’s involvement.


‘Completely unaware’

Replying to questions by this newsroom, Enemalta said it was “completely unaware of any alleged transactions between Cifidex and 17 Black,” but has nonetheless commissioned an internal investigation and also filed a report with the Police to investigate the matter. “Enemalta’s directors are fully committed to provide the fullest support possible to the investigative authorities,” the company said.

Enemalta said it had been informed that the Maltese government and Shanghai Electric Power had agreed to identify a wind farm project and Mozura was identified as having potential.

“Enemalta agreed to collaborate with Shanghai Electric Power and Vestigo Capital Advisors LLP for this purpose. A consortium was formed between Shanghai Electric Power (as the lead investor), Enemalta, Vestigo and Envision Energy, in light of its expertise in the production of wind turbines.”

The company said that, as noted in its audited accounts for 2015, it had agreed with Cifidex to acquire 100% ownership of Mozura, but the intention was always sell the respective shareholding to the other members of the consortium.

“Since the consortium’s financial structures had not yet been fully established by October 2015, Enemalta paid €3.5 million in December 2015 to secure the acquisition of the Mozura Wind Farm from Cifidex at a final price of €10.3 million. The €10.3 million was not to be paid by Enemalta but rather by the new consortium comprising of International Renewable Energy Development Limited (70% SEP and 30% Enemalta), Vestigo and Envision.”

€2.9 million

“Though the initial discussions required Enemalta to only hold an indirect investment in the project through its 30% shareholding in IREDL, in 2016 the Government of Montenegro required Enemalta to retain a 10% direct shareholding in the project, this requirement being acceded to by Enemalta after it considered the potential rate of return of the project. This resulted in Enemalta having an effective shareholding (direct and indirect) in the Mozura project of 28.9%.”

“As a result of this the portion of the purchase price payable by Enemalta amounted to €2.977 million, which is nowhere near the €10.3 million as quoted in section of the media, with the difference between the €3.5m actually paid and the €2.977 million which was payable, having been re-imbursed to Enemalta by the other consortium members.”

Enemalta said that when it sold 90% of its shareholding to the other consortium members it also made a profit of €811,000.

Enemalta noted that, when it decided to acquire the project, negotiations between Fersa and Cifidex were already at an advanced stage, so it could not negotiate with Fersa.

“Extensive” due diligence of the project and its financial viability were carried out by SEP (as the lead investor) and its international external legal and financial advisors, Enemalta said

“None of the individuals/company mentioned in recent press reports featured in the said due diligence reports provided to Enemalta.”

“Enemalta made a separate objective analysis of the due diligence reports and recommendations provided to it by Shanghai Electric Power before it decided to be one of the investors in the project. The price was eventually agreed to by all 4 members of the consortium, and not by Enemalta on its own.”


From ‘dead’ to ‘ready to build’

Asked about the €10.3 million price tag, Enemalta said that, “between February 2015 (when Cifidex entered into agreements with Fersa), and December 2015 (when Enemalta acquired the shares from Cifidex) Cifidex also undertook various other liabilities and obligations which had been incurred by Fersa, such as the payment of a wind measurement fee, the payment for the termination of certain services agreement/s, payments which were due to Celebic, and the assumption by Cifidex of certain liabilities to Fersa which were incumbent on the Mozura wind farm project company, thereby contributing to the mentioned purchase price by the consortium.”

It also mentioned the 1% shareholding Cifidex had acquired from Celebic (a Montenegrin that had originally acquired Mozura together with Cifidex).

“Moreover, whilst in February 2015 Cifidex was acquiring a project at an ‘almost dead’ status, by December 2015 the project was at ‘ready to build’ status (including as a result of the consortium also requiring Cifidex to ensure that Fersa transferred the rights to the lease of the project site at no additional expense).”

“Notwithstanding that the financial due diligence carried out always showed the possibility of profitable returns, Enemalta also separately negotiated with the consortium members a guaranteed equity internal rate of return on this investment, and this was eventually set at 9.4% for Enemalta’s benefit. The guaranteed return was committed to by Shanghai Electric Power (Malta) as the majority investor and Envision Energy. Enemalta’s directors analysed what was in the best interest of Enemalta and its shareholders and had concluded on the basis of all the documents provided to it that this investment was indeed in the best commercial interests of Enemalta and its shareholders.”


Politicians deny knowledge of 17 Black involvement

Former Enemalta executive chairman Frederick Azzopardi had signed the agreement on behalf of the state utilities company. When asked whether he had been aware of the 17 Black link and how the price had tripled, Azzopardi referred us to Enemalta’s statement.

Former PM Joseph Muscat, who had inaugurated the project, said the 17 Black revelations were “new” to him and insisted he has nothing to hide.

Current Energy Minister Michael Farrugia also pointed to the Enemalta statement which, he said, has “answers to your misconceptions.”

Joe Mizzi, who served as Energy Minister for almost three years, told The Malta Independent on Sunday that he knew “absolutely nothing” about the situation regarding Enemalta’s purchase of the project.

Mizzi said that he had gone to Montenegro to visit the site only because there were technical and logistical issues for construction on the project to start.

He said that when he became Minister, the project had not started and that when this became clear to him, he had gone to meet with the Montenegrin government to see what the problems were and see how they would be ironed out.

However, Mizzi assured that he knew nothing about what happened before he was in office, when the deal was signed.


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