The Malta Independent 5 December 2023, Tuesday
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Updated: Muscat misled Public Accounts Committee – Daphne Caruana Galizia Foundation

Tuesday, 26 September 2023, 07:46 Last update: about 3 months ago

Former Prime Minister Joseph Muscat misled the Public Accounts Committee when he testified before it last month, the Daphne Caruana Galizia Foundation said Tuesday.

When testifying before the PAC on 29 August 2023, Joseph Muscat was asked about the LNG Security of Supply Agreement that his energy minister, Konrad Mizzi, had signed with Azerbaijan’s state energy company, Socar, in favour of Electrogas Malta Limited.


“When the PAC chair asked Muscat why his Government did not disclose the State guarantee to the European Commission, he cited our report that Muscat’s Government had kept it hidden from the European Commission,” the foundation said.  Muscat said that the EU Commission had “full visibility of all the information”.

The foundation said it immediately wrote to the European Commission to ask whether this is correct. The European Commission’s reply shows that while they were aware of the possibility of a Security of Supply Agreement, they were not notified of its existence or its content, as Muscat implied in his testimony.

This is the reply which the foundation received from the DG Competition yesterday (emphasis added): “As regards DG Competition, Malta submitted a notification in June 2016 relating to the Malta Delimara Gas and Power Energy Project, under which Electrogas Malta Limited ("EGM") committed to supply electricity and gas to Enemalta (SA.45779). Part of the aid notified by the Maltese authorities had already been granted and therefore the case was registered by the Commission as relating to non-notified aid.

“On 11 January 2017, the Commission adopted a decision approving the notified measure. More specifically, the contractual structure, as notified by the Maltese authorities for the development of the Project, involved: (i) a Security of Supply Agreement (“SSA”), (ii) an 18-year Power Purchase Agreement (“PPA”), and (iii) an 18-year Gas Supply Agreement (“GSA”).

“This was complemented by an Implementation Agreement (“IA”), whereby EGM agreed to finance, design construct, build, own, operate the LNG regasification facility and the new power plant Delimara 4, and to transfer these to Enemalta at the end of the term (see recitals 33 to 46 of the public version of the Commission decision).

“The aid beneficiary was the developer of the Project, namely the company Electrogas Malta Limited ("EGM"), as specified in recital 47 of the Commission decision. A possible agreement between the Government of Malta and Socar was not part of the notification to the Commission and was therefore not assessed in the Commission’s decision.”

During yesterday's Public Accounts Committee sitting, Joseph Muscat was asked about the Daphne Foundation statement, adding that that he intended to address this even regardless of the aforementioned statement, as he had checked after the question arose in the last sitting.

He said he had made a mistake when he said that the Commission had visibility of the agreement between SOCAR and the government.

He said that the government had sent everything needed and requested by the European Commission, and checked why the commission didn't have visibility of the SOCAR agreement with government.

He said he found that "this was an agreement between the government and an Azerbaijan state company that was not part of the tender, had no direct or indirect impact on Electrogas, and Electrogas was not part of it."

This agreement was practically an insurance policy that the government took, which said that if in some way Electrogas pulled out, SOCAR would not then say that they would no longer continue providing gas to Malta because of that, he said, but rather that the Maltese government would have the right to start buying the gas itself. "That is what this agreement was."

He said the agreement never came into practice as Electrogas continued moving forward.

He said that the government had taken advice from the firm Clifford Chance, which he described as "one of the go to international firms." He said the firm had given the government written advice, which he no longer has access to, which said that this agreement didn't need to be presented to the Commission, "as the standard for state aid notifications reads that if the government ties itself to mandatorily do something then it needs to notify, but the government in this agreement just had the option of the going into it." He also said that for it to be state aid there needs to be a commitment by the state, "which there wasn't as there was simply an option, and that this commitment must be firm and concrete, and this wasn't the case."

He said the agreement was a bilateral one between the government and SOCAR, adding that Electrogas wasn't part of it, nor was it a witness to it. Clifford Chance, he said, had said that this agreement had no risk of state aid and that this agreement was not part of the project, but a standalone the government took as an insurance policy, concluding that this is why notification was not needed and that this is why it wasn't part of the documents presented to the EU Commission.  

He also said that after the agreement had become public, the Commission had also not asked for it. He said the agreement is today terminated as it wasn't needed and no payments were made as it wasn't used.

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