The Sunday Times of Malta this week reported how the €360 million State guarantee for the Electrogas consortium was extended on the eve of the June 3 election while keeping the public in the dark. The guarantee was extended once again in September.
Government did not issue any statement whatsoever about the decision to extend what the government had in August 2015 termed as a “22-month temporary guarantee”.
To make matters worse, The Times has also reported that in September the Finance Ministry’s permanent secretary Alfred Camilleri raised concerns about a “serious” default by Electrogas under the terms of the €450 million loan agreement covered by a State guarantee.
Before the guarantee was announced the government had secretly authorised an €88 million bank guarantee for a private loan needed by Electrogas from Bank of Valletta – where government remains the largest shareholder – to finance the private power station.
In January, Konrad Mizzi in his role as Minister without a portfolio said the European Commission’s approval of the project would lead to the ‘temporary’ €360 million State guarantee being withdrawn. In the meantime, the security of supply agreement has not been signed yet.
No public announcement was ever made about either of the two extensions. This is shocking. Public money is being used to make good for a private investment without tax payers even being informed about it.
Moreover, this inevitably this raises the question; why should government make good for a particular private investment and not for others?
Malta’s energy policy has been clouded in secrecy ever since a decision was taken by the then newly elected Labour government in 2013 to tie Malta’s energy future to a private consortium which includes GEM Holdings (owned by Maltese property magnates Tumas and Gasan), Socar – the Azeri state owned energy company and German company Siemens.
Electrogas Consortium – the only consortium of the 19 bidders for Enemalta’s Expression of Interest with a Maltese shareholding – managed to fend off major international players in the oil and gas industry, including Shell and Edison.
The choice was made through a call for expression of interest and was not undertaken by the Departments of Contracts. The government has refused to reveal the identity of the members of the selection board. Inexplicably, Energy Minister Joe Mizzi said that such information cannot be disclosed because it has “commercial value” and could “prejudice the company’s business”.
The departure of Gasol in July 2015, one of the original members of the consortium, was also shrouded in mystery. Gasol previously held a 30 per cent stake in the company, the same as GEM Holdings, while Siemens and Socar held 20 per cent each.
In a 2015 report the National Audit Office reprimanded the lack of accountability in fuel hedging agreements with Azerbaijani state oil company SOCAR signing on the basis of “ministerial direction” .
The government has also been secretive with regards to the amount of energy it will be obliged to buy from Electrogas. Large chunks of the power purchase agreement tabled in Parliament last February were blacked out, with the government insisting that it needed to protect commercially sensitive information.
Moreover extracts from a report by the government’s anti-money laundering agency (FIAU), leaked in May, indicated that the Orion Engineering Group, the local company linked to the LNG tanker moored in Delimara, had transferred funds to a Dubai-based company called 17 Black, which was linked to Konrad Mizzi’s and Keith Schembri’s Panama companies. Mizzi, Schembri and Orion Engineering have denied any of these findings and the full FIAU report has not been published.
In 2013 the Labour government was elected on the promise of cheaper energy from the new power infrastructure. The government has already defaulted on the promise the Party had made then to have the new power infrastructure in place by 2015.
What we know for sure is that the Maltese government had managed to reduce electricity prices while relying exclusively on the Malta-Sicily interconnector for energy provision. This was confirmed in January when Enemalta confirmed it was buying 75% of its energy from this source.
How much of the interconnector supply Malta will be able to use is a mystery, due to the secrecy of the agreements signed with Electrogas. But citizens cannot be kept in the dark over the use of taxpayer money. Especially when the Maltese government’s ties to the Azeri government are at the centre of magisterial inquiries over alleged corruption at the highest level.