Enemalta made a total loss of €35.8 million in 2020 according to recently published accounts, with the company’s directors blaming the COVID-19 pandemic and damage to the interconnector as the main contributors to the losses.
Last year, Times of Malta reported on an unpublished S&P Global credit rating report which indicated that Enemalta’s loss for 2020 would be in the region of €30 million. The S&P had given the electricity provider a rating of BB with a negative outlook.
In the director’s report which accompanied the accounts, the company said it had been impacted by reduced electricity sales, reduced utility payments, an increased risk in the provision of services, and delayed or reduced investment activity as a result of the COVID-19 pandemic.
Being unable to use the interconnector, which was damaged by a ship’s anchor in December 2019, also had a financial impact on the company.
Repairs to the interconnector were concluded by the middle of March 2020, with the report noting that the repair costs were settled through insurance, while the cost of lost revenues was recouped through an international court case by the end of 2021.
Additionally, the company had undertaken what it called major works to upgrade electricity distribution in several localities, invested in reinforcement projects, replaced older switchgear and increased transformers in localities where additional demand for electricity was being anticipated.
While local demand for electricity decreased by 4.3% when compared to the previous year, due to the COVID-19 pandemic, it subsequently rose by 6.6% in 2021.
Although for 2020, the report describes 2021 as an “unusually difficult” year due to an increase in gas prices, which at the beginning of 2022 stabilised at an average of €86/MWh, which is four times higher than it was at the start of 2021.
While the rising price of LNG did not have a direct effect on the cost of local energy generation, the prices of interconnector imports directly corresponded to the increase in gas prices, Enemalta said.
The report also noted price of energy from the Italian market went from €46/MWh in 2020 to €65/MWh during the first five months of 2021 and up to €98/MWh in June, going on to balloon to a record €533/MWh by the end of December 2021.
Country needs transparency on Labour’s energy policies - PN
In a statement, PN energy spokesperson Mark Anthony Sammut said that the report had exposed how the government’s hands are tied and it is not free to select the cheapest energy source in the public’s best interest.
“The same year that Enemalta made this loss - 2020, Shanghai Electric reported a profit of €15 million from the BWSC power plant that it bought from Enemalta and that it is selling us electricity from,” he said.
“These losses occurred much before the increases in gas prices or the effects of the war in Ukraine and confirm what the Nationalist Party has been saying about Labour’s energy policies.”
He added that the PN would keep insisting on transparency in the sector and continue to take every necessary action against all involved in the corruption that led to this situation.
“The people should not continue to pay for the responsibility and incompetence of the government,” Sammut said.