The government will in the coming day be lifting its €360 million guarantee for the Electrogas loan covering the new gas-fired power station in Delimara after the consortium signed a security of supply agreement with the government on Wednesday.

Finance Minister Edward Scicluna said that a reliable and efficient power plant was fundamental for economic growth. He said that the expenditure on oil had gone down thanks to the better use of sources.

"We gave an estimate of 22 months but we had to give extensions which we thought were valid and justified," he said.

He also confirmed that the consortium had paid the government €11.4 million to cover the costs of guarantees - which also ensured that the guarantee would not be seen as state aid.

Addressing the audience, Prime Minister Joseph Muscat said the new plant was clearly needed and had it not been for its generating electricity, Malta would actually have had a shortfall in its capacity on Tuesday.

Read: Electrogas in ‘serious’ default of €450 million loan deal

The Electrogas consortium signed what was meant to be a 22-month bridge loan agreement with four banks on July 28, 2015, backed by a “temporary” €360 million State guarantee.

The European Commission announced in January that the Electrogas project did not fall foul of EU State aid rules. This paved the way for the signing of a security of supply agreement, guaranteeing that the government would buy energy from Electrogas if Enemalta were to go bust.

Then Minister Within the Office of the Prime Minister Konrad Mizzi said at the time that the Commission’s approval of the project would lead to the ‘temporary’ €360 million State guarantee being withdrawn. However, this was delayed for several months.

Read: €360 million power plant loan guarantee extended before election

More soon.