Updated with government statement at 10.40am

Shanghai Electric is making €41,000 in profits every day selling energy back to Enemalta from the BWSC power plant it bought from the State electricity corporation in 2014.

Meanwhile, Enemalta is still registering losses, despite buying much of its energy at a low price through the interconnector link with Sicily. D3 [Delimara 3] Generation Limited, the company that was formed by Shanghai Electric to operate what was at the time Enemalta’s newest power plant, received €27 million from the corporation during its first 16 months of operation, according to its published, audited accounts.

From this, it made a profit of €20 million.

The accounts also show that the new Chinese owners have kept costs down at the state-of-the-art plant, where they employ just five officials.

Audit experts who analysed the D3 accounts told this newspaper that the Chinese “have got a very good deal from the government”.

“If the stream of payments from Enemalta to the Chinese remains at current levels, it will mean that the Chinese will recover their investment in just seven years, with a return of 14 per cent per annum,” they said.

The BWSC plant was commissioned in 2012 and dubbed “a cancer factory” by the then Labour Opposition. This was  due to the use of heavy fuel oil to fire its eight turbines.

The Chinese have got a very good deal from government

It was sold by the Labour government to Shanghai Electric two years later in a bid to reduce Enemalta’s long-term debts. Shanghai Electric owns 90 per cent of the shares in the plant, while Enemalta has retained an equity of 10 per cent.

The agreement between Enemalta and the Chinese company has never been made public, even though Prime Minister Joseph Muscat promised last year that all contracts would be published by the end of 2016.

Requests from this newspaper to see the contract have consistently been turned down. Asked to state how much energy Enemalta bought from the Chinese in 2014 and 2015 and how much it paid per megawatt, the corporation did not provide the information, citing “commercial sensitivity”.

It is not known whether Enemalta is paying the Chinese according to the amount of electricity supplied or whether the contract stipulates a fixed payment independent of the amount of electricity produced.

Data issued by the NSO points towards the latter.

According to official statistics, in 2015 the BWSC plant supplied Enemalta with just 28 per cent of all its energy needs (Malta’s demand). This means that if used at full capacity, the plant would have been running for the equivalent of three months out of 12.

Shanghai Electric owns 90 per cent of the shares in the plant, while Enemalta has a 10 per cent equity.

Meanwhile, 47 per cent of Malta’s total energy demand in 2015 was bought through the interconnector, while the rest was produced by other plants in Delimara and through domestic photovoltaic panels.

Currently, the Chinese BWSC plant is only capable of producing half of its 144 MW generation capacity, as four of its eight turbines are being converted to run on natural gas. The others will be converted once the long-awaited Electrogas power plant becomes operational.

Dr Mizzi has said in Parliament that according to the still unpublished agreement, Enemalta will not be obliged to buy all the power produced by the BWSC plant.

However, he did not say how much the Chinese are being paid under the deal.

In the meantime, Enemalta has not yet published its audited accounts for the last two years. Asked for an explanation, the company said it would publish its 2015 accounts soon and expected to post a profit by the end of this year.

Enemalta no longer a major risk for the economy - government

In a statement this morning, the government did not deny this report but said it was misleading.

It said that over the last three-and-a-half years Enemalta was transformed from a state-owned corporation into a forward-looking public limited company.

It reduced its debt by half, improved financial performance, partnered with Electrogas and Shanghai Electric Power to invest in a new gas to power infrastructure, obtained permits and constructed the interconnector, and invested €80 million in distribution. The company also restructured its operations.

As it now started producing power from gas, it looked forward to sustain tariff reductions in the long term and also make fair profits.

Enemalta would also accelerate efforts to decommission Marsa Power Station and Delimara 1.

It was no longer a major risk for the economy but was now a major contributor to economic growth, socially fair tariffs and a cleaner environment.

ivan.camilleri@timesofmalta.com