Chinese firm Shanghai Electric Power is to inject €320 million into buying a 33 per cent stake in Enemalta and majority control of the BWSC plant at Delimara.
The deal signed yesterday at Auberge de Castille includes a commitment for the creation of two joint venture companies that will see Enemalta investing in renewable energy projects in Europe.
Workers’ jobs will be guaranteed and the petroleum division, Enemalta’s only profitable venture, will not form part of this deal since government has other plans for it.
In a tweet after the signing ceremony Prime Minister Joseph Muscat said “the future is bright for Malta”.
Giving a breakdown of the deal, which he described as the single largest foreign direct investment, Energy Minister Konrad Mizzi said Shanghai Electric will be acquiring the Enemalta shareholding for €100 million.
The company will also spend €150 million to acquire a majority stake in Enemalta’s newest plant – the BWSC power station – that will be hived off to a separate company.
Shanghai Electric will also fork out the €70 million required to convert the BWSC plant to run on gas.
The substantial investment is expected to halve Enemalta’s multi-million debt to €300 million and cut government’s exposure to loan guarantees that were required to sustain the corporation over the years.
Under the arrangement the government will provide guarantees for €200 million, a move which Dr Mizzi said will improve the country’s financial situation.
Dr Mizzi said Shanghai Electric was a strategic partner and the investment will position Enemalta as a regional operator.
“This is a proud moment... this investment will put Enemalta on a sure footing,” he said at a press conference after Enemalta chairman Charles Mangion and Shanghai Electric chairman Wang Yundan put pen to paper.
Enemalta’s board of directors will eventually reflect the shareholding balance with the chairman being appointed by the government.
The government wants the process finalised by September and will be submitting the agreements to Parliament. Legal changes will be necessary to the Enemalta Act.
Dr Mizzi explained that the investment in the two joint venture companies will be over and above the €320 million. Shanghai Electric will have a 70 per cent holding in a new company it will set up with Enemalta to invest, design and build renewable energy projects in Europe.
Dr Mizzi said the initial aim of this joint venture will be to produce 300MW of renewable energy over the next five years – 100MW in solar energy projects and 200MW in wind energy.
“This will enable Enemalta to tap into the Euro-Mediterranean market and create job opportunities,” he added.
Dr Mizzi conceded that this part of the deal provided the win-win scenario for the Chinese company.
A second joint venture will see Enemalta holding a 70 per cent stake in a regional service centre that will service the power plants Shanghai Electric will have in the region.
When asked whether he anticipated any problems from the EU in relation to the renewable energy project, Dr Mizzi said the company will function within the parameters of an agreement already reached between the EU and China.
The deal was first announced in Beijing last September during a visit to China by Prime Minister Joseph Muscat.
The agreement was welcomed by credit rating agencies and last week Standard and Poor’s improved Enemalta’s outlook to stable from negative.
The energy landscape is in for a major overhaul over the next year as Enemalta loses its role as the country’s sole electricity generator.
Government plans to introduce private sector investment will see Enemalta’s own power generating capacity drop to some 150MW of the nearly 600MW output available.
The part-privatised Enemalta will eventually have to buy electricity generated by third parties – the BWSC plant that will be run by Shanghai Electric Power, the new gas-fired power station run by Electro Gas and the interconnector cable to Sicily that will tap the European electricity market.
However, Energy Minister Konrad Mizzi yesterday played down concerns over the dependence on private enterprise for the country’s electricity needs. He insisted Enemalta will still have sole discretion to purchase electricity from where it deemed fit.
Enemalta will also retain the distribution network, which will be improved through more Chinese investment.
He said the energy plan will not only help reduce electricity tariffs for consumers but save Enemalta from the ugly predicament it was in.
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