Debt-stricken Enemalta, which is about €800 million in the red, is set to receive “tens of millions of euros” as part of a deal which sees a Chinese state-owned energy company become a minority shareholder.

Sources told Times of Malta that Shanghai Electric, a subsidiary of China Power Investments, will inject around €200 million to reduce the corporation’s debt.

The official announcement was made yesterday following a meeting between Prime Minister Joseph Muscat and his Chinese counterpart Li Keqiang in the Chinese city of Dalian, where the annual meeting of World Champions is being organised by the World Economic Forum.

The event is also known as the Davos Summer Forum.

We want to keep our feet on the ground and will not make any pledges which we may not be able to implement at a later stage

A memorandum of understanding signed between Energy Minister Konrad Mizzi and China Power Investment Corporation president Lu Qizhou marked the start of the six-month negotiations to thrash out the agreement’s terms.

The agreement includes setting up a joint venture company in Malta specialising in the manufacture of photovoltaic panels to give China a foothold in the lucrative EU market.

In return, the Chinese company will be able to service its plants in the Middle East and Africa by calling on the expertise of Enemalta employees. The technical staff of the Chinese company will also receive English Language training.

Dr Muscat said the Government would be seeking Parliament’s go-ahead before signing the agreement. “This will make the entire process transparent,” he said.

This step may also be necessary since some of the agreement’s legal aspects would require amendments in the legislation regulating Enemalta’s operations.

Government sources said a due diligence exercise was carried out on the Chinese company.

Advice had also been sought from Brussels, and the EU said the deal conformed with its directives as the Chinese company would only have a minority stake in Enemalta. However, the Government has not disclosed what this will be.

The Prime Minister said the cash injection would not mean further reductions above the promised 25 per cent decrease in utility rates.

“We want to keep our feet on the ground and will not make any pledges which we may not be able to implement at a later stage.”

Dr Muscat said this deal would improve Enemalta’s credit rating and open the possibility of easier loan repayment terms in the future.

“This agreement, which translates into tens of millions of euros, will immediately have a positive impact on a nationwide scale,” said the Prime Minister.

This deal, he said, would be welcomed by taxpayers who had to shoulder the burden of Enemalta’s debts.

It would also help guarantee the future of the corporation’s employees, adding that this may even lead to job creation.

General Workers’ Union general secretary Tony Zarb told a seminar in Malta that he had been assured by the Prime Minister that the Government would remain responsible for Enemalta employees and they would not lose their jobs. Asked whether Enemalta’s partial privatisation was carried out without a public call, Dr Muscat said the Government considered this to be an investment with a strategic partner from the world’s second largest economy.

The Prime Minister will today be addressing a meeting with the prime ministers of Bulgaria and Finland as part of his second and final day at the Davos Summer Forum in China.

Agreement welcomed by social partners

The memorandum of understanding was lauded as a positive development for the economy and excellent news by social partners.

The Malta Employers’ Association said this positive development could open many opportunities in the energy sector.

It said the strategic alliance with China Power Investments could pave the way for economic collaboration in other areas.

It also expressed its wish that the negotiations would result in a capital inflow in the economy, an easing of Enemalta’s financial woes and a transfer of technology which could generate green jobs.

The Chinese company’s stated mission of “providing green energy, serving the public” could easily be adopted to bring about a culture change in Enemalta.

The Malta Restaurants and Hotels Association too hailed the agreement saying it was very good news for the tourism industry, the manufacturing sector and taxpayers.

This development was a new chapter for Enemalta, as energy represented a substantial part of the industry’s costs.

“We are now looking forward to meet the investors and plan the necessary changes to reduce utility tariffs and upgrade the corporation’s infrastructure,” MHRA president Tony Zahra said.

The Chamber for Small and Medium Enterprises, GRTU, also welcomed this agreement and appealed to the Government to invest in more human resources for Maltese to benefit from these opportunities.

China Power Investments

• China Power Investments is ranked 451 in the Fortune Global 500 list, which ranks the world’s top 500 corporations.

• It is also one of the five largest state-owned electricity producers in China supplying about 10 per cent of the country’s electricity.

• The Chinese company employs more than 121,000 people and its revenue in 2011 was in excess of 24 billion US Dollars.

• Earlier this year the company invested $17 billion in hydropower plants in Indonesia.

Malta-China cooperation plan in the pipeline

A cooperation plan covering a number of sectors between Malta and China was discussed during a meeting between Prime Minister Joseph Muscat and his Chinese counterpart Li Keqiang yesterday.

The plan includes close collaboration in education, the services sector and infrastructure.

The meeting was held at the Bangchuidao state guest house in Dalian, in China, as part of Dr Muscat’s visit.

Dr Muscat said that rather than taking “sporadic initiatives” both sides agreed to plan in advance for the next five years. He said the proposal to draft a plan was put forward by the Chinese Prime Minister.

“This is not a question of Malta requesting money from foreign countries, but one of investment,” Dr Muscat said.

He said the memorandum of understanding signed with China Power Investment was a good example of how Malta could attract strategic partners if it adopted the right attitude.

The Chinese Prime Minister took the opportunity to thank Malta for its help in evacuating 5,000 Chinese nationals at the height of the Libyan civil war two years ago.