With the Chinese buying into Enemalta and the Government intent on producing electricity through a gas-fired plant owned by a foreign company, isn’t Malta’s energy sovereignty on the line?
We are only speaking of a minority stake [for the Chinese company]. The chairman will still be appointed by the Government as will a majority of the directors on the board. We will have full control on the decisions at Enemalta. China Power Investments will have a share of equity and they will expect a return for sure, which means they will expect a business plan to be put in place and Enemalta turned around. They will have directors on the board and if we ask them they will also provide technical expertise such as how to reduce technical losses on the lines.
But why now?
The corporation today has €840 million worth of debt and its credit rating is essentially junk. If we do nothing to start turning it around we will have to close down Enemalta. With this agreement we are turning a problem into an opportunity. We can turn Enemalta around, safeguard jobs, create new hi-tech jobs and address the 10 per cent target of renewable energy.
I don’t think the Chinese are out for charity. What will they gain?
I agree with you that CPI and Shanghai Electricis are not charities, they have to account back to their shareholders. When they first came here to scout for opportunities in Europe, we packaged the deal as a win-win for both parties. The element they placed most importance on from their end was the creation of an energy hub. A key element is the setting up of an energy services centre that will provide technical services to their investments across the Middle East, Africa and Europe in the future.
They were quite impressed with Enemalta’s employee base when they visited the plant, twice over the past months. But they are also interested in Enemalta’s assets and they also looked at the accounts in detail, asking tough questions. They know there is potential to turn Enemalta around. We agreed to draw up a business plan for Enemalta over the next months, which will be used for the company’s evaluation.
It has been floated in the international press that the joint venture proposal between Enemalta and Shanghai Electric on the production of PV panels may be the Chinese way of going round EU concerns of solar panel dumping by China on the European market. Was this on the agenda?
No, it was never raised from their end. The issue has been settled between the European Commission and China in a fair way. There are clear rules that have to be followed, which means if there are levies on solar panels from China or even the material used to build them, you cannot circumvent that. But the Chinese companies’ core businesses are electricity generation not the manufacture of PV panels.
The Labour Party had promised nobody at Enemalta will lose his job. Will jobs be safeguarded?
Jobs will be safeguarded. We discussed this and they want a motivated workforce. Employee costs are only a small proportion of Enemalta’s cost base. The focus will not be on them but we will be offering workers opportunities in the services centre and renewables because the Marsa power station will be closing down.
Have you spoken to the General Workers’ Union?
Yes we have. The Prime Minister and I spoke to Tony Zarb and the section secretary. We will also be engaging with them over the next six months. For comparison’s sake, when the previous Government sold Mid-Med Bank to HSBC, the deal was done over Christmas and it was a fait accompli. This time we signed a memorandum of understanding and over the next six months we will be discussing in a transparent manner, engaging stakeholders and will go to Parliament with all the details. But I was surprised with the Opposition leader’s statement against the privatisation of essential services because his party in government had embarked on the privatisation of the petroleum division and the public transport system.
Is the petroleum division part of the China deal?
No, it is excluded. Enemalta’s petroleum division is a profitable venture and the privatisation process is still open but we will be reviewing policy in that area.
How has this been received within the Labour Party?
It has been received well by everybody, including the union. I was actually positively surprised by the GWU’s reaction. We are talking about a minority stake and the social partners know that if we do nothing Enemalta will go to ruin. I am a believer in the private sector and even with a minority investment it will introduce more discipline at board level, better corporate governance and reporting standards required by Shanghai Electric because it is a listed company.
But do others in the same party believe in the private sector as much as you do?
There is consensus about this. We discussed this in Cabinet and there was unanimous support for this initiative. Nobody challenged the concept.
The part-privatisation of Enemalta was not part of the electoral programme. Was this ever on the cards or did it just happen after the election?
Our plan was and is to introduce gas in Malta and have a power purchase agreement. It is on track and separate from this initiative. In our electoral manifesto we did commit to turn Enemalta around, safeguard jobs and ensure the distribution infrastructure is upgraded. Through this investment we can achieve those objectives. The objectives were in the manifesto, what we are talking about now is the vehicle. I never had any doubt that this required a restructuring of the balance sheet whether this happened through the contribution of private sector investment or some form of bank refinancing.