UPDATED - Adds Labour's reaction - The government intends to absorb some of Enemalta's costs but is not planning to raise electricity tariffs, Finance Minister Tonio Fenech said this afternoon.
Speaking after the corporation was downgraded by Standard and Poor's yesterday - for the second time in 13 months - the minister said an exercise has started to see which of Enemalta's non-core costs may be absorbed by the government.
For example, he said, people who generated their own electricity through photovoltaic panels currently sold it to Enemalta. This electricity would now be bought by the government.
Furthermore, Enemalta currently absorbed the discount, known as the eco-reduction, given to consumers who saved electricity. That cost too could be borne by the government.
These two items alone cost Enemalta €25m a year, the minister said.
The minister said yesterday's downgrade was mainly influenced by rising oil prices which had hit $125 a barrel and were likely to rise even further.
Enemalta is this year expected to make a loss of some €50m.
He said the corporation was currently finalising its debt restructuring and refinancing plan, which had been delayed due to technical difficulties, and this would then be presented to parliament. Had it been completed earlier, the downgrade may not have happened.
In terms of the plan, the minister said, some workers would have to be redeployed to new sections. There would also be a number of workers who would be surplus to the corporation's needs, and talks would be held about them as was done in the WSC and other public companies.
The corporation had a debt of almost €600m, which was expected to rise by a further €200m for the inter-connector project. He admitted that the downgrade could raise borrowing costs. In terms of the plan, the debt would be paid back over 25 years.
The main message from Standard and Poor's, Mr Fenech said, was that Enemalta needed to be sustained because of its vital role in the economy.
S&P said yesterday it expected that Enemalta's financial and operational performance may suffer from volatile commodity markets and its inflexible capital expenditure program.
Mr Fenech said the government's intervention to absorb some of the corporation's costs proved the wisdom of its decision to reduce its spending by €40m.
TAXPAYERS PAYING FOR INCOMPETENCE
In a reaction, Labour leader Joseph Muscat said this evening that taxpayers would be paying for the government's incompetence at Enemalta.
He explained that the corporation's restructuring and financing plan was supposed to have been presented last year. Standard and Poor's downgraded the corporation when the plan was not produced.
That the plan was not produced on time was irresponsibility and incompetence which taxpayers would have to pay for. Dr Muscat asked who would shoulder responsibility.
Dr Muscat also asked where the government would get the €25m it needed to absorb some of Enemalta's costs. This outlay would come about when the government was meant to be making cutbacks, even though its spending actually increased by €61 in January.
That power tariffs were not rising was only a repetition of the tactic adopted before the 2008 election, Dr Muscat said.
He reiterated that Labour would convert the power station extension to operate on gas.
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