Updated 2pm

Malta will be allowed to apply for EU funding for a proposed gas pipeline, though none of those funds may “directly or indirectly” flow to anyone involved in criminal activity.

The agreement was thrashed out during late-night negotiations between the European Parliament, Commission and Council.

In a statement on Wednesday, the European Parliament said that while natural gas projects would no longer be eligible for EU funding, "a temporary derogation will allow Malta and Cyprus one natural gas project each with a view of connecting them to the EU network under strict conditions."

One source privy to the negotiations said the reference to criminal activity is built in as a safeguard to try to prevent the Electrogas consortium or any of its shareholders from benefitting from the pipeline funding. 

The source said the agreement places the onus on the Commission to ensure if the project does get EU funding, no one connected to criminal activity can benefit from them.

Although Malta is set to go ahead with its application for the funding, there is no guarantee the Commission will agree to it.

Funding for the pipeline will trigger a compensation payment to the Electrogas consortium that operates Malta's gas-fired power station, although the precise amount of that multi-million payment remains undisclosed. 

The Electrogas power station is currently supplied with gas using a floating LNG storage tanker docked outside Marsaxlokk bay. 

Matthew Caruana Galizia, son of slain journalist Daphne, has waged a strong campaign against granting funding for the pipeline. 

Caruana Galizia has argued that the funds will ultimately benefit Electrogas and one of its shareholders, Yorgen Fenech, who stands accused of complicity in his mother’s murder.

He told Times of Malta that his family’s position on the matter remains unchanged.

“Public funds should not be used to reward corruption and murder. [Energy Minister] Miriam Dalli and the chamber of commerce did not agree with this basic principle. This is shameful,” he said.

The chamber of commerce warned last week that jeopardising EU funding for Malta’s energy transition is dangerous.

Its warning came soon after the PN said it was unacceptable for EU funds to go towards compensating Electrogas shareholders on a contract that should have long been scrapped for being "tainted in corruption and blood".