An €88 million bank guarantee from BOV to the consortium building the new gas power station had only been an interim measure until an agreement over the €360 million state guarantee was concluded, two ministers said today.
Finance Minister Edward Scicluna and Energy Minister Konrad Mizzi were addressing a news conference to give details about the controversial €360 million state guarantee.
The guarantee, announced yesterday, is 80 per cent of the financing needed for Electrogas to build the new power station.
The full loan of €450 million is 20 per cent financed by the consortium’s shareholders and is being provided by four banks: BOV, KfW IPEX-Bank Gmbh, HSBC Bank plc and Société Générale.
Prof. Scicluna said the €360 million guarantee is for 22 months.
The time-frame was based on the advice of experts who recommended that this was the maximum length of time within which the European Commission would be expected to approve the security of supply agreement with the consortium, would enable the government to step in case Enemalta would not be in a position to buy electricity from Electrogas.
Once the Commission gave its approval, the guarantee would be withdrawn.
Prof. Scicluna said the Opposition was making a lot of fuss about this guarantee even though the Nationalist government had, in December 2012, given a €318 million guarantee to keep Enemalta afloat and keep it from defaulting.
Asked what would happen should the Commission not give its clearance, Prof. Scicluna expressed himself “confident” that the outcome would be positive.
He said feedback from the Commission was that there were no state aid issues and that this would be a project in the national interest which addressed a number of country specific recommendations, which had been repeatedly flagged.
However, Dr Mizzi pointed out the Commission could request some tweaks in the security of supply agreement with Electrogas but echoed Prof. Scicluna’s positive sentiments.
He added that the agreement had not yet been signed as the government wanted to have the clearance in hand before finalising the deal.
Prof. Scicluna said the €360 million bank guarantee agreement was announced yesterday because it had only been sealed at the end of last month.
Asked whether the government would be publishing the terms of the guarantee, he said such details could only be divulged with the consent of all parties involved.
Such consent, he said, had even been required to name the banks involved.
In a statement, Alternattiva Demokratika said that the sum the government was guaranteeing was worth athird of the whole value of Enemalta.
"Since when does government guarantee for private investors with public money?
"Is the government in some way indebted to these investors to give such preferential treatment? Will these investors be further facilitated to build towers in Sliema and Mriehel," chairman Arnold Cassola asked.
He added that the private investors should guarantee with their own assets and the Prime Minister and Dr Mizzi should stop playing Russian roulette with the Maltese taxpayers' money.
Read Opposition leader's press conference here.