Updated | Busuttil condemns ElectroGas guarantee, Mizzi brushes off ‘shallow’ reaction

Busuttil condemns ElectroGas guarantee, Mizzi brushes off ‘shallow’ reaction.

The Opposition has condemned €360 million guarantee the government issued on a €450 million bridge loan required by the ElectroGas consortium for the LNG plant it will construct at Delimara.

Opposition leader Simon Busuttil said the “irresponsible” decision, announced following the departure of Gasol plc from the consortium, was taken because the banks would not loan money to ElectroGas without the guarantee.

The consortium is now owned jointly by GEM Holdings, Siemens, and SOCAR, the Azerbaijan state-owned gas supplier.

You take the risk, Electrogas takes the profit. Today, @JosephMuscat_JM put his personal interest ahead of the national interest.

— Simon Busuttil (@SimonBusuttil) August 13, 2015

After dubbing it 'millenium gimmick', Simon Busuttil now claiming energy bill cuts were his doing. Yes, indeed!

— Joseph Muscat (@JosephMuscat_JM) August 13, 2015

“If this project does not happen, Joseph Muscat will have to resign. It is obvious that this guarantee was made simply so that Muscat saves his skin,” Nationalist Party leader Simon Busuttil said.

“Placing a colossal €360 million burden on the Maltese is a grave act of egoism costing each family €2,500. It’s a decision that shows this government acts only as it sees fit for itself.”

Busuttil said Muscat has already broken his original promise to have the power station constructed by March 2015, and that now he had taken a risk for a private investor that he was placing on the public.

“The power plant has been built on lies and confusion since the very start, considering that Muscat has no mandate for this €360 million guarantee.

“The decision lacks transparency, announced in the middle of August with no public press conference. No private company turns to the State for a guarantee on a loan. This is an extraordinary guarantee for a private consortium, which was not even mentioned in the original tender,” Busuttil said.

He also said the government was steaming ahead with the bank guarantee when the European Commission has not yet authorised the security of supply agreement. "What will happen if the European Commission does not give its clearance?" Busuttil said adding that he has no information on the clearance government is expecting from the European Commission on the Security of Supply Agreement (SSA).

“The reduction in energy bills was only thanks to the Nationalist government’s infrastructure… particularly the BWSC extension and the interconnector. The question comes naturally: what is the need to have a new power station when the power from the interconnector will be cheaper?”

Minister's reaction

Energy minister Konrad Mizzi said he was baffled by Busuttil's "shallow and artificial reaction" to the announcement of government's decision to guarantee 80% of a €450 million bank loan issued by four banks for ElectroGas to build the new gas power plant.

"ElectroGas required the Security of Supply Agreement (SSA) to obtain financing," Mizzi said, adding that since government was obliged to provide security of supply it took a decision to act as guarantor.

Mizzi said that all bidders had asked for a security of supply agreement which was duly accepted by government, and that this was not giving ElectroGas an advantage as it was paying €9 million in fees to make up for the advantageous rates guaranteed by government.  

Without admitting that the decision was motivated by pre-electoral pledges, Mizzi said: "it was a choice we could have either waited to take, or we could have gone ahead and proceed, and we went for a temporary measure which is in line with the law."

He said that despite the PN's efforts to hinder the project the power plant will be up and running by next summer. Insisting that the guarantee is an interim measure until government gets a clearance from the SSA it had entered into with ElectroGas.

Comparing the current government's record in the energy sector to the previous PN administration, Mizzi said that while the latter had entered into a 25-year €320 million agreement for the old power plant in Delimara, this government is overseeing a complete turnaround in Enemalta's fortunes and energy tariffs are now the third lowest in Europe.