No breach of EU rules in election eve extension of Electrogas guarantee, European Commissioner says

The loan guarantee extension was approved by the government without fanfare and only came to light last November • The guarantee has since been lifted after Electrogas secured bank financing

European Commissioner Margrethe Vestager
European Commissioner Margrethe Vestager

A government decision to extend the multi-million euro guarantee to Electrogas on election eve was not in breach of European rules, the European Commission has told Francis Zammit Dimech.

The Nationalist MEP asked about the matter last November soon after media reports revealed that the government had quietly extended the loan guarantee last June.

But replying to the Zammit Dimech’s parliamentary question, Competition Commissioner Margrethe Vestager indicated there was nothing untoward in the extension.

“An extension of this temporary loan guarantee does not call into question the findings of the Commission on the measure notified and assessed at the time. If further State aid were to be granted to the Delimara project, it would be for Malta to notify the Commission of any such additional support,” Vestager said.

She reiterated that the Commission was aware of the temporary loan guarantee when it assessed the compatibility of the Delimara project with EU State aid rules.

“The guarantee was intended to cover the period until a definitive financing solution for the project had been put in place,” Vestager said.

The guarantee was eventually lifted last month after Electrogas secured financing from several banks for its gas power project.

The guarantee was necessary until the government cleared the security of supply agreement with the European Commission. The security of supply agreement gives Electrogas an assurance that if Enemalta falters, the government would step in to buy the electricity generated by the new power plant.

The security of supply agreement had to be cleared by the EU. Clearance came early in 2017 but the loan guarantee continued in place until Electrogas concluded negotiations with the banks.

The security of supply agreement, which covers 25 years, was tabled in Parliament last week.

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