Daphne foundation says Muscat misled PAC on LNG security of supply agreement

The Daphne Caruana Galizia foundation has said former Prime Minister Joseph Muscat misled parliament when saying the EU Commission had “full visibility of all the information” regarding LNG Security of Supply Agreement.

Testifying before the Public Accounts Committee (PAC) Muscat fielded questions on the LNG Security of Supply Agreement that his energy minister, Konrad Mizzi, had signed with Azerbaijan’s state energy company, Socar, in favour of Electrogas Malta Limited.

When the PAC chair Darren Carabott asked Muscat government did not disclose the State guarantee to the European Commission, he cited the foundation’s report that it had kept it hidden from the European Commission. Muscat said that the EU Commission had “full visibility of all the information”.

“We immediately wrote to the European Commission to ask whether this is correct. The European Commission’s reply shows that while they were aware of the possibility of a Security of Supply Agreement, they were not notified of its existence or its content, as Muscat implied in his testimony,” the foundation said.

The commission said possible agreement between the Government of Malta and Socar was not part of the notification to the Commission and was therefore not assessed in the Commission’s decision.

“As regards DG Competition, Malta submitted a notification in June 2016 relating to the Malta Delimara Gas and Power Energy Project, under which Electrogas Malta Limited ("EGM") committed to supply electricity and gas to Enemalta (SA.45779). Part of the aid notified by the Maltese authorities had already been granted and therefore the case was registered by the Commission as relating to non-notified aid. On 11 January 2017, the Commission adopted a decision approving the notified measure,” the commission’s reply read.

“More specifically, the contractual structure, as notified by the Maltese authorities for the development of the Project, involved: (i) a Security of Supply Agreement (“SSA”), (ii) an 18-year Power Purchase Agreement (“PPA”), and (iii) an 18-year Gas Supply Agreement (“GSA”). This was complemented by an Implementation Agreement (“IA”), whereby EGM agreed to finance, design construct, build, own, operate the LNG regasification facility and the new power plant Delimara 4, and to transfer these to Enemalta at the end of the term (see recitals 33 to 46 of the public version of the Commission decision). The aid beneficiary was the developer of the Project, namely the company Electrogas Malta Limited ("EGM"), as specified in recital 47 of the Commission decision.”