[WATCH] PN questions legitimacy of €88 million ElectroGas banking guarantee

PN questions legitimacy of €88 million ElectroGas banking guarantee

The Nationalist Party has questioned whether the €88 million state guarantee issued to cover a €101 million bank loan for ElectroGas was regular.

Once again the opposition expressed concern at the government's refusal to publish details on the banking guarantee it issued to the consortium building the new power station and demanded full disclosure.

Shadow economy minister Claudio Grech noted that the party had asked for the disclosure of this document, explaining that the government had so far not published any documents even after a freedom of information request by The Malta Independent, quoting "a substantial adverse affect on the ability of the government to manage the economy," as its justification.

"Given the government's insistence that the banking guarantee was 'in order' and that there had been all the necessary approvals for the agreement, this refusal is of particular concern," Grech said. 

"This contradiction begs the question of whether this guarantee is indeed regular," Grech said.

The government had issued an €88 million state guarantee to cover a €101 million bank loan for ElectroGas to build the new gas power station.

He added that the party was once again requesting the publication of these documents, given that this 18-year contract was binding even future governments. 

"Future governments can't really know where to go next as they are not being handed the necessary information," he said. 

Grech said that the best way for this project to progress without further speculation was through full disclosure. 

Financial services spokesperson Kristy Debono said that the energy sector was shrouded in "mystery".

Debono stressed that prime minister Joseph Muscat and energy minister Konrad Mizzi's plan had failed, both because the promised power station had been delayed and as the government had to make good on an agreement with a substantial amount of public funds.

She questioned whether the right due diligence had been carried out in this case.

"What will happen if the European Commission decides this is a case of state aid?" she said, questioning whether the bank or public funds will have to make good for this loan.

Grech quoted Mizzi saying that some four banks had also been ready to give the loan, on condition of receiving the Commission's go-ahead. 

"Finance minister Edward Scicluna also added that the agreement had been a 'unique' one and that state guarantees were not normally dished out to private companies."

Describing the deal as a “dangerous gamble to save the government’s face,” Debono also questioned who was ultimately responsible for this decision, and added that her questions during a parliamentary debate last Monday had gone unanswered.

"These events are also shedding a very negative light on important Maltese institutions like the Bank of Valletta, and the situation is of concern to some 20,000 shareholders in the company," she added.

The opposition chooses to remain against investment in the energy sector – Labour Party

In a reaction to the Nationalist Party’s accusations earlier today, the Labour Party pointed out that the PN continued to spew unfounded allegations despite the latest Standard & Poor’s report showing that energy had been crucial in improving the country’s economic situation.

“The banking guarantee is merely a temporary measure, until the European Commission approves the supply security agreement, which is of national and long-term interest,” the statement reads.

The party added that the guarantee had been subject to state aid regulations and that the Electrogas consortium had had to issue credit notes as a guarantee of the project.

“The banking guarantee was given under specific conditions and according to regular auditing and internal controls.”

The statement then went on to point out that whereas press conferences aimed to criticize the government, recent revelations had shown that former shadow minister Tonio Fenech believed that the government would succeed in the energy sector.

These views had been expressed in the controversial Shadow Finance Google Group, which the former minister allegedly used to obtain sensitive financial information from a group of public officials.