ElectroGas, the country’s energy supplier, will not turn a profit until the end of the decade, key shareholder Mark Gasan has revealed.
Speaking in the public inquiry connected to the assassination of journalist Daphne Caruana Galizia, Gasan quoted from ElectroGas’ latest financial models, placing doubts on director Paul Apap Bologna’s assertions that it would be profitable by 2023.
Gasan explained that Gasan Group was initially hoping to invest €5 million in the venture and that the costs to develop the project would be €250 million when the call for expressions of interest was announced in April 2013.
This all changed by July 2013, once the consortium started working on the request for proposals on the project. By then, the forecasted cost of the project had already increased to €350 million. An 18-year security of supply was guaranteed, securing a stable revenue for close to two decades.
Financial issues continued to implode at ElectroGas. Matthew Caruana Galizia has revealed that by February 2017 the company’s bank balance plummeted from €450 million to €100,000 by that date.
A €360 million state guarantee granted on the €450 million loan to finance the project was expiring in August 2017. ElectroGas was facing potentially defaulting on payments. However, December, the €360 million state guarantee was extended yet again.
Email exchanges and other documents published by Matthew Caruana Galizia have revealed that key players in former Prime Minister Joseph Muscat’s administration did all they could to ensure ElectroGas does not default on its loan, which would have been disastrous for the government.
Malta’s Minister of Finance, newly appointed Attorney General, and disgraced former Minister Konrad Mizzi all played a key role.
Gasan insisted that the default only came about because the government guarantee was on the verge of expiring and banks were pushing for the deal to be closed. He also said that the perception that the guaranteed loan benefitted ElectroGas was wrong, pointing towards at €11 million payment on the agreement.
He dismissed suggestions of wrongdoing in these negotiations. However, he did say that the state guarantee should have never been granted in the first place.
Gasan said he was informed by the company’s CFO that there was on-going dispute between ElectroGas and state authorities over a multi-million excise tax bill.
Enemalta believed the company should pay. However, it was still the state body, and taxpayer, who foot the bill. Gasan said that ElectroGas should work to clarify the matter.
He also said he was unaware of an IPPC permit which was reduced from €5.5 million to €2.5 million.
Who is ElectroGas?
The ElectroGas consortium was selected to build and operate the LNG power station in Delimara back in October 2013, with a deal eventually signed in April 2015.
ElectroGas is equally owned by three companies – German conglomerate Siemens, Azeri state energy company Socar and GEM Holdings, a Maltese business venture.
GEM Holdings is split between four companies. Tumas Energy and Gasan Enterprises each own roughly 35% of the company. CP Holdings, a company owned by the Apap Bologna family, owns about 20%, while a separate company owned solely by Fenech owns about 8%.
Until his arrest, Fenech was personally listed as one of three ElectroGas directors.
Socar purchases gas from standard suppliers like Shell and resells the stock at a benchmarked value to ElectroGas, who transports the gas in liquid form and holds it in a tanker nestled in Delimara Bay. It is then converted to energy and distributed among homes in Malta.
The 18-year deal has always raised eyebrows and questions as to why Malta was using Socar as a middleman, with the country often paying a higher rate than most European counterparts, all while analysis indicates that Socar made close to €32 million in 2017 alone.
The deal has been flagged as a potential motive behind the murder of Daphne Caruana Galizia.
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