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Government securing €1 billion in debt for parastatals
The government of Malta is securing just over €1 billion in loans and guarantees for corporations like Enemalta, the annual report by the Auditor General published today shows.
14 December 2011, 12:00am
Matthew Vella
Matthew Vella
1 min read
Delimara power station: Enemalta accounts for over 50% of the 'indirect' 1 billion in debt that government guarantees for its parastatal companies.
A total €1.03 billion in letters of comfort and bank guarantees may effectively translate into dues by government, should the companies call upon the government to make good for their debts.
The list of debts confirms claims by credit rating agency Moody's that Malta has 'weak debt metrics' even though officially, Malta's national debt is 68% of its gross domestic product, less than the EU average of 85%.
On its own Enemalta accounts for over 56% of this debt: between 2009 and 2010, Enemalta's liabilities increased from €448 million to €579 million. This was due to guarantees from government to secure loans to finance the energy company's investments in the national electricity supply and distribution network, and its interconnector to Sicily.
The Malta Freeport Corporation on its part has €212 million guaranteed by the government, as part of a currency swap: the exchange of USD250 million in bonds into a euro denomination.
The Water Services Corporation has €89 million in loans guaranteed by government, which includes a foreign loan for investment in wastewater collection and treatment.
Of the total billion in guarantees, €482 million includes loans from foreign entities.
Apart from this €1 billon in guarantees on public corporations' debt, Malta also is committed to €400 million in guarantees on external debt tied to the European Financial Stability Facility (EFSF) and another €74 million bilateral loan to Greece.
Technically, all the loans taken out by these corporations have to be paid back - if not, it will be the government that will have to back up these debts. Until then, this potential or contingent debt is not added to the cumulative deficit.
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
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Can only support what CHIKKU has said below. Given the way parastatal companies are run, it is probable that enemalta lies in the same state as Air Malta, meaning it requires a complete restructuring. I would not be surprised if half of the workers at Enemalta could also go... (qedin hemm ma jaghmlu xejn) Why are we paying such high utility rates to subsidise wasteful jobs???
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EUR 1 billion divided by population 400,000 = EUR 2,500 per person, or EUR 10,000 in a household of four. This money has to be paid back, and in the meantime it carries interest. Much as I hate the high utility bills I have to thank Austin Gatt for grabbing the bull by the horns and addressing this issue before weaker politicians drove us to bankruptcy. But now that the bills have been increased it's time to tackle the waste in the utility providers. Let's pray somebody else grows a pair.....
Priscilla Darmenia •
in a company's audited accounts these are shown in the notes as contingent liability. That is, they do not form part of the proper accounts, but noted to third parties that if these will become a reality the company would be so much worse of.
may I ask where these are shown in the government's accounts?
Mark Fenech •
Alchemist - that is very true and most of the local councils were penalised for not providing the accounts on time, and Enemalta is allowed to breach its own law, as if nothing is happening.
No wonder we never find any person coming from the Energy Sector in the list of officials awarded the Republic honours.
You can find people from the entertainment, culture, educational, private enterprise, etc. but nobody from the energy sector inspite of all the problems facing this very important sector.
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"Enemalta's liabilities increased from €448 million to €579 million"
AND yet this corporation has NOT published or otherwise did not have its accounts audited since 2008 in BREECH of the law.
And yet the Mr T Fenech is silent on the whole matter.
As a taxpayer may I ask 'What's going on, please?'
