Opposition supports setting up of SPV to address Enemalta's debt

Labour MP Karmenu Vella has confirmed the Opposition's support to a resolution that sets up a Special Purpose Vehicle, Vault Finance Ltd, as part of the restructuring process to address Enemalta's debt.

Kicking off the debate in parliament this evening, Finance Minister Tonio Fenech urged the Opposition side to support a motion presented this evening to approve the transfer of property to the corporation.

In his opening speech, Fenech said that the €25 million subsidy which government is giving Enemalta was not enough. He confirmed that this year, the corporation suffered a €65 million loss.

He added that the SPV could see the corporation's debts being paid off.

"This instrument is important for Enemalta's debt to be paid off. Economically, the country today can pay this debt over a period of 25 years," he said.

Fenech said that the European Commission has approved this payment mechanism. He said that the interconnector and Delimara power station extension would be paid off through the return on capital.

Fenech insisted that studies carried out by government showed that if it had opted for a gas-operated power station, electricity tariffs would have ended up being higher.

"And this is why we went for the interconnector and the Delimara 2 plant. It was not a wrong decision, but a responsible decision," Fenech said.

He added that before embarking on major projects, government chose to address Enemalta's debt through the reform of utility bills. "This has stopped Malta from falling into the same problems suffered by Portugal, Greece and Italy."  

He said that families were paying average rates when compared to EU member states.

Karmenu Vella insisted that by supporting the resolution, the Opposition was not taking "on board" government's wrong decisions and U-turns with regards to energy.

"But presenting this SPV as a magic solution for Enemalta's debts is incorrect," Vella said, adding that since 2009, Enemalta's debt had been on the increase. He argued that government should therefore find a solution for Enemalta to address both the "old" and "new" debt.

With regards to the financial problems, Vella said that book value of the power stations was "almost zero".

The Labour MP took the opportunity to reiterate the party's pledge to reduce utility bills, adding that this was doable through a responsible energy strategy. He also expressed concern over Malta's total dependece on oil.

Taking the floor, Labour MP Charles Mangion said that €350 million of Enemalta's €850 million debt should have been paid through capital projects.

"The amount forms part of the 'old' debt and should have been covered by capital projects undertaken by the corporation. But instead of covering it, this debt has matured," Mangion said.

He recalled that until 1994, Enemalta used to give government some €23 million a year following the yearly profits it would make.

Mangion also pointed out that government guaranteeing debt could have serious repercussions on the financial situation of the country. He went on to comment that hadn't government needed the parliament's approval to transfer the property to Enemalta, probability was that the Opposition would have remained in the dark.

On the other hand, Labour MP Joe Mizzi said that the lack of accountability and transparency with regards to Enemalta's finance was glaring.

Mizzi berated government for having imposed on the taxpayers the highest rates of utility bills and fuel prices, while it lacked a national energy policy. He insisted that government should have opted for a gas-operated power station from the very beginning.

Mizzi said that government has so far not replied to a list of problems he had repeatedly presented to parliament over the years. With regards to the Delimara power station extension, Mizzi said it was not responsible for Enemalta to carry out only performance testing.

"It is clear that the problem was not with the steam turbine. But now that BWSC has made its report, government has accepted to take their word for it."

Mizzi insisted Enemalta should carry out a reliability test run, given that the power station is a "prototype". He added that there were still prevailing problems at the new power station.

Mizzi asked government to give the "true" story behind the problems suffered by the Delimara power station extension.

"Explain the true financial situation and be transparent with the Maltese," he urged the minister.

Referring to the several power cuts experienced over the summer, Mizzi criticised government for having "blamed the roads and the sun, because they can't react". He said that in reality there were serious problems with regard to the distribution of supply.

The motion has been approved nem con.