Malta secures China cash injection deal for Enemalta

A memorandum of understanding signed today in China will see an energy company owned by the Chinese government invest "substantial amounts" in Enemalta.

The investment of around €200 million will come as a "direct cash injection" in the state energy corporation, government said. The investment will be made by Shanghai Electric Power, a subsidiary of China Power Investments. Through its investment, the company will become a minority shareholder at Enemalta.

"Government will remain in full control of the corporation," the government insisted. The memorandum was signed after months of negotiations and "is separate from the plan for cheaper utility tariffs which is on track".

Energy Minister Konrad Mizzi and China Power Investments CEO Lu Qizhou signed the memorandum of understanding in Dalian after Prime Minister Joseph Muscat held meetings with Chinese Premier Li Keqiang.

Although the investment amount will be finalised in the next six months, it is believed it will be effective in "considerably alleviating" the €800 million debt which has crippled the state entity.

Both governments have agreed that the arrangement will be ironed out and finalised within the next six months.

"We will then appear before parliament to ratify the agreement for transparency's sake," the government said, insisting that the Chinese investment will help "save the jobs which were endangered by Enemalta's debts" and invest in Enemalta's infrastructure.

The Chinese memorandum of understanding also includes two separate investments to be made by China Power Investments Corporation. The Chinese company is looking at the possibility of developing a renewable energy project and setting up an energy service centre, which would in turn create further jobs in the energy sector.

The energy service centre, the government said, will be used by China to service its power stations located in the Mediterranean.

China is looking at the renewable energy project as a stepping stone to Europe. In this sense, China was viewing Malta as a strategic partner in the Mediterranean.

"Thanks to this agreement, Malta will have an important Chinese company hailing from the world's second biggest econimic as its strategic partners," the government said.

This is the second memorandum of understanding related to energy signed by the Maltese government following the oil procurement agreement made with Libya last week.

It is also the second memorandum of understanding signed with the East Asian country recently, seemingly amplifying China's interests in Malta. In July, China approached the Maltese government to conduct a €4 million study on the feasibility of a bridge between Malta and Gozo.