Shanghai Electric Power purchases BWSC plant

Chinese-state owned company Shanghai Electric Power will be purchasing the BWSC plant for €220 million, €70 million of which will go for the conversion of the plant to gas.

A separate €100 million by the Chinese subsidiary will be used as capital injection into Enemalta plc, a company that will not be set up by a parliamentary act. The capital injection will be an investment in the distribution system, the state corporation’s bleeding ground.

The total €320 million investment by Shanghai Electric Power does not include two joint venture projects to be carried out by the Maltese government and the Chinese company.

The Chinese investment will see China owning a 33% stake in the corporation, while Enemalta’s debts will be halved.

Late this afternoon, Enemalta chairman Charles Mangion and Wang Yundan, chairman of the board of directors at Shanghai Electric Power, signed the €320 million equity investment.

According to Energy Minister Konrad Mizzi, Enemalta’s debts would stand at €300 million of which €100 million would be shouldered by Shanghai Electric Power.

“Shanghai Electric Power will carry its weight and government guarantees committed for the state corporation will reduce drastically. At the end, the government will be carrying around €200 million in debts,” he said.

Mizzi said the BWSC’s debts will be paid in full: the Chinese company will transfer the money to Enemalta and Enemalta would then transfer the shareholding asset. An associate company will be set up.

Addressing parliament, Mizzi explained that today’s agreement signed with the subsidiary of China Power Investment Corporation was a head of terms agreement stipulating future projects and equity. Shareholding agreements and other technical agreements will be finalised between now and September.

The final agreement will be presented to Parliament for parliamentary approval. Changes to the Enemalta Act – possible through parliament – will also take place.

During the parliamentary debate, the Opposition repeatedly asked whether the transaction meant that Shanghai Electric Power had effectively bought the BWSC plant and whether government had agreed on the rate with which the electricity would be bought.

Avoiding the question, Mizzi said the current average electricity cost was “phenomenal” and the investment would reduce this cost: “Shanghai Electric Power will procure a stake, pay off the debt and the convert the plant. While the generation price from the BWSC plant will drop, the cheapest supply of electricity will be by Electrogas.”

The electricity base load will be from the Electrogas plant, while the rest will be divided between the BWSC plant and the interconnector. Mizzi said the government could easily switch to the interconnector if the gas supply becomes cheaper.

The minister argued that with the five-year gas supply agreement, Malta was at an advantage: “We know the price and we have price certainty.”

He reiterated that Enemalta will retain the dispatch rights – which energy supply to go for.

Two other projects by Shanghai Power Electric and the Maltese government will include a joint-venture to produce 300MW of renewable energy distributed into Europe, of which 100MW will be through photovoltaic panels and 200MW generated from wind energy.

The company will be 70% owned by Shanghai Power Electric and 30% owned by the Maltese government.

The other investment will be another joint venture, this time 70% owned by the Maltese government, to service power plants owned by Shanghai Power Electric in Europe.Nationalist MPs George Pullicino and Tonio Fenech urged the minister to table the deal in parliament, noting that the memorandum of understanding signed in September had not yet been tabled.
Pullicino also asked whether the Government was "comfortable" with privatising Enemalta.
Fenech, a former finance minister, also noted the discrepancy between the
memorandum of understanding and agreement signed today: “It was said before that 20% of the corporation would be sold for about €200 million. Now, it's a total of 320 million, which begs the question: why are a number of shares being sold at about half price than the previous price-per-share ratio?”