Recent government transactions may constitute ‘illegal state aid’ – AD

Alternattiva Demokratika has warned against “possible illegal state aid” following the recent financial transactions carried out by the Maltese government.

The government has set up two new companies – Petromal Company Ltd and Enemed Company Ltd – to take full control of Enemalta’s petroleum division. The two companies have already taken an €83 million bank loan.

During an interview on Dissett, conducted by TVM head of news Reno Bugeja, Air Malta chairwoman Maria Micallef also revealed that the government would be acquiring Selmun Palace Hotel for the national airline.

According to AD, the government may be “endangering the stability of Malta’s finances”.

“By selling the profit-making Petroleum Division to other two government-owned companies and by buying the Selmun Palace Hotel from Air Malta, the Maltese government is endangering the stability of Malta's finances. There is a great risk that these deals be declared as hidden state aid by the European Commission,” Alternattiva Demokratika chairperson Arnold Cassola said.

Cassola insisted that the government had to explain why it had taken up an €83 million bank loan for the transfer of the petroleum division’s assets and also give a justification for this operation.

“The government cannot play these dangerous financial games with people's taxes, putting at risk the stability of our financial basis.  What the government needs is not transferring sums of money from one government entity to another one but encouraging investment and influx of new money from external sources,” Cassola argued.

The petroleum division was left out of the negotiations with Chinese state entity Shanghai Electric Power, that has acquired a 33% stake in Enemalta plc for €320 million.

Although it remains owned by the government, the petroleum division is no longer the responsibility of Enemalta. The original plan for the lucrative division was its privatisation. In 2008, Dutch group BB Energy BV was named the first ranking bidder for the commercialisation of the operation, maintenance and development of Enemalta’s Petroleum Division and the business activities undertaken by MOBC.