Updated | Gasol drops out of ElectroGas consortium for Delimara gas plant

Gasol has been struck off from the consortium selected to construct a new gas power station.

The Electrogas consortium said in a statement that the company was removed to “maintain the long-term stability of the project company which will supply energy and natural gas in accordance with its commitments to Enemalta and all stakeholders”.

The most recent financial statement of Gasol reported a negative equity of €12.8 million and accumulated losses of €96 million, with independent auditors warning that the company doesn’t hold enough cash or liquid assets to meet its commitments. The company has also been delisted from the London Stock Exchange.

Gasol was previously the lead partner in the consortium, with a  30% stake.

The three remaining partners – Siemens Financial Services, Socar Trading SA, and GEM Holdings Limited – are now equal shareholders, with Siemens the new lead member.

“We remain fully committed to its obligations to deliver the project that will introduce natural gas for power production in Malta, and all the environmental benefits associated with it, within the agreed timeframes,” Electrogas said. “We would like to thank Gasol plc and its executives for the dedication and contribution given to the project to bring it to this advanced stage and wishes them every success in their future projects.”

Economy Minister Chris Cardona had previously brushed off concerns that Gasol’s financial problems could impact the power station’s construction, insisting that it would be ready on time in July 2016.

The project was originally scheduled for completion by March 2015, before the government delayed the deadline to July 2016. The government explained that this delay was due to the reopening of negotiations with Electrogas following Shanghai Electric Power’s acquisition of a 33% stake in Enemalta in March 2014.

Gasol released a statement claiming that it had realised a "demonstrable application of its pioneering leadership strategy to establish an innovative LNG import-to-power generation project model" in a European country.

It said its role was to structure the contractual and interface arrangements for the 215 MW power plant and LNG import terminal, and that the project, already been under construction for more than six  months, was progressing well.

Gasol COO Alan Buxton said that the remaining shareholders were in a good position to take the project to its next stage, through the construction phase.

The government has controversially granted ElectroGas an €88 million state guarantee to cover the consortium’s €101 million loan from Bank of Valletta. The Opposition has questioned the legitimacy of this unprecedented state guarantee and has called on the government to publish details on it.

Energy minister Konrad Mizzi has argued that the guarantee was a temporary solution, necessary “in the national interest”, until the government receives clearance from the European Commission that the Security of Supply Agreement it had entered into with Electrogas satisfied EU requirements and does not constitute incompatible state aid.

Shadow economy minister Claudio Grech has suggested that the government didn’t wait for the clearance before guaranteeing € 88 million to BOV because it didn’t want to fall further behind on the construction of the power station, the project that it has “bound its political future to”.

'Power station project commitments remain unchanged' - government  

In a brief statement, the Energy Ministry said that it welcomes the “ongoing and now increased commitment” shown by Siemens, Socar Trading, and GEM Holdings.

“The increase in shareholding by two world-class corporations and a leading Maltese holding company shows the importance these companies attribute to the project,” the Ministry said. “The project commitments remain unchanged and the momentum is being sustained in the development phase.

 “The implementation of this major investment will not only result in economic benefits as outlined by credit rating agencies but also in significant environmental benefits and the reduction of emissions.”

'Proof that the project was a farce from the start' - PN 

The Nationalist Party said that the news is proof that the power station project was “a farce from the very beginning”.

“Four months after the power station was supposed to be up and running, its consortium has now lost its lead partner,” the PN said in a statement, while recounting how the Opposition had repeatedly tried and failed to draw the government’s attention to the project’s viability over the past two years.

“Gasol’s departure from the consortium casts doubt on whether the government’s public procurement process [through which Electrogas was selected] remains valid, and confirms the amateurishness of the government’s due diligence process through which the consortium was selected,” the PN said. “It also confirms that the government shouldn’t have granted Electrogas an €88 million state guarantee.”