UPDATED: Exactly what ‘power purchase’ agreement did the government sign last Friday, and who with?
A story appeared in Times of Malta last Monday claiming that the government had signed a power-purchase agreement with the Electrogas consortium the previous Friday, and asking why the deal had been signed behind closed doors and why the press were not called out in a show of publicity.
The report quoted no sources and gave no indication of how the newspaper came to know of the deal, which is the usual practice, but just stated it baldly as fact.
This indicates that it may have been yet another strategic leak. The question at this stage is: whose strategy?
Later that day, a television debate was recorded featuring the prime minister and the Leader of the Opposition, in which the prime minister said that the contract had yet to be signed and was brought up short when the Leader of the Opposition said that there was a story in the newspaper that morning saying it had been signed.
The prime minister would not have lied if he had known about the story in Times of Malta – unless he lost track of who said what to whom in the space of just a few hours, which is unlikely. But then again, he is unlikely not to have known about the story, because even if it was not leaked by his people under his instruction, it would have been brought to his attention as a matter of importance.
Quite frankly, I think the real reason that the government ‘covered up’ the signing of the contract, first refused to publish it and now keeps promising to publish it when it has been gone through for sensitive information is that it hasn’t been signed at all. Or at least, not in the format expected.
First we have to ask ourselves: who signed? The press talks about Electrogas, but Electrogas is still a loose consortium of individual companies that have not yet been gathered into a single incorporated company that will run the power station and provide the power.
It is a company called Malta Power and Gas Ltd which has filed development applications with the MEPA for the new gas-fired power station, and not “the Electrogas consortium”. Malta Power and Gas Ltd was incorporated last summer (July). It is owned entirely by Enemalta Corporation. Aviation Fuelling Services Ltd, which is owned by Enemalta Corporation, has a nominal one share.
The stated plan is for the individual companies which make up “the Electrogas consortium” to buy the shareholding of Malta Power and Gas Ltd from Enemalta Corporation in the proportions in which they make up the consortium. The consortium will then no longer be a loose assembly of individual companies for the purpose of this project, but a single company in which they are all shareholders.
Once they have all acquired their shareholding, the plan is to change the name of the company from Malta Power and Gas Ltd to ElectroGas Malta Ltd. That is why the latter name is on the reserve list at the Malta Financial Services Authority, which is the registration authority for Maltese companies.
They have put the name on reserve while they all sort out buying their shares in Malta Power and Gas. The stated plan here is that all the shares have to be bought for cash. Enemalta Corporation will then have the cash it needs to sort out certain problems, which may or may not include subsidising reductions in electricity tariffs or sorting out that tax accounting problem with the European Commission.
But here’s the thing. So far, no member of the “Electrogas consortium” has bought any shareholding in Malta Power and Gas Ltd, which filed documents with the Malta Financial Services Authority on Friday, 9th May, to increase its shareholding – presumably in preparation for the sale to the companies which make up the “Electrogas consortium”. Yet as of today, all of Malta Power and Gas’s shareholding is still owned by Enemalta Corporation.
Only one member of the consortium, Gasol, has so far done so much as to sign a share-purchase agreement (for 30%) with Malta Power and Gas. This does not mean that it has actually bought the shares, as Malta Today reported. A share-purchase agreement is the equivalent of a ‘konvenju’ when buying real estate.
Yet Gasol is the smallest and most unlikely member, with a nominal number of staff and a very odd track record, operating mainly in West Africa (this website covered the subject extensively last summer).
None of the other consortium members – Siemens (20%), the state of Azerbaijan (20%), and the Maltese company which brings together Gasan, Fenech and Apap Bologna (30%) – have yet bought their shareholding in Malta Power and Gas or signed a share-purchase agreement.
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Why is Enemalta so deeply involved in a transition company slated for takeover by an international consortium that will bind and screw Enemalta for 18 years?
Call me naive but it doesn’t look like sound business strategy to me. It looks like Muscat using state-owned enterprises to honour his pre-electoral commitments to undemocratic states.
Which banks is the mandated bank consortium made of? Are there any problems in this regard?
“Commenting on the project COO, Alan Buxton said: “This is a hugely exciting development for
Gasol. Although based outside of our usual geographic remit, we have considerable expertise in
floating LNG import projects, which we can apply to Malta. I am delighted that out of the final
three bidders, our consortium has been announced as preferred bidder and we look forward to
finalising the project arrangements with Enemalta and subsequently concluding the financing
agreements with Electrogas’ mandated bank consortium of local and international banks.”
https://www.google.com.mt/url?sa=t&rct=j&q=&esrc=s&source=web&cd=11&cad=rja&uact=8&ved=0CGUQFjAK&url=http%3A%2F%2Fwww.gasolplc.com%2F&ei=pjZ3U4ikOtLn7Abjl4CYCQ&usg=AFQjCNHGbBXpQf3Y61RcGwxCHN4z1bahyA
Excellent analysis.
Daphne, I have taken the trouble to set out a number of questions which some journalist should submit to the office of the prime minister, the Minister for Health, Energy, Ovaltine and Podologists, and to Enemalta. If any of these questions is raised in Parliament, a written copy should be given to the Speaker under the heading “PQs on erectic deal.”
“Reference is made to the contract which the prime minister Joseph Muscat said “had been signed” on the program Reporter which was aired on Monday 12th May following questions by the Leader of the Opposition:
1. Was the prime minister referring to the “electric deal” agreement which was “sealed behind closed doors” on Friday 9th May as reported by Kurt Sansone on The Times of Monday 12th May?
2. What are the formal title and legal title of the said “electric deal” agreement signed on Friday 9 May reported in The Times of Monday 12th May?
3. On, and with what date, was the said “electric deal” agreement actually signed?
4. In which country, town, and address location was the said “electric deal” agreement signed?
5. What are the registered names of the companies or other legal entities from the private sector which signed the said “electric deal” agreement, and what are the registration details of those companies?
6. What are the registered names of the companies, legal entities or Ministries from the Maltese government which signed the said “electric deal” agreement?
7. Who were the officials – names and positions – who signed the said “electric deal” agreement on behalf of the Maltese government?
8. Were third parties, such as ambassadors, consultants, advisors, former EU Commissioners, persons or entities black listed by the World Bank, present for the signing?
9. In particular, was Shiv Nair – the prime minister’s consultant on energy whose due diligence by the Office of the Prime Minister did not reveal that he is permanently debarred by the World Bank for corruption, the one the prime minister said he never met – present for the signing of the “electric deal”?
10. Do you confirm that Gasol plc, a member of the ElectroGas Malta Consortium, has entered into a Share Purchase Agreement (SPA) (with Enemalta) under which Gasol plc will acquire 30% of Malta Power and Gas Ltd, as stated in a public announcement by the London Stock Exchange AIM-listed company on 14th May 2014?
11. When was the said SPA agreement dated and signed?
12. In which country, town, and address location was the said SPA agreement signed?
13. What are the names of the parties who signed the said SPA agreement?
14. Why does it appear on the MFSA records that Malta Power and Gas Ltd is still owned by Enemalta (except for 1 share) despite Gasol plc’s announcement about the said SPA?
15. Has the said SPA been completed as at today, and if not, on what date, or after what event or condition, is it expected to be completed?
16. Are there any conditions or events on which the completion of the SPA depends, and if yes, what conditions, and what are the consequences if those conditions are not fulfilled?
17. What amount of consideration in Euro (please convert any amounts due in Renminbi at today’s rate of exchange) was agreed on the said SPA for Gasol plc’s 30% stake in Malta Power and Gas Ltd?
18. In favour of whom is the said consideration payable?
19. Was that consideration paid to-date, and if yes on what date, and if not, on what date is it due to be paid?
20. Is that consideration paid, or due to be paid, in cash (for the benefit of Minister Manwel Mallia, bank transfers are considered as “cash”) or in kind?
21. If paid in Euro notes, were they deposited in a bank account immediately, or were they stashed under Manwel Mallia’s mattress?
22. Have SPAs for the acquisition of the remaining 70% of the shares in Malta Power and Gas Ltd been signed by the other members of the ElectroGas Malta Consortium (namely Siemens Project Ventures, SOCAR Trading SA, GEM Holdings Ltd)?
23. If yes, by which members of the ElectroGas Malta Consortium, on what date, at what location, with what entities on behalf of the Maltese government, and for what amounts of consideration?
24. If not, “why not”?
25. Has the power purchase agreement for 18 years’ supply of electricity been signed between Enemalta and the ElectroGas Malta Consortium, and if not, “why not”?
‘…Muscat explained a similar agreement between an Italian energy company and Shanghai Electric – a Chinese company associated with Shanghai Electric Power – earned plaudits, claiming that the government’s agreement between Enemalta and the Chinese company highlighted its “vision and its positive energy….’
The company in question is Ansaldo Energia, which however is NOT an energy provider, but simply a producer of gas turbines. Ansaldo Energia along with its sister company Ansaldo Breda, railway and train engineering company belongs to Finmeccanica, the state’s engineering, armaments and shipbuilding conglomerate,
What similar agreement?
What I can actually see is this rather coinicidental ‘strategic agreement’ between Italy and China the day Muscat was supposed to proclaim the bxara t-tajba.
The agreement being between the FSI, Italy’s national strategic development fund and Shanghai Electric, signed the 8th of May.
Trust Renzi to get in the way. And don’t tell me Muscat’s house of cards with Gasol, Siemens et al, aren’t in the way of Shanghai Electric’s major interests.
http://www.fondostrategico.it/en/media/press-releases/fsi-shanghai-electric-strategic-agreement-for-ansaldo-energia.html
Instead of asking the government, shouldn’t the journalists ask the Gasans etc directly?
As well as Shiv Nair, perhaps at his London address: 135, Holland Park Avenue.
It sounds so strange that it seems something out of this world. Does it make sense for Enemalta to sell its exclusive right as the sole electricit provider in the country to a company or consortium which would then bind/oblige Enemalta itself for 18 whole years to buy the same product that it (Enamalta) is capable to provide through its own plants and interconnector probably at lesser costs? Absurd to the point of madness.
The prime minister said he is not privatising Enemalta. What he did is he privatised its power stations. BWSC is gone to China, and the new one will be owned by Electrogas.
At the moment, Enemalta is left with two old plants (Marsa and Delimara 1), and a chimney.
Thank you for these clarifications.
The clarifications of the last couple of days, such as are available, are still not reassuring or transparent:
The question still remains (amongst several): why and with what backing, financing or mandates has the Maltese company ALREADY started working on the power station?
Is it working alone, or with the rest of the consortium?
If it is working alone, how does this effect the eventual final contract?
I once read an advice for people over forty not to lie any more since their memory would start failing them, making them forget what they lied about and how they lie was construed, thus getting caught easily.
I think Joseph is into that now.
If you are forty and over, stop lying.