The Bank of Valletta is exposed to the tune of 360 million euro to fund the Electrogas power station. Temporarily the exposure is backed up by a guarantee provided by the government. But the government is impatient to withdraw that guarantee because that letter is a pain point for the government’s accountants seeking to balance the books.
The Bank of Valletta (and other banks) would then move to ask Electrogas to secure the loan against a contract signed by the government undertaking to buy electricity from it at the price needed to repay the loan for the next 18 years. Note: at the price required to pay the loan, even if electricity could be obtained cheaper from elsewhere.
But how is the government going for that contract when the Electrogas power station broke down the moment it was switched on. I am told a major catastrophe was thankfully and momentarily avoided. I am told the boilers of the power station which should now be burning gas contain scaffolding as engineers seek to repair major damage on a plant that is brand new.
How is the government undertaking to buy electricity from a plant that appears to have major design faults?
And can anyone tell us if these faults are being repaired with adding to the banks’ 360 million euro exposure?
The Electrogas plant was supposed to be giving us electricity for some time now: actually since 2015. Although few can say when and if, it looks like we will not actually be getting electricity from it for some time.
The bank would be sweating blood right now. But a subtle bit of news was issued in the midst of the pile yesterday.
We were told that “more than €360 million from IIP were received by National Development and Social Fund”. Notice the elegance of the figure. And note also how “during November, the Fund has acquired the nil-paid rights issued to UniCredit S.p.A, as part of the €150,000,000 rights issue by Bank of Valletta. The new BOV shares will form part of NDSF’s long-term Directed Investment Portfolio, and will result in the Fund acquiring around 2.91% of BOV’s total shareholding.”
The government has therefore just increased its control of Bank of Valletta and has matched its exposure to the Electrogas project with an equivalent fund raised from what is left from selling passports after everyone has made their commissions.
Look what’s happening here.
Electrogas is a cover for SOCAR of Azerbaijan, with whom the government closed a deal in secret that includes purchasing of energy from it irrespective of market prices over the next 18 years. The Chairman of Enemalta deems the Electrogas plant as less reliable and less credible than the sub-marine electricity cable he inherited from the Gonzi administration.
But he has no choice in the matter. Because there’s a big tanker right next to the power station that has never been of any use and won’t be for a long time but FIAU investigations show tangenti for it have already been paid to the minister who negotiated it.
Corruption got us a plant that does not work using gas sourced for an empty tanker we do not need. But the money has flowed to the corrupt politicians who made the decisions.
Then to pay for the losses your citizenship and your reputation were sold to who knows who. The benefit does not come to you. It pays the tangenti along the way at least some that we know of to the prime minister’s chief of staff. And what’s left is kept to cover for the risk of one of the most critical financial institutions for the country for funding the entire white elephant of a project.
Do you remember the enquiries into the BWSC plant that is humming quietly backing up the cheap electricity obtained from the under-sea cable that has allowed your utility bills to go down?
Do you remember John Dalli coming on TV while still EU Commissioner to sell this brilliant idea we are stuck with in Marsaxlokk bay? Do you remember Lawrence Gonzi shutting the door on it and Joseph Muscat lapping it up? He called it his “costed roadmap”.
Look where that got us.