Enemalta hiding losses of tens of millions of euros after being stripped of major assets

Malta’s only energy provider, Enemalta, has been racking up tens of millions of euros in losses since 2020 and is only managing to stay afloat through taxpayer subventions, The Shift has learned.

Despite the dire financial situation of the monopoly, both Energy Minister Miriam Dalli and her politically appointed CEO, Jonathan Cardona, have refused to give details about the company’s financial situation and have failed to explain why it has returned to a loss-making situation.

While Enemalta has been ‘hiding’ its financial position since 2019, with the last published accounts going back to 2018, The Shift is informed that the energy company’s finances have been in the red since 2020, when the company posted a loss of over €30 million. 

Losses continued to increase significantly in the years since, exacerbated by the pandemic and the increased costs of energy, with the government last week admitting that it is being forced to pump millions of taxpayers’ euros into the company to keep it afloat. 

While the government has continued to stonewall questions about Enemalta’s financial problems for years, credit rating agency S&P Global last week revealed that it was only thanks to the government’s financial intervention that it was able to retain the state monopoly’s positive ranking.

Miriam Dalli, the new energy minister who took over from former minister Joe Mizzi, was forced to admit that Enemalta has once again become dependent on government handouts, but refused to give any details.

Asked specifically to state how long Enemalta has been posting losses and how many millions of euros it’s been receiving every month from taxpayers’ coffers, Jonathan Cardona, the former chief passport salesman for the government, installed as Enemalta CEO by Dalli, also declined to answer.

In a curt reply through retired PBS editor Reno Bugeja, now on Enemalta’s books, Cardona told The Shift that “most of your questions have been answered in the last few days by public comments made by the prime minister and government ministers. Since this is a matter of government policy, who is the major shareholder of the company, Enemalta has nothing more to add,” he said.

Neither the prime minister nor any other government ministers have given any details of how they are using public funds to keep Enemalta afloat and they have persistently refused to quantify the subsidies. Instead, the government has said that this was being done to keep electricity prices stable, something which economists have said is unsustainable in the long run.

Cardona did not reply to questions on estimates of how long Enemalta will need to rely on government subsidies. Neither did he answer a question asking whether the current subsidies have been approved by the EU under state aid rules.

Enemalta back to 2014

One of Labour’s first ‘projects’ after it returned to power in 2013 was to partially privatise Enemalta in order to address its massive, accumulated debts.

In a much-trumpeted exercise, former minister Konrad Mizzi had sold a 33%  stake of the state monopoly to the Chinese government, through Shanghai Electric Power Company, for just €200 million.

At the same time, Mizzi, with the consent of disgraced former prime minister Joseph Muscat, also sold to the Chinese one of the few assets remaining on Enemalta’s books, at the time its newest power plant, better known as the BWSC, for another €120 million.

To reduce the company’s costs and bring Enemalta back to profitability, the government had also shunted all the company’s employees, more than 1,000, onto the public payroll, through a new company called Engineering Resources. It then put Konrad Mizzi’s father, Lawrence, at its helm.

In a much-vaunted public relations exercise, both Muscat and Mizzi had depicted this deal with the Chinese government as the key to the company’s recovery.

While at first, the company began posting small profits, as a result of the reduced expenses and opportunity to shrink its debt, less than five years later, Enemalta is back in the red. In the meantime, the government has continued to recruit staff for the electricity provider, and to pay phenomenal salaries to its political appointees at the company.

Through the Mizzi-Muscat 2014 sale, Enemalta was stripped of all its major energy-related assets, with most of its income used to pay back Electrogas – the operator of a private gas-fired power plant – and the Chinese government, for the provision of its supply of energy.

The Shift also revealed that Electrogas secured a sweetheart deal with the taxman on its estimated €84 million windfall once the gas pipeline is built, according to leaked emails seen. It follows other lucrative concessions given to the consortium, such as a ‘gift’ of €40 million in excise tax refunds.