China’s Shanghai Electric posts €15 million profit as Enemalta flounders following sale

Tista’ taqra dan l-artiklu bil-Malta hawn.

Shanghai Electric, the Chinese government-owned company that bought Enemalta’s most modern plant in 2014, has posted a profit of some €15 million in 2020, while Malta’s electricity distributor Enemalta, is floundering in tens of millions of losses, The Shift has learned.

According to the latest set of audited accounts for the year 2020, D3 Power Generation – which bought the state-of-the-art BWSC electricity generation plant in 2014 from the Labour government – made millions in profits at the same time as the Malta state electricity supplier struggled to cover its costs and was forced to start depending on subsidies from taxpayers.

The accounts, audited by RSM, show that in 2020, in the midst of the pandemic, the Chinese company was paid some €95 million for selling its LNG produced electricity to Enemalta, netting it a profit of €15.2 million. This was some €2 million less than the profit reported by the same company in 2019, when it sold around €73 million’s worth of electricity to Enemalta.

D3 Power Generation, which is 90% owned by the Chinese government, while Enemata holds the remaining 10%, has been making millions of euros in profits since the Chinese government took it over in 2014 for just €150 million.

According to its financial statements, it has just 18 employees on its books to operate the power plant, though the state agency employed hundreds when it used to run the same operation.

Industry sources told The Shift that the deal made by the Chinese – then described by disgraced former prime minister Joseph Muscat as Enemalta’s rescue from insolvency – turned out to be very profitable for them, as they were guaranteed millions of profit every year through a power purchase agreement with Enemalta.

“In just a few years, the Chinese are almost on the brink of already getting back their whole investment,” the sources said.

“Ironically, the excuse which the government used at the time to sell the new power plant at a ridiculous price – the rescue of Enemalta – is now resulting to be as hollow as the deal itself as Enemalta is back into deep red territory,” they added.

Enemalta’s interests on the board of directors of D3 Power are being represented by an 86-year-old former Labour MP, Salvu Sant, appointed by Prime Minister Robert Abela in October after removing him from Enemalta’s board of directors.

According to the latest accounts, the four directors, which, apart from Sant, include three Chinese officials who reside in Malta, shared €200,000 in fees in 2020.

While D3 Power Generation has published its audited accounts, Enemalta has been concealing its financial position for years.

The last published accounts go back to 2018 and no one really knows the state of the company.

Earlier this week,  The Shift reported that Enemalta has reverted to seeing millions of euros in losses every year since 2020. 

Both Prime Minister Robert Abela and Energy Minister Miriam Dalli last week refused to give indications of how many millions the government pays in subsidies every month to Enemalta to keep it afloat. Their only comment was that this state aid – which is legally dubious under EU rules – is a measure to keep consumer prices stable.

This state aid, forked out by taxpayers, is also going to the Chinese government which, through the same BWSC deal, was sold 33% of Enemalta for just €100 million.

The 2014 sell out has turned Enemata into no more than a distribution monopoly without any real power generation capacity of its own.

Currently, Enemalta is totally dependent on private entities to provide electricity through various purchase agreements with Electrogas, the owner of the LNG power plant, D3 Power, the owner of the former BWSC plant, and the interconnector which imports electricity from Sicily.

In case of an emergency, Enemalta still owns a few power generation units in Delimara, which go back to the 1990s and run on heavy fuel oil.

Malta currently has a generation capacity of 537 MW with an extra 200 MW possibility from the interconnector. Plans for a new interconnector were announced a few months ago.