Brussels fudges responses to questions about legality of state aid to floundering Enemalta

The European Commission – the guardian of the EU treaties and directives – is sitting on the fence where it comes to the dubious legality of millions of euros in state subsidies which the Maltese government is pumping into state monopoly Enemalta.

Following revelations by The Shift that Enemalta is losing millions of euros every year and has once again become dependent on state handouts to stay afloat, the European Commission has refused to say whether these subventions from taxpayer coffers are in line with EU state aid rules.

Asked by The Shift whether, under current rules, Malta is allowed to pass on subsidies to a state company, the Commission has refused to provide a clear reply.

Instead, a spokesperson for the EU said: “As always, it is up to the Member States to assess whether a measure involves State aid that needs to be notified to the Commission under EU rules.”

Asked whether the Maltese government has notified the EU executive about this state aid, the Commission, again, refused to reply.

Research conducted by The Shift on the EU’s register of state aid shows that, so far, the Maltese government has not sent any notification to Brussels.

EU law experts told The Shift that “it seems that at the moment, due to the ongoing pandemic and the war in Ukraine, the Commission is closing both eyes to State aid.”

“Under normal circumstances, Malta is only allowed to grant millions in state aid to Enemalta if this is notified and gains its green light. The most the government can do is subsidise consumers directly so that the effect of high costs of energy helps vulnerable people. However, currently, the Commission is not really enforcing these rules,” the experts said. 

According to the experts, directly subsiding Enemalta is “very dangerous” as the company can manipulate state financial injections for other uses, including inefficiencies. This distorts competition and is usually termed uncompetitive from the EU’s point of view.

While Enemalta has no real competition in the local market, as it’s the sole energy provider, it has become completely dependent on third parties to acquire its energy, including international suppliers through the interconnector and the Chinese government through the former BWSC plant.

Experts argue that indirectly, the government has now ended up subsidising the Chinese government which also holds a 33% stake in Enemalta.

While admitting that the government is spending millions of euros per month to “keep energy prices to consumers stable”, both Prime Minister Robert Abela and Energy Minister Miriam Dalli have declined to give any details.

Their argument is that these subsidies are going to help consumers, however, this may not be the case as Enemalta is registering massive losses in its operations.

The Shift has also revealed that while in 2020 Enemalta posted some €30 million in losses, one of its suppliers, D3 Power Generation Ltd, which in 2014 bought from Enemalta the former BWSC power plant, made over €15 million in profits during the same year. 

The Chinese government, through Shanghai Electric, owns 90% of the shares in D3.

Enemalta has not published its audited accounts since 2018.