News 15 september — 13:11

Investigation reveals no corruption in SOCAR project in Malta

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Energy consortium Electrogas on Friday defended its business model and said that an independent review conducted found no signs of corruption at any stage of its project to build a gas power station in Delimara, The Times of Malta reports.

It should be noted that, the Delimara power station is located near Marsaxlokk in the southeast of Malta and is the newest power plant in Malta. It was put into operation in 1992 and redeveloped in the 2010s. The Delimara Power and Gas project was developed by Electrogas Malta Limited, a consortium that includes SOCAR, Siemens and Gem Holdings.

In a statement issued on Friday, the company said it had launched an "extensive internal legal and forensic review" in 2019, following the appointment of three new directors.

The company’s directorship changed following the resignation of shareholder Yorgen Fenech after he was arrested and charged with complicity in the murder of Daphne Caruana Galizia, a Maltese journalist who specialised in investigating corruption and the links of Maltese high-ranking officials with organised crime. Fenech was part of a joint venture, GEM Holdings, that owns 33 per cent of the power station.

The review was launched as the new directors were aware of the "ongoing public domain allegations of corruption, wrongdoing or impropriety" relating to the power station project.

That review "found no evidence of any wrongdoing during the bidding stage, construction of the powerplant and the operational activities of Electrogas".

Electrogas said that its statement sought to address "speculation in the media" about the company's profits - which it said were non-existent at this stage, as the company had yet to turn a profit.

In the detailed statement, Electrogas said that it made no profit from the sale of LNG to Enemalta, saying this was a “pass-through cost”.

Instead, it makes its money by charging a fixed fee for electricity that its power station produces, with the fee not reliant on the amount of energy Enemalta buys from it.

The company said this sort of deal, referred to as an 'independent power producer' business model, was commonplace for large-scale energy projects. 

LNG prices were fixed for five years until April 14, 2022 "based on the tender requirements", it said, with the price switching to a floating one based on a pre-agreed formula after that date.

Electrogas buys its LNG from one of its own shareholders, SOCAR Trading, through a 10-year supply and purchase agreement. SOCAR Trading owns 33 per cent of Electrogas.

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