Issue link: https://maltatoday.uberflip.com/i/1466079
2 NEWS maltatoday | WEDNESDAY • 27 APRIL 2022 2 NEWS MATTHEW VELLA S&P Global Ratings has affirmed its 'B+' rating for Enemalta and removed the rat- ing from Credit Watch with negative im- plications. The Maltese government is providing ongoing financial support to energy dis- tributor Enemalta to sustain its liquidity position. Credit rating agency S&P said Maltese taxpayers were now fully compensating Enemalta's losses on a monthly basis, after the government committed €200 million in energy support to to finance the increase in energy costs – which the company cannot pass through to its cus- tomers. "This was necessary because the regula- tory framework in Malta does not auto- matically protect the company from the rise in commodity prices nor from de- cline in consumption volumes and also as it is the Maltese government's policy is to keep prices stable," S&P said. As a result, Enemalta is fully exposed to volume and price risks: for example, the prices for energy imported via the Mal- ta-Italy interconnector, which represent 25%-30% of Enemalta's needs, increased to €148.02/mWh in 2021 from an average of €58.09/mWh in 2020. Overall, this and an increase in carbon costs and the surge in gas prices, led En- emalta to record zero net profit in 2021, resulting in S&P placing Enemalta on CreditWatch negative in December 2021. But the energy support measures will result in improved financial performance and cash flow from 2022, S&P said. "We understand that the government now fully compensates Enemalta's losses on a monthly basis. As we include the fi- nancial support from the government as a subsidy in our EBITDA adjustments, we view it as operating compensation as it is earmarked for company's operating losses. "We now expect the company to gener- ate positive funds from operations (FFO) of around €32 million in 2022 and contin- ue to generate positive cash flows in the next two-to-three years as long as govern- ment support remains." Enemalta's losses were already fully cov- ered by finance ministery in 2021, as well as those of January and February 2022. "These timely cash injections materially reduce the volatility in Enemalta's credit ratios. They also materially reduce Ene- malta's exposure to price risk as it is now borne by the State." Enemalta still relies on short-term li- quidity lines and overdrafts from banks, including a €20 million revolving loan signed in October 2019, committed until October 2024 and reviewed annually. It also has a special €20 million 'COV- ID-19 assist' loan guaranteed by the Mal- tese Development Bank, signed in May 2021 and to be repaid over the next four years. Enemalta uses the credit lines when it faces liquidity shortcomings. "Our credit rating analysis on Enemalta incorporates our opinion of a high likeli- hood that the government of Malta would provide timely and sufficient extraordi- nary support to the company in the event of financial distress," S&P said. The Maltese government owns 67% of Enemalta since the sale of a 33% stake to Shanghai Electric Power in 2014. Malta retains the controlling stake in the com- pany, and it elects four of the six mem- bers on Enemalta's board of directors. Malta is the guarantor of all Enemalta's pre-2014 debt and the guarantee covers some uncommitted lines, as well as some exposure to commercial agreements. Enemalta losses compensated 'on monthly basis' as energy costs soar MATTHEW AGIUS A man from Paola has admitted to charg- es relating to domestic violence and dangerous driving following a domestic incident at Marsaskala on Sunday. The 44-year-old man was arraigned before magistrate Yana Micallef Sta- frace on Tuesday morning by Inspec- tor Sherona Buhagiar. He was charged with causing his partner, who is also the mother of his daughter, to fear violence would be used against her or her family, as well as attacking the woman, slightly injur- ing her and insulting her. He was further accused of insulting or threatening a police officer and driving his Volkswagen Jetta in a negligent and dangerous manner and breaching the peace. A guilty plea was recorded. The court sentenced the man to im- prisonment for two years, suspended for four, together with an €800 fine which must be settled within three years. Magistrate Micallef Stafrace also im- posed a three-year protection order in favour of the victim, as well as a three- year treatment order. The court imposed a ban on the pub- lication of the names of the parties, in order to protect the couple's daughter, who is a minor. Man admits to domestic violence, dangerous driving charges