China Development Bank provides a €310 million EUR bridge loan to Shanghai Electric to facilitate its acquisition of 33.33% equity stake in Enemalta and 90% equity stake in D3 Power Generation Limited

Project narrative

On September 11, 2013, in Dalian, China, the Ministry for Energy and the Conservation of Water of the Government of the Republic of Malta and China Power Investment Corporation signed a Memorandum of Understanding (MOU) on Cooperation in the Energy Sector in Malta. Then, on March 12, 2014, the Government of Malta and Shanghai Electric Power Co. Ltd. (SEP) — a subsidiary of China Power Investment Corporation (later State Power Investment Corporation Limited) — signed a Heads of Terms Agreement. Under terms of the agreement, SEP agreed to purchase a 33.33% equity stake in Enemalta Corporation — the Maltese state-owned power utility — and a 90% equity stake in D3 Power Generation Limited — a project company and special purpose vehicle (SPV) responsible for the 149 MW Delimara Power Station — for €320 million EUR. SEP agreed to earmark €100 million EUR for a capital injection into Enemalta plc, €150 million EUR to purchase a 90% equity stake in the 149 MW Delimara Power Station (BWSC plant), and €70 million EUR for the conversion of the BWSC plant from oil to gas. Following the signing of the agreement, Enemalta was registered as a public limited company (plc). On August 26, 2014, D3 Power Generation Limited (马耳他 D3 发电有限公司) was legally incorporated in Malta. Then, on November 26, 2014, SEP (Malta) Holding Limited was legally incorporated in Malta. Several weeks later, on December 6, 2014, SEP announced that would obtain a 1-year bank loan — via Shanghai Electric Power Energy Development (Hong Kong) Co., Ltd. — to support the activities described in the March 12, 2014 Head of Terms Agreement. As a condition of this loan agreement, SEP would need to provided a corporate repayment guarantee to cover the first loan disbursement amount of €260 million EUR. Then, on December 12, 2014, Enemalta plc, the Government of the Republic of Malta, Malta Government Investments Ltd., and SEP (Malta) Holding Ltd. signed the Subscription Agreement of Enemalta plc. On the same day, Enemalta plc, the Government of the Republic of Malta, DEP, and SEP (Malta) Holding Ltd. signed the Energy Sector Cooperation and Investment Agreement, which makes reference to the governance of SEP (Malta) Holding Limited and D3 Power Generation Limited as well as the intention to incorporate International Renewable Energy Development Limited (subsequently incorporated on February 2, 2015) and International Energy Services Centre Limited (subsequently incorporated on December 22, 2015). SEP officially became a shareholder of Enemalta and D3 on December 30, 2014. The acquisition helped ease the debt burden of the Maltese Government and improve its creditworthiness. The share purchase agreement included a provision for a five-year period in which SEP would support Enemalta for a management fee, described by Enemalta as a €2 million EUR consultancy fee (annually from 2015 to 2019), although when asked by the Times of Malta for a breakdown on what it received for the payments, it could not provide an answer. In 2020, Enemalta posted a loss of €35 million EUR, while SEC posted profits of €15 million EUR of selling Enemalta power from the Delimara Power Station as a result of a guarantee that Enemalta would purchase energy from the plant regardless of prices from other sources that came when Enemalta's most modern asset was sold; despite hundreds of millions of subsidies from the Maltese Government with €240 million EUR of loans owed, mostly to the Bank of Valletta, Enemalta was in trouble, with SEP had already made its main back..