While globally energy utility companies are facing an uncertain future, the credit agency S&P Global Ratings has just announced a positive outlook for Enemalta. This while affirming the company’s B+ rating.
All this happened despite a sharp increase in the price of electricity purchased from the interconnector, in payments due for carbon emissions and a surge in the international price of gas.
Compensating for these developments is the fact that the Maltese Government has provided strong help to Enemalta so that electricity bills for families and businesses remain stable. This when there are exaggerated increases across Europe which are leading to great hardship amongst families as well as causing significant difficulties for businesses.
In the words of S&P Global Ratings “ongoing financial support has removed immediate liquidity pressure”, while improving profitability. If this support continues, the international experts have argued that there is even a possibility that Enemalta’s rating will be upgraded.
“Ongoing financial support has removed immediate liquidity pressure.” – S&P
The report notes that the price of electricity purchased from the interconnector has risen from €58 per mWh in 2020 to €148 per mWh in 2021. This means that if Government had done as the Nationalist Opposition proposed – that is relying solely on the interconnector, the price of electricity would have almost tripled.
Despite the huge increase in external costs, according to S&P Global Ratings Enemalta in 2021 still did not make a loss. It is worth recalling that in 2012 Enemalta made a loss of €60 million. Back then the Nationalist-led Government was able to offer Enemalta just €25 million in aid. Today a Labour-led Government has passed on €200 million in aid, or almost ten times more.
The international experts conclude that Enemalta will now generate a positive cashflow of around €32 million this year and continue to generate positive liquidity for around three years thanks to the help of Government. This stabilises the company’s finances and confirms that Government will act as a shield against changes in international prices, just as it has promised in recent months.