Miriam Dalli resists disclosure on Enemalta’s €60M gap

A significant financial shortfall linked to a major carbon-trading transaction has placed renewed scrutiny on public accountability within Malta’s energy sector. The situation, which involves an estimated €60 million in unfulfilled carbon credit obligations, has raised persistent questions regarding procurement oversight, risk management, and the responsibilities of those entrusted with the stewardship of publicly funded utilities.

Energy Minister Miriam Dalli has continued to withhold the publication of documents relating to the collapsed transaction, citing potential prejudice to ongoing recovery efforts. However, this withholding has intensified concerns within political, administrative, and civil oversight circles, given the scale of public funds at stake and the importance of transparency in dealings carried out by a state-owned utility.

The following expanded report examines the background of the transaction, the resulting financial exposure for Enemalta, the legal and administrative implications, and the public interest considerations that have driven calls for further disclosure.

Background to the disputed carbon-trading arrangement

In 2021, Enemalta entered into an agreement with a Swiss-based intermediary, described as a firm engaged to procure carbon certificates required under the EU Emissions Trading System (ETS). These certificates enable regulated energy utilities to comply with emissions obligations and typically involve substantial recurring expenditures.

Internal communication referenced in earlier reporting indicates that the intermediary failed to deliver carbon credits valued at approximately €60 million. These certificates would have covered nearly two years of Enemalta’s ETS obligations, meaning the failure to secure them introduced both financial exposure and compliance-related pressures for the company.

According to internal correspondence provided to journalists, Enemalta had formally alerted Minister Dalli in August that the structured carbon-trading arrangement had collapsed after the intermediary did not fulfil its delivery commitments. The internal note emphasized the magnitude of the exposure and the urgency of addressing the resulting deficit.

Ministerial response and ongoing withholding of documentation

Minister Dalli has publicly maintained that publishing details of the transaction could hinder efforts to recover part of the lost sum. During parliamentary questioning, she insisted that the release of documentation “is not in Enemalta’s interest”, citing concerns about the potential impact on litigation or negotiations involving the intermediary.

Her position has been met with questions from several parliamentary members seeking administrative clarity, financial accountability, and an explanation of the due-diligence processes that preceded the 2021 engagement. However, the minister and Enemalta’s senior leadership have not provided detailed public answers to these concerns.

Crucially, neither the ministry nor the company has publicly accepted administrative or political responsibility for the collapse of the trading arrangement. The absence of such acknowledgment has fuelled ongoing debate over governance structures and the level of oversight exercised in relation to major contracts.

Internal divisions within Enemalta

Sources with insight into Enemalta’s internal deliberations describe a divided environment within the organization. Some officials reportedly believe that a portion of the funds might still be recoverable through structured negotiation, particularly given the engagement of legal advisors. These officials view the transaction as potentially salvageable, or at least partially mitigable, provided that negotiations proceed without public disruption.

Other officials, however, question why no internal review or accountability process has been initiated, especially given the scale of the financial exposure. They highlight concerns that the utility’s governance mechanisms should have been triggered immediately upon discovery of the non-delivery of the certificates.

This internal divide reflects broader institutional challenges faced by state-owned enterprises in small jurisdictions, where political stewardship, administrative independence, and commercial pressures intersect in complex ways.

Absence of formal litigation at this stage

While Minister Dalli referenced ongoing litigation as a reason for withholding information, sources familiar with the situation have indicated that Enemalta has not yet initiated court proceedings against the intermediary. Instead, the company has retained the Maltese law firm Camilleri Preziosi to lead negotiations aimed at recovering part of the funds.

Engaging a private law firm, rather than immediately pursuing litigation, suggests that efforts are currently concentrated on settlement or recovery outside the courts. This approach may be intended to reduce the time and cost associated with judicial proceedings, or to maintain constructive dialogue with the intermediary. However, this strategy also means that public visibility into progress remains limited, further heightening the desire for transparency.

Lack of clarity about due diligence and contract processes

A central question that remains unresolved concerns the due-diligence procedures followed before the intermediary was appointed in 2021. The company has not publicly disclosed what checks or assessments supported the selection, whether multiple entities were considered, or whether financial stability, trading history, and risk profiles were adequately examined.

Given that carbon-trading intermediaries are typically assessed for creditworthiness, regulatory standing, and their capacity to fulfil large-scale certificate deliveries, the absence of publicly disclosed due-diligence details has increased scrutiny of the transaction. Responsible procurement norms generally require careful vetting, especially for engagements involving tens of millions of euro in public-linked funds.

Despite public statements insisting that the Swiss entity remains operational, Enemalta has not named the intermediary. The lack of identification has also contributed to concerns regarding transparency and the public’s ability to understand whether the intermediary’s business activities, industry standing, or operational capacity had previously raised any red flags.

Governance structure and state ownership

Enemalta’s governance structure adds further complexity to the situation. The company is majority-owned by the Maltese government, while a 33% stake is held by Shanghai Electric Power, a state-owned entity from China. The presence of foreign state investment has historically introduced additional layers of scrutiny into Enemalta’s operations, particularly regarding risk exposure and financial governance.

As a state-linked utility, Enemalta relies heavily on public funds to sustain operations. Government subsidies have been a recurring feature of its financial framework, enabling the company to maintain price stability and operational continuity. In this context, any substantial financial shortfall—such as the €60 million exposure arising from the carbon credit transaction—can have notable implications for the public finances.

Financial implications for public funds

Enemalta’s dependence on state subsidies means that financial losses do not only affect corporate balance sheets but can also influence public budgets. A €60 million exposure, even if partially mitigated, represents a significant liquidity challenge for a company already reliant on government support.

While negotiations led by legal counsel may eventually reduce the net loss, the immediate financial strain can require adjustments in government support structures. Any increase in subsidies, or reallocation of funds to address liquidity gaps, ultimately draws from taxpayer-funded resources. For this reason, public accountability has emerged as a central theme of the ongoing discourse.

Parliamentary scrutiny and calls for disclosure

In parliament, opposition MP Graham Bencini pressed Minister Dalli to disclose the status of the case, identify the intermediary, and detail Enemalta’s next steps. While the minister reiterated concerns about prejudicing ongoing recovery efforts, no further information was provided.

Several parliamentary representatives have emphasized the need for transparency, arguing that clarity is essential for public accountability. They contend that the withholding of information limits stakeholders’ ability to evaluate whether governance standards were upheld, whether risk management processes functioned effectively, and whether appropriate steps are being taken to mitigate the financial exposure.

Public interest considerations

The public’s interest in this case is rooted in the large financial exposure and the implications for state-funded entities. Energy prices, subsidy levels, and operational stability are matters directly relevant to households and businesses, making accountability imperative.

In a broader sense, the situation underscores the necessity of robust procurement controls within state-linked utilities, particularly when engaging international intermediaries. The case further highlights the importance of safeguarding public funds, ensuring transparent oversight, and maintaining public trust in essential services.

Conclusion

The unresolved €60 million carbon credit shortfall has placed Enemalta and the Ministry for Energy under sustained scrutiny. While the minister has emphasized the need for confidentiality during recovery efforts, the absence of transparent disclosure, coupled with the scale of public funds involved, continues to fuel legitimate calls for accountability.

As negotiations proceed and potential recovery avenues are pursued, the matter remains a significant test of governance, due diligence, and financial responsibility within Malta’s public energy sector. Ensuring a clear, legally sound, and transparent resolution will be essential in safeguarding public confidence and reinforcing the integrity of publicly funded utilities.

FAQs

What is the nature of the carbon credit shortfall at Enemalta?
The shortfall concerns approximately €60 million in carbon credits that were not delivered under a 2021 agreement with a Swiss intermediary.

Why has the government not released detailed information about the transaction?
The minister has argued that releasing information could “prejudice” ongoing efforts to recover part of the funds through legal or negotiated channels.

Has Enemalta initiated court proceedings against the intermediary?
According to information available, no court case has yet been filed, and the company is currently engaging legal advisors for negotiation.

What due diligence was conducted before selecting the intermediary?
No public explanation has been provided regarding the vetting procedures, leading to questions about procurement safeguards.

Why is the identity of the intermediary not being disclosed?
The ministry has not provided a specific reason beyond general references to legal sensitivities and ongoing processes.

Could the shortfall affect public finances?
Given Enemalta’s reliance on government subsidies, any major financial exposure may have implications for public funding.

Is the Swiss intermediary still operational?
Enemalta has stated that the intermediary remains operational but has not provided additional assurance or identification.

What is the role of Shanghai Electric Power in Enemalta?
Shanghai Electric Power holds a 33% ownership stake, contributing to the company’s governance and investment structure.

Why has internal accountability not been triggered at Enemalta?
Some internal stakeholders have questioned this, noting the scale of the exposure, while others emphasize ongoing recovery prospects.

What is being done to recover the funds?
A Maltese law firm has been engaged to lead negotiations in an attempt to recover part of the missing amount.