Today, the European Commission has given a positive assessment of Malta's modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €328 million in grants (up from €316.4 million) and covers 31 reforms and 16 investments.
Due to the downward revision of its grants allocation, Malta has removed two investments, i.e. the construction of a new ferry dock at Buġibba, St Paul's Bay, and the setting up of a Centre for Vocational Education Excellence, the ITS Campus. Malta has also scaled down two measures, related to the digitalisation of the health sector and to the renovation of Mount Carmel public hospital.
These and other minor changes made by Malta to the original plan are based on the need to factor in:
- supply chain disruptions caused by Russia's war of aggression against Ukraine, which have made investments more expensive and caused delays; and
- the downward revision of its maximum RRF grant allocation, from €316 million to €258 million. This downward revision is a result of the June 2022 update to the RRF grants allocation key and reflects Malta's comparatively better economic outcome in 2020 and 2021 than initially foreseen.
Importantly, Malta has added a REPowerEU chapter to its plan, including one new reform and one new investment to deliver on the REPowerEU Plan's objectives to make Europe independent from Russian fossil fuels well before 2030, in light of Russia's invasion of Ukraine. The two measures aim at facilitating the increase of renewable energy in Malta's energy mix and strengthening the electricity grid, making it more suitable for the deployment of renewable energy sources. The investment concerns the strengthening and extending of the electricity distribution network through investments in the grid, distribution services and battery storage. The reform involves the streamlining of permitting procedures of renewable energy projects and making solar energy installations mandatory for certain new buildings.
To finance the increased ambition of its plan, Malta has requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €40 million. These funds, added to Malta's REPowerEU grants allocation of €29.9 million, make the approved modified plan worth €328 million.
An additional boost to Malta's green transition
The modified plan has a significantly stronger focus on the green transition, devoting 68.8% (up from 53.8% in the original plan) of the available funds to measures that support climate objectives.
The reform and investment measures included in the REPowerEU chapter strongly contribute to the green transition. The reform will require the installment of renewable energy solutions on certain new buildings. Shorter, binding timelines will be adopted for the application and permit-granting procedures of renewable energy installations on greenhouses and for other renewable energy projects. The investment in the electricity grid will make the grid stronger and wider, addressing existing bottlenecks in the provision of stable, flexible and fast-responding energy, and making the grid better suited for the deployment of renewables.
The plan maintains support for investments in renovation and energy efficiency improvements of private and public sector buildings (schools, hospitals and offices). Likewise, the plan continues to support the decarbonisation of transport in the public and private sectors, including a scrappage scheme (i.e. a programme aimed at promoting the replacement of old vehicles with modern ones) and grants for the purchase of zero-emission vehicles.
Reinforcing Malta's digital preparedness and social resilience
The digital ambition of Malta's plan remains high. The plan now devotes 26.2% (up from 25.5%) of its total allocation to support the digital transition. The plan includes investments to digitalise the public administration, to strengthen the government's IT systems and enhance digital public services. Malta's plan also includes investments in the digitalisation of at least 360 companies, in particular SMEs.
The modified plan's social dimension remains ambitious, with the health and social reforms remaining unchanged. The plan includes significant measures to contribute to addressing vulnerabilities in the field of education and training, employment, social protection and health. It also furthers implements the European Pillar of Social Rights, putting forward measures to prevent early school leaving, enhance the quality and inclusiveness of the education system, and expand reskilling and upskilling guidance and opportunities for all adults, most notably the low-skilled.
Next steps
The Council will now have, as a rule, four weeks to endorse the Commission's assessment.
The Council's endorsement would allow Malta to present its second payment request under the RRF and a request for €14 million in pre-financing under REPowerEU. Under the RRF, Malta has so far received €41 million in pre-financing in December 2021, as well as a first payment of €52.3 million in March 2023.
The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in Malta's recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.
