VALLETTA -- China and Malta have signed off on an energy deal that sees the rescue of the indebted Maltese energy utility and gives China a Mediterranean foothold in a future energy hub for the European Union.

The landmark agreement signed on Tuesday -- the biggest foreign direct investment ever in Malta -- gives the Shanghai Electric Power Company (SEP) a 33 percent equity stake in the Maltese utility Enemalta for a price of 320 million euros (432 million U.S. dollars).

"It's a new Enemalta," the Maltese Energy Minister Konrad Mizzi said at a press conference following the signing, adding that the state-owned utility, in which Malta will retain the controlling interest, would now become a regional operator.

"If we ... position ourselves as a country which facilitates investment to Malta as a hub, our economic growth can be accelerated. And ... that is what we are trying to do here, accelerate our growth, create new opportunities, and create a larger pipe to a certain extent, because Malta is a small market ... and at the same time also rescue Enemalta," the Minister told Xinhua.

Mizzi has said previously that Malta would serve as a key connection point for Europe in the Mediterranean. "There is a need for Europe's energy strategy to have a Mediterranean dimension," he said in an earlier address at the Economist Business Roundtable held here on March 7.

Enemalta's debt, which has stood at as much as 800 million euros, will be reduced to under 300 million euros with the deal, Mizzi added. When the Memorandum of Understanding was announced in Beijing last September, the state utility's Standard & Poor's credit rating improved from negative to stable.

Under the deal, 100 million euros will be capital transferred to Enemalta, 150 million euros will be invested to acquire the majority shareholding in an oil-fired power plant, and 70 million euros will fund the conversion of that plant to gas.

In addition, the Shanghai Electric and Enemalta deal will see the formation of two joint-venture companies: the first will invest in renewable energy projects for distribution in Europe, with a target of 300megawatt over the next five years produced from wind energy and solar panels. The company will be 70-percent-owned by Shanghai Power Electric and 30-percent-owned by the Maltese government.

The second joint venture will be a company to provide service to other Shanghai Electric power plants in Europe.

Enemalta will have Chinese members on its board of directors, with some reports of the deputy chairmanship for SEP.

The petroleum division, Enemalta's only profitable segment, is not included in the current deal, nor is the Enemalta gas division, which was privatized under the previous government.

The current agreement is expected to be finalized by September, when it will be presented to the Malta Parliament.