14 – 20 February 2001

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"We viewed this tariff as an eco tax based on the polluter pays principle"

By Charles Buhagiar

Please refer to the editorial of your publication dated Wednesday 31 January 2001 and in particular to the comment "Dr. Sant has a short memory. When he was Prime Minister he instructed his Minister for Public Works and Construction Mr Charles Buhagiar to see that the requisites dictated by the European Investment Bank EIB were implemented."

There is absolutely no truth in this statement. At no instance did I as Minister of Public Works and Construction receive any instructions to implement the requisites of the EIB.

The truth of the matter is as follows:

“On assuming power in October 1996 we were informed that the previous Nationalist administration had signed an agreement with the European Investment Bank for a soft loan of 15 million ecus at 3% interest to be used for the construction of sewerage treatment plants. Condition 6.09 of this contract signed on the 15 December 1993 between Prof Guido de Marco then Deputy Prime Minister and Minister of Foreign Affairs and Mr P. Gennimatas, EIB Vice President, entitled Jarrifs stated that "The Borrower undertakes to include within a reasonable period of time a tariff for waste water collection and treatment in water tariffs.”

We tried to negotiate this clause with EIB officials and to extend "reasonable period of time" but they were very adamant that no monies would be forthcoming unless this tariff was implemented.

On the other hand we felt it was imperative that these sewage treatment plants were built as quickly as possible so as to ensure no more sea water contamination with raw drainage as well as to be able to make use of the treated effluent as second class water for agriculture and industry.

Furthermore we viewed this tariff as an eco tax based on the polluter pays principle. It is to be noted that at the time the Nationalist administration also agreed to the introduction of such a tariff. Indeed in a letter dated 19 November 1995 that Mr. John A. Bonnici permanent secretary in the Ministry of the Environment sent to Mr J. Boffa, Head, Foreign Financing, Ministry of Finance he informed him: "I inform you that the proposals outlined by the European Investment Bank are acceptable as they fall in line with the policy of the Ministry of the Environment".

Indeed not only were they acceptable but the Ministry of the Environment had commissioned Prof. Edward Scicluna to prepare a proposal "A cost recovery programme for Sewerage Services in Malta" dated October 1994 in which proposal Prof Scicluna recommended the introduction of "Lml2.00 annual charge for sewerage services be made for each household as from 1997".

All of this has to be viewed within the context of the big financial mess left behind by the then outgoing Nationalist administration.

The Labour Government had to take a decision within this scenario. Either accept to implement the EIB requirements and get the money to build the treatment plants or not build the plants. Considering the importance of these treatment plants we felt we had no choice.

When the tariffs were introduced, the Nationalist Opposition kicked up a big fuss for short term political gain. Political opportunism never pays and it is the whole country which suffers - to date these treatment plants have not been built since there are no funds for them.

The removal of the wastewater tariffs may have contributed in some ways to the Nationalist party's victory at the general elections but it has cost the country very dear since it is giving rise to immense environmental degradation.

Labour Shadow Minister for
Infrastructural Development and Capital Projects

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt