26 MARCH 2003

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Enemalta protected against oil price hikes – Bonnici

The international price of oil has been on something of a rollercoaster ride since the outbreak of war in Iraq. Oil indices fell sharply at the conflict’s inception, only to be rising again recently while the prospect of a short-lived campaign in Iraq quickly dissipates as resistance to coalition forces mounts in Iraq.
But speaking to The Malta Financial and Business Times in today’s interview, Economic Services Minister Josef Bonnici, responsible for both Enemalta and Air Malta, explains that recently adopted strategies for the purchase of oil are to safeguard the price at which Enemalta purchases its fuel requirements.
He explains how some three months ago the talk of conflict in the Gulf region had prompted the Ministry to adopt a type of ‘insurance scheme’ through which the price at which Enemalta purchases its fuel requirements was maintained on an even keel.
He explains, "We adopted a system in which there is a small premium paid but which protects Enemalta if the price goes beyond a certain level. This is not open ended in the sense that we know how much is being paid. That can be factored in and it provides a type of protection, especially if there are spikes in prices."
The Minister also explains that while Air Malta employs a similar scheme for the purchase of its oil requirements, the airline’s short-term prospects depend largely on how the tourism sector’s consumers respond to the developments in Iraq.
The manufacturing sector is also susceptible to downturns as a result of the Iraq conflict, if international consumer spending were to slump and demand for products manufactured in Malta were to subsequently suffer. He explains, "Today the Maltese economy is so integrated with the rest of the world that any fall in world economic activity will be felt very quickly here.
"Remember that Malta exports almost 100 per cent of its GDP so demand for most of our production comes from international markets. As such, any economic instability in Singapore, the US, Japan or in Europe affects us."

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
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