19 January 2005

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Electricity surcharge back on discussion table
By Kurt Sansone

Investments Minister Austin Gatt on Friday once again have to bring out his PowerPoint presentation to try and explain the reasons for the introduction of a 17 per cent surcharge on utility bills when he meets the social partners in a meeting of the MCESD specifically convened to discuss the issue.
The hefty surcharge was introduced in the budget against a background of rising crude oil prices and their purported impact on Enemalta’s bottom line. However, our sister newspaper MaltaToday had burst Government’s carefully blown up bubble when it released information that showed how Enemalta’s fuel bill to fire up the power stations was in fact less in 2004 than it was in 2003.
The newspaper had highlighted the difference between crude oil, which is not purchased by Enemalta and fuel oil, which is the petroleum product purchased by the national energy company for use in its power stations. The price of light sulphur fuel oil has retained a relatively stable price despite the wild fluctuations in the price of crude oil and coupled with the favourable exchange rate of the dollar to the Maltese Lira, it transpires that Enemalta in 2005 will not be making the exorbitant losses Government exponents had been bandying about prior the introduction of the surcharge.
The PricewaterhouseCoopers report, which the ministry had commissioned to analyse the situation also indicates that any additional losses related to a possible hike in fuel prices for Enemalta in 2005 would amount to around Lm6 million, even if in the budget Prime Minister Lawrence Gonzi chose to quantify losses at around Lm16 million.
The Lm16 million is in fact the additional losses Enemalta would be making utilising 1999 as a benchmark. For all intents and purposes the 17 per cent surcharge introduced on utility bills for 2005 is one way of collecting losses and additional costs Enemalta has been accumulating since 1999 when utility tariffs were last reviewed.
The social partners are expected to hear Minister Gatt give a detailed explanation on how Government reached its decision to impose a 17 per cent surcharge and on what price of oil the surcharge was calculated.
Prior to the budget, in a similar meeting the social partners were not informed of the difference between crude oil and fuel oil, and that losses were being calculated utilising 1999 as a benchmark. Indeed, the social partners were not given a full copy of the PWHC report.
The surcharge became effective on 1 January and will be levied on water and electricity consumption. It is expected to be reviewed every six months but with Government using 1999 as the benchmark for fuel costs it is practically impossible for the surcharge to disappear once and for all.

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Editor: Saviour Balzan
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