Petrol prices to remain unchanged

The government has announced it will not be adjusting the price of local oil products over the next three months because of the "abnormal" and "exceptional" circumstances created by the war in Iraq.

This means the price of diesel, unleaded petrol, lead replacement petrol and kerosene will remain unchanged.

Last year, the government had begun to apply a formula through which the prices of oil products were made to reflect the fluctuations in the price of oil on the international market. The formula was first put into practice in April 2002 and since then has been applied every three months.

The government said the last time it applied the formula was last January, when the price of petrol went down and the price of diesel increased.

"However, the formula was created to reflect the fluctuations in the international oil prices that happen from time to time in normal circumstances and was never intended for the exceptional context created by the war in Iraq," the economic services ministry said.

The government said that at present the international oil prices were subject to "abnormal pressures."

"The abnormal variables are due to the expectations of the war and the fact that the war has now started. There is also the factor of speculation on the war. In effective terms, the international oil market remains very volatile and unstable. At first, the price of oil exploded but since the war began, it started going down and all the indications suggest that it will continue to go down even further."

In these circumstances, the government said, it would neither be realistic nor correct to apply the automatic mechanism of the formula for a period of three months as originally anticipated.

"It seems more appropriate that the calculation of the price of oil will be made over a longer period of six months. One assumes that by then the situation would be more stable and that the price of oil would have settled around the average level that was in effect before speculation on the war had begun."

Last January the government had announced a slight reduction in petrol prices, while prices rose for diesel and kerosene. The price of lead replacement petrol and unleaded petrol went down to 38c7 and 35c7 per litre respectively, a drop of nine mils per litre. The price of diesel went up by 1c1 to 24c9 per litre and that of kerosene by 1 mil to 12c8.

The international price of oil had risen but was offset by a drop in the value of the US dollar in relation to the Maltese lira.

The measure was originally taken by the government to strengthen the position of Enemalta, which made a loss after tax of Lm3.5 million in the year up to September 2001 as a result of an increase in the price of oil and the strength of the dollar.

Provisional figures for the year which ended on September 30, 2002 show that Enemalta "recovered somewhat" and should end the year with improved results. This was due to the further weakening of the dollar and more stable and lower, albeit still rather high, oil prices.

Projections also tabled in parliament show that Enemalta expected to have made a pre-tax loss of Lm1.3 million in the year 2001-2002. A profit of Lm364,000 is projected for the financial year ending next September 30.