Average household to pay 5c3 more a day for utilities

The surcharge in water and electricity rates announced in Wednesday's budget will translate into an average daily increase of 5c3 per household, it was learnt yesterday.

Of the 184,000 households, just over 137,736 are expected to pay under Lm24.50 more a year in utility bills; 178,000 households will fork out less than Lm70 more per annum and only 187 accounts are expected to be charged over Lm295 extra per annum.

Government Investments Minister Austin Gatt yesterday shed some light on the much-debated tariffs, which come into effect on January 1.

A detailed presentation at the ministry showed that the mean increase in tariffs for the nearly 41,000 commercial entities would be 17c a day.

The average hike for the 755 accounts pertaining to the hotels category is Lm2.85 a day, while the mean increase for the 1,473 industrial accounts works out at Lm5.53 a day.

VAT on domestic clients will be absorbed by Enemalta and the amount paid by industrial and hotel categories will be capped at Lm5,000.

Dr Gatt explained that adjustments to the fuel surcharge will be made on a half-yearly basis, the first in August 2005. The fuel surcharge will be clearly indicated in the bill and will not be aggregated with the consumption and service charge. The surcharge will be removed entirely when the projected annual fuel costs reach the baseline of Lm31.6 million.

A total of Lm8.37 million will be absorbed by Enemalta and Lm7.73 million will be recovered through the 17 per cent fuel surcharge.

Water and electricity tariffs were last revised in 1999 and since then fuel prices have increased drastically, fuelling a rapidly deteriorating financial situation, Dr Gatt said.

Fuel costs have in fact spiralled from Lm18.7 million in 1999 to an estimated Lm47.7 million in 2005.

The cumulative savings by households between 1999 and 2004, following the last tariff revision five years ago, are estimated to have totalled Lm91.5 million.

Dr Gatt repeatedly said that the government was ultra-sensitive to avoid draconian measures like the ones introduced by the Labour government in 1997.

The annual bill for a two-person household had doubled in 1997, while the increases announced in this year's budget would reach about 13 per cent. Backed by Eurostat statistics, Dr Gatt said Malta's electricity tariffs were the cheapest in the EU, along with Latvia.

He promised that structural inefficiencies would not be passed on to the consumer and a capital investment of Lm9 million at Enemalta will not be factored into the tariff revision.

No fuel surcharge will be applied on the meter rent and 11,000 domestic social cases will be excluded from the increases.

A fuel procurement advisory committee is composed of economists, fuel procurement experts and the Central Bank, whose primary role will be to advise Enemalta on its fuel procurement strategies.

Dr Gatt promised that Enemalta would come down hard on defaulters. A fine would be introduced at once (replacing months of court action), services would be immediately suspended and reconnection would only be made upon full settlement of dues.

Turning to gas operations, Dr Gatt said Enemalta would operate on a break-even basis in 2005. For the next financial year, the government was prepared to subsidise the full difference (circa Lm1.8 million) between the current and revised prices. Enemalta will absorb a further Lm750,000 of losses to ensure that consumer prices do not rise.