Utility surcharge 'changed after consultations'

The surcharge on water and electricity consumption announced by the Prime Minister in the budget was significantly different until a few days before but was changed following consultations with the constituted bodies, government sources said.

The sources explained that until four days before the budget the government was not proposing a surcharge on water and instead had in mind a 10 per cent fuel surcharge for domestic and commercial electricity consumption and a 10 per cent fuel surcharge on unleaded and leaded petrol.

However, consultations with unions and employers' associations represented on the Malta Council for Economic and Social Development, indicated that the constituted bodies preferred a 17 per cent surcharge on water and electricity rather than a 10 per cent levy on leaded and unleaded petrol.

In 2005, Enemalta is expected to spend Lm48 million on oil for electricity generation purposes. This means that the impact of the increases in the international price of oil on Enemalta for 2005 is projected to be just over Lm16 million, the sources said.

The government is saying that one must not consider only the impact on Enemalta. A quarter of the electricity generated for industry is used by the Water Services Corporation to produce water from the reverse osmosis plants.

The measures announced in the budget would not mean that all the added Lm16 million to be spent by Enemalta will come from the consumer. In fact, the government decided that Enemalta would absorb Lm8.3 million of the increase with the remaining Lm7.7 million being passed on to the consumer.

About 11,000 households, which are treated as social cases, today pay an average of Lm7.50 a year on electricity, including the meter rental. They will not be affected by the fuel surcharge and neither will be families with special social needs.

The government has been careful to point out that it was not raising water and electricity rates. It insists it introduced an oil surcharge, which would be reflected separately in the bill. This surcharge would be only on actual consumption and not on meter rentals.

The difference in the bill of any factory and any hotel would not be more than Lm5,000 annually. This capping was introduced to ensure that industry would remain competitive.