Opposition hits out over power surcharge

The House of Representatives yesterday approved the financial estimates of Enemalta Corporation at the end of a two-day debate in which opposition speakers hit out at the new power surcharge and criticised the government for not accepting responsibility for inefficiency at the corporation.

Evarist Bartolo (MLP) said the power surcharge and the kerosene price increase had had a major negative impact on the tourism industry. Although the surcharge increase had been capped, the Malta Hotels and Restaurants Association (MHRA) had said the measure still remained an added cost burden on the industry, this as it struggled to be competitive.

The surcharge alone would raise energy costs for hotels by 0.4 per cent. This was not an insignificant increase. The taxation burden in Malta was already higher than competing destinations, and hoteliers were seeing costs rise without being able to raise prices.

The MHRA had rightly complained that a capping agreement had not been reached for restaurateurs, whose taxation was higher than all of the EU.

The transport business, including car hire, was also seeing rising costs, further undermining competitiveness.

A four-star, 100 room hotel this year was seeing government induced costs rise by Lm1,000 per month.

It was no wonder that several were considering an exit from the hotel industry, converting their properties to apartments.

Mr Bartolo said the oil purchases committee should be given the resources it needed to function well. It was a mistake for the government to have turned down the opposition's request for its report to be presented in Parliament.

He also called for stronger emphasis on alternative sources of energy. Viability, he said, should not be calculated solely on costs, but also on savings in other sectors, such as the people's health.

David Agius (PN) said that Enemalta had a responsibility towards the people. He observed that the power supply on Tuesday was cut three times for a few minutes. Enemalta, he said, should assume responsibility for such power cuts, and damages which could result, when such cuts were avoidable.

Mr Agius urged the corporation, together with local councils, to install more street lighting in newly-built areas and industrial estates.

Enemalta should also see curb light pollution, which also meant a waste of energy. The Light Pollution Awareness Group has passed on to Enemalta some interesting suggestions.

Mr Agius also referred to the gas shortage, saying that in the talks being held with the distributors, one needed to consider the needs of the elderly who could not go out to buy gas from fixed points. The recent shortage, he said, should would not repeat itself.

Noel Farrugia (MLP) said it did not make sense that, with all the tales of progress, the people had been left without electricity on numerous occasions. In view of Enemalta's past and projected future losses it was important for Enemalta employees to know what their future held insofar as job security was concerned.

Mr Farrugia asked what had become of the agreement with Libya for the supply of crude oil at favourable prices, even though the crude still had to be refined in a third country. Enemalta maintained that once the refining had been paid for, the supplies from Libya were no longer advantageous. Now that Malta was part of the EU and could more easily use refineries in other member countries, the situation might have changed and made the protocol advantageous again. If the government felt there was a need for changes to make the Libya agreement more favourable, the whole protocol should be renegotiated.

The Labour MP criticised the government for not assuming its responsibilities for Enemalta's inefficiency, which had led to the 17 per cent surcharge on power and a shortage of gas. Had the government taken any action to avoid a repetition of the recent gas situation?

Mr Farrugia referred to rural affairs and said that while efforts were being made to remove unsightly oil drums which had replaced rubble walls, Enemalta had gone the other way and installed metal poles and pylons when wooden structures would have been more environmentally pleasing.

Robert Arrigo (PN) expressed concern over the millions of liri owed to Enemalta by clients and augured that the corporation would manage to quickly recover those funds so that it could pay its loans. He asked how much electricity was being stolen and said more effort was needed to curb this abuse.

Referring to the investment which Enemalta needs to make in new power generation facilities, Mr Arrigo said the government could relieve the corporation from its investment burden by building the new plants itself and selling power to the corporation. Then, Enemalta could expand its activities by selling electricity to other markets.

Marie-Louise Coleiro (MLP) said that Enemalta definitely had a responsibility to provide a better quality of life to the citizens. The newly-introduced electricity surcharge was impinging on many sectors of society. The government tried to justify it as being a surcharge pegged on consumption. But the surcharge was causing hardship even though 13,000 households had been exempt.

Families with children with disability and the aged consumed more water and electricity. There were minimum wage earners who could not cope with such tariffs.

Did the government know that the EU classified minimum wage earners as the working poor? The government should have the decency to make its homework before imposing such a surcharge. One of the various benchmarks used by the EU to gauge the quality of life in its 25 member states was whether the people had difficulty to pay water and electricity tariffs.

She called on the government to act responsibly and do its analysis. Otherwise poverty would increase greatly.

Ms Coleiro also complained of damages to appliances called by power cuts. The only redress which clients had was to go to the Consumers' Arbiter and compensation was limited to only Lm1,500. Enemalta did not have a consumer charter. Clearly, it should have the decency to honour its obligations towards its clients.

If what happened in gas distribution had happened in another country, the minister would have had to resign. But in Malta, ministers never shouldered blame.

Chris Agius (MLP) said power cuts were an inconvenience and sometimes caused hardship to people. They were also a cost for industry. It was no wonder that the power supply, and its cost, were a constant source of complain in the business sector. Local electricity rates were among the highest in the EU, and ways must be found to make them more affordable if Maltese competitiveness was to improve.

Something also needed to be done to reduce Enemalta's losses. It was true that whoever used the service should be expected to pay for it, but several families could hardly make ends meet, and they should be included as social cases. In this age of computerisation and mobile phones, there were many families who did not have electricity because they could not afford it.

Mr Agius referred to alternative sources of energy and said that it was a shame that sun-drenched Malta did not make better use of solar energy. The government should give more generous incentives for the people to adopt solar energy than the measly Lm50.

Leo Brincat (MLP) said any analysis of the situation at Enemalta had to consider the political aspect. This government had been in office since 1987, except for a 22-month interruption. Before blaming work practices for inefficiency, the government should blame itself for its inaction. Statements made over the past few days by Investments Minister Austin Gatt were, to say the least, unethical. Because he did not use gas at home, he had shown himself to be cut off from the people's needs. Yet the people had been queuing in their hundreds for gas. This was a humiliating situation which was akin to a country under siege. Where was ministerial accountability? Where was the accountability of the top management?

He had first hand experience of how tough it was to bring about even the smallest change at Enemalta. Initially, when, as ministers, he had ordered investigations, no one was found to blame. But the situation improved after the investigations started being held by people from outside the corporation. This was the method which the current manager should follow.

Mr Brincat asked why the human resource audit at Enemalta had not been completed yet.

It was an anomaly that the chairman of Enemalta in an interview to Vanessa Macdonald spoke on the importance of accountability and had warned that heads would roll when there was abuse, yet no one was blamed and no one assumed responsibility during the gas shortage a few days later.

Mr Brincat asked what was happening at MOBC, the offshore bunkering company. The minister had said the chief executive was no longer working there as this company was no longer dealing in oil. But was it true that the CEO had actually been politely shown the door and even given financial compensation to leave? Was it a coincidence that this person's term as an oil purchases consultant ended at the same time?

What had happened with regard to the cover up on the fraud over duty-free sales of diesel? Why were efforts made to hide the names of those involved? Bowsers belonging to the persons concerned had been held at Hal Far pending the investigations, yet the go-ahead was still given for those persons to hire other bowsers so that they could carry on with their business. Who took these decisions?

Concluding, Mr Brincat noted that the chairman of Enemalta had also said that the Marsa power station was actually more cost effective than Delimara power station.

Although Marsa power station's efficiency rating was 19 per cent to Delimara's 33, the former used less expensive fuel oil. The chairman had also said that Marsa power station was "here to stay". This was a government u-turn. Where were the environmentalists who used to campaign so much against the Marsa power station in the past?

Winding up, Public Investments Minister Austin Gatt reacting to opposition remarks, said Marsa power station was being retained because it had been modernised. The situation was different from some years ago, when calls were made for its closure.

As for the claim that the Delimara power station cost more to operate than Marsa, the fact was that costs rose at Delimara only when equipment that was there for emergencies were used.

It had even been claimed that the international price of oil had not risen. Yet in the first four months of this year alone, Enemalta would be paying Lm2.8 million for the same amount and quality of fuel oil it bought last year.

As for hedging agreements on oil purchases, Dr Gatt said he was in favour of hedging, but this was not a magic wand. This was risky and one could make profits or losses. He hoped that the MLP would not come out shouting if losses were made, after calling for hedging. Indeed, no profit had been made from the hedging agreement made under Labour, although he was not blaming anyone.

Dr Gatt said the position at MOBC was that the government had been unable to sell it, and it had been converted into an oil storage company because the government felt it should not be involved in oil trading in competition with private companies.

Several opposition speakers had spoken of fraud in the sale of duty-free diesel. But Enemalta had nothing to do with duty-free sales and never sold duty-free diesel. This was an issue which fell under Customs. However the chairman of Enemalta had issued a denial to remarks about him in this context made by Labour MP Joe Mizzi.

Dr Gatt denied there were no strategic plans at Enemalta. He had spoken, on Tuesday, of the short term power generation plan going up to 2010. Within three months a plan for the years beyond 2010 would be completed.

Reacting to complaints that Malta's competitiveness would suffer because of the power surcharge, Dr Gatt said all European countries had imposed similar surcharges on electricity, sometimes more than once. Gas prices had also increased steeply.

A study showed that hotels would be paying just 3c8 per bed per day more because of the surcharge.

As for complaints of hardship caused to families by the surcharge, Dr Gatt said big families were already being subsidised more than others with bigger subsidies that were to stay. People with disabilities would benefit too, and no surcharge was imposed on social cases. How could anyone say people were finding it hard to pay their power bills because of the surcharge, when not one bill that incuded the surcharge had been issued yet?

How could the opposition complain about the 17 per cent surcharge when the Labour government had doubled bills even though the international price of oil was at its lowest-ever price?

The government had also been criticised for raising the price of kerosene to the same level as diesel. But that was what Labour had also done in the past.

Concluding, Dr Gatt said he looked forward to a better future for the corporation. What needed to be done was not easy, but he believed that what had been done was on the right track.

The estimates were later approved after a division, the opposition voting against.