Enemalta to transfer fuel storage to Corradino

Enemalta has decided to transfer its fuel depot from Birzebbuga to Corradino rather than to Has-Saptan as originally indicated, Public Investments Minister Austin Gatt told Parliament yesterday.

He also said that a total of Lm21.6 million will have been saved between 2004 and 2006 through a reduction of state subsidies to parastatal companies.

He said restructuring had been successful in some areas, but much remained to be done in others.

At Air Malta, an operating loss of Lm9 million in 2002-2003 had been reduced to a loss of Lm3 million last year, despite a Lm4 million increase in the fuel bill.

The industrial agreement at the airline had yielded savings of Lm2.5 million with overtime having been halved, and Lm500,000 less spent on outstations. Still, further savings of Lm1.5 million were being targeted for up to 2007.

The opposition, Dr Gatt said, had resorted to mentioning names. He would only say that a former airline chairman, now Labour MEP, used to have earnings of Lm60,000 and spent Lm20,000 on the company credit card.

The airline, he said, was investing in a new IT system which would place it at par with other airlines. And he could not understand how the opposition could criticise the introduction of the much needed revenue management system.

Dr Gatt said the reform at Public Broadcasting Services had gone well. The government subsidy had been slashed and yet audiences had grown.

The dockyard used to be given a government subsidy of Lm23 million in 2003 but this had been reduced to Lm9 million this year. The yard had a full order book up to February, but it was far from being out of the woods. The major challenge next year would be to raise productivity and cut losses by a further Lm7 million.

The Water Services Corporation was one of the success stories, where a subsidy of Lm10 million had now been cut to Lm4.8 million.

There was also substantial improvement at Gozo Channel where an operating loss of Lm1 million had been turned into a modest profit. The number of trips had been increased and there was even a scheduled night service. Although fares had been raised, they were not thought to have been the cause of a decline in passengers since those declines only took place in two months, February and May.

At Tug Malta, an operating loss of Lm22,000 had been turned into a profit of Lm500,000.

What had been done at Sea Malta was well known. Suffice to say that through privatisation, the government had saved financial exposure of Lm4 million.

Dr Gatt said the total of Lm21.6 million saving achieved by his ministry's efforts came about despite hostility and opposition from some quarters. But the government view was that subsidies should not go for financial activities but be directed to the social sector, including education and the environment.

At Maltacom, despite the opposition criticism of the management, the share price had risen from Lm1.15 in December 2003 to Lm1.76 earlier this week. Shares at MIA rose from 70c in 2003 to Lm1.60.

The government, Dr Gatt said, could not go on subsidising loss-making commercial activities, and it was moving out of activities where it competed with the private sector.

What was needed was realism, and he would be the first to admit that not all was well everywhere.

He was not happy with the state of Maltapost, which was still not equipped for a future which was paperless.

Enemalta was a tougher nut to crack than the shipyards. Still progress had been made. The corporation now had a proper senior and middle management structure and by year's end talks would have been started on new work practices and a new collective agreement. Changing work practices would be key to improving efficiency at the corporation.

On the financial side, it was worth noting that electricity generation costs were down by Lm1.3 million and Lm250,000 had been saved in human resources. There was a substantial improvement in the collection of arrears.

This progress had led S&P to improve the credit rating for Enemalta and this resulted in a Lm1.7 million saving in interest costs this year. S&P recently confirmed this rating, meaning this saving would be maintained but this situation could only be maintained if efficiency was improved. The ratings decision was also given in full view of the decision on the surcharge.

Dr Gatt pointed out that Enemalta was doing much to improve the environment, with the decision to use low sulphur fuel costing it an additional Lm9 annually.

It had also been decided that when the March 31 facility at Birzebbuga was closed down, petrol distribution facilities would be shifted to Corradino rather than to Has-Saptan as originally indicated.

An application had been made to Mepa for an upgrading and extension of the old facilities at Corradino and petrol and diesel distribution would be made from there.

Enemalta was at the same time still awaiting a Mepa permit to transfer its gas plant from Qajjenza to Benghajsa.

Touching on the oil prices, Dr Gatt insisted that comparisons should not be made with crude oil because what the corporation bought was fuel oil, and the price had doubled. That was the only reason why the surcharge had been increased.

And while some in industry were criticising the current price of thin fuel oil, they should remember that Enemalta had been heavily subsidising this product for many years.

Industry was also complaining about the compensation given to workers for the increase in the power tariffs, yet Enemalta was absorbing half the costs itself and the surcharge had been capped for large industrial concerns.

He said that while he understood protests by sectors whose prices were controlled, such as buses, he could not understand protests in a free market. Competing operators expected subsidies for the increase in the price of diesel. But it did not work like this.

Dr Gatt reiterated his view that oil hedging decisions should be taken by the experts without political interference.

Although it was true, as the leader of the opposition had said on Monday, that British Air and Lufthansa had saved money with hedging, so had Air Malta. What the leader of the opposition did not say was that both BA and Lufthansa had a fuel surcharge of €12 to €44. Air Malta had a surcharge of €16 on every ticket.

Turning to the cost of water and electricity, the minister tabled a study by KPMG comparing prices now and under Labour and insisted that prices were higher under Labour, especially when one factored in inflation over seven years.

It had been calculated that with the new surcharge, 48 per cent of account holders would not be paying more than Lm31 annually, 33 per cent would pay between Lm32 and Lm95 more, 15 per cent would pay from Lm95 to Lm200 more and the remaining 7,000 account holders would pay over Lm200 more.

Going back to parastatal companies, Dr Gatt said the government could not continue subsidising loss-making companies and those which were competing with the private sector.

It was for this reason that 11 government companies, including Kalaxlokk and Interprint, had been closed.

It was for this reason too that Sea Malta was sold to a reputable Italian shipping line and the freeport was transferred to the fifth biggest container shipping line. The government had also disposed of its shareholding in Middle Sea selling it to the biggest reinsurance company in the world.

Referring to the investment in Brindisi terminal, Dr Gatt said this was a good idea which turned bad and he was not blaming the Labour government, which launched it, or anybody else.

Earlier in the debate, Opposition energy spokesman Joe Mizzi insisted that the surge in power tariffs in Malta was not just a result of the rise in international oil prices.

Prices would have been lower had the government had a clear energy policy, if the power stations were more efficient and if Malta was more efficient in its oil purchases rather than having dumped hedging agreements started by the Labour government.

Speaking during the budget debate, Mr Mizzi said the Labour government had raised the tariffs in 1997 in order to get Enemalta on even keel after years of neglect. But once Labour left office, the inefficiencies at Enemalta were not addressed.

Mr Mizzi criticised the government for having no plans for the use of alternative energy. He said it should be mandatory for all new buildings to have solar heating, with adequate subsidy by the government. New buildings should also have wells, and energy saving bulbs should be used.

Furthermore, incentives should be in place to encourage heavy energy users to switch to night time operations, when demand was lower.

Mr Mizzi asked how the Malta Resources Authority was not involved in the revision of the power tariffs.

The new tariffs, he said, were higher than under Labour - from 5c4 per unit then to 7c per unit now.

Turning to Maltapost, Mr Mizzi said the opposition's criticism of the choice of strategic partner, New Zealand's Transend, had been proved correct and from an efficient operation, the postal service was now a farce. The government now wanted another strategic partner.

Concluding he referred to Maltacom privatisation plans, saying the company should be strengthened and jobs should be safeguarded.

Joseph Cuschieri (MLP) criticised successive Nationalist administrations for their handling of Air Malta and, particularly, the chairmanship of Joseph N. Tabone. He said very capable workers had ended up leaving the airline or been cast aside. He also complained of political patronage in the way appointments were made.

Mr Cuschieri said that the day of reckoning would come and justice would be done to those who had suffered.

He asked what was to become of the workers once Holiday Inn and Hal Ferh were sold.