Appeal over use of fuel storage plant

The Malta Resources Authority is today expected to hear an appeal by Shell over the use of Enemalta's storage facilities.

Shell, represented locally by Attard Services Ltd, was granted a licence in June 2004 to provide aviation fuel to Malta International Airport, competing with Enemalta, which until now has a monopoly on its supply. However, Shell is obliged to use Enemalta's storage, which it felt could lead to conflict of interest.

It had complained that the fees being charged by Enemalta were high and unjustified, a complaint that was shot down by the MRA which said this did not constitute a barrier to entry and therefore was not unfair competition. It did, however, note that there were a number of inefficiencies in Enemalta leading to the high prices, which it has instructed Enemalta to solve. It also noted that it could only act within the parameters of its terms of reference, and not those of the Competition Act.

Enemalta is quoting almost three times what Shell claims to be normal industry rates, according to the claim.

In its decision, MRA gave Shell and Enemalta four weeks in which to reach an agreement.

Contacted yesterday, Attard Services Ltd's managing director Kenneth Attard said the company has been in very protracted and frustrating negotiations with Enemalta for a long time. "We made a formal submission in February 2004 requesting the intervention of the Malta Resources Authority so that Shell could be treated equally to others in a fair, transparent and non-discriminatory way," Mr Attard said.

"We find ourselves having to negotiate with our competitor, with a licence in hand, but in any case unable to operate because there is no regulation in place, despite the fact that aviation fuel should have been liberalised in 2003 and the remaining fuels by January 2006.

"I am still hopeful that a solution will be forthcoming," Mr Attard said, declining to comment further as the matter remains under appeal.

The government is over two years late in formulating a policy for the liberalisation of fuel imports. It recently announced it would be starting a consultation process on the issue, in spite of a timetable agreed with the EU during accession negotiations held in 2002 preparing the various stages that should have led to a structured liberalisation by last Sunday.

The Minister for Resources and Infrastructure said in 2002 that the government was "committed to the liberalisation of the fuel sector at the earliest possible time and therefore was committed to a comprehensive policy formulation and implementation for the market's opening by 2005".

"It is estimated that, for the initial phase, access to the market will be regulated in order to ensure that security of supply on the market is ensured at all times, while a competitive market evolves. The policy document for liberalisation will be completed by December 2003," an EU document said.

The timetable set out that the policy would be adopted by June 2004 and industry would then be invited to express interest, with the licences to be issued in June 2005, followed by the issue of trading licences and start of operations by last December.

The policy was also meant to lay down the government's strategy for the operation of the available fuel storage facilities, now under the control of Enemalta.