Landmark decision on aviation fuel

The Appeals Board has overturned a decision taken by the Malta Resources Authority a year ago, and has concluding that Enemalta set an excessive price for the use of its aviation fuel storage tanks.

Shell, represented locally by Attard Services, was granted a licence in June 2004 to provide aviation fuel but has to use the storage tanks belonging to Enemalta, its competitor.

It had complained that the costs being charged by Enemalta were high and unjustified, but the MRA had ruled that this did not constitute a barrier to entry and therefore unfair competition. The MRA had noted that it could, however, only act within the parameters of its terms of reference and not those of the Competition Act.

Shell believes that the price should be around $8.25 per metric tonne while Enemalta was quoting $22.27.

The Appeals Board found in a decision last week that the price as quoted by Enemalta was prima facie excessive and abusive, and constitutes an entry barrier. It also said that the authority had failed to fulfil its duty to ensure interconnectivity of services and to ensure fair competition.

It went so far as to say that prima facie Enemalta's behaviour was a "constructive refusal to grant access", which constitutes a material illegality as well as a lack of reasonableness and proportionality in the authority's decision.

The board has directed the authority to instruct Enemalta to present segregated accounts within one month, which should show the true costs related to the infrastructure, with justification.

Within three months, the authority must establish a fair price for the operation, explaining its reasoning to Enemalta and Shell.

The next step would be for it or any financial or economic entity on its behalf to establish the pricing structure of aviation fuel operations - which will take another three months.

Once this has been done, Shell would be given a fair price, enabling it to become the second fuel handling operator at Malta International Airport.