Bill aims at updating Enemalta, WSC management set-up

The House of Representatives yesterday started debating a Bill which Investments Minister Austin Gatt said was aimed at making the management structures of Enemalta and the Water Services Corporation more efficient.

Opposition spokesman Joe Mizzi said that rather than making the two corporations more efficient, the Bill would enable the government to transfer profitable sections of Enemalta to people of its choosing, and it would also pave the way for higher electricity bills once the general election was past.

Dr Gatt said the aims of the Bill were threefold: To update definitions in the law in view of EU membership, to amend the Enemalta Act in view of market liberalisation and to modernise the structure of both corporations, particularly Enemalta, to make them more efficient and flexible.

The minister said the bottom line of both corporations was not just the financial, but also the provision of a quality service.

It was being laid down that Enemalta not only needed to be financially efficient, but it needed to be guided by the principles of energy conservation and energy efficiency. The same applied to the WSC, which was a major user of electricity.

The Bill better defined the role of the various members of the management structure, particularly at Enemalta. There had to be a better distinction between the board of directors and management. Up to a few years ago, Dr Gatt said, Enemalta did not have a CEO and a suitably qualified financial controller, and its financial office still had major shortcomings. There were also shortcomings with regard to corporate governance, internal audit and the IT office.

This Bill laid down that both corporations must have a policy- setting board of directors appointed by the government, a CEO appointed by the board with approval of the minister, and a Works Council to replace the worker-director.

Dr Gatt said that while there was a worker director at Enemalta, there was none at the WSC. The government felt this concept was past its time. The duty of every director was to promote and safeguard the interests of the company, and it was illegal for any director, even a worker-director, to reveal what was said in board meetings. And every director's first duty was towards the company.

The substitution of the worker director by a Works Council at Air Malta some years ago had been very successful for dialogue between workers and board.

Dr Gatt said that despite liberalisation, all existing Enemalta workers would continue to be employed by the corporation, if they so wished.

The minister said there were a few other relatively minor amendments. For example, the financial year would coincide with the calendar year. The objectives, duties and powers of Enemalta and the WSC were being updated to include the principles he had outlined. The corporations were being given greater flexibility to farm-out some of their activities. Enemalta and the WSC were being obliged to coordinate with other bodies before undertaking various works, such as when roads had to be disturbed.

The Bill laid down that product prices would be established by the Malta Resources Authority as the regulator of these sectors.

Procurement rules were being aligned with the public procurement regulations of the EU. Disposal of property was being aligned to the Disposal of Government Property Act.

The Bill also laid down the legal protocols relating to the relationship of Enemalta with the government and local councils on street lighting.

Dr Gatt said power and water prices would continue to be subsidised by the government and the level of that subsidy as well as the financing of future plant had an impact on the operation of both corporations.

There were challenges ahead, especially in the way competition could impinge on Enemalta and the need to invest in new, cleaner power generation plant.

The WSC had made significant progress, reducing the need for a government subsidy by half from Lm9.5 millon five years ago, and he was confident of further progress. He saw no reason why this success could not also be emulated by Enemalta. This Bill would make the progress of change easier, although it was people who were key to success.

Mr Mizzi asked why the government had waited so long to move these amendments relating to the EU.

Furthermore, some of these amendments were clearly aimed at thwarting MLP plans to reduce the surcharge once it was elected to government.

The process for the liberalisation of the energy market in the EU had been going since 1996. The government had committed itself to liberalise the fuel, gas and electricity sectors by 2004 but nothing had happened. Indeed, the government had hindered the process. So why was this Bill being moved now, on the eve of an election?

The people were promised that liberalisation would yield lower prices and better quality. They had got neither. Indeed, the government profited from the higher international oil price by slapping on higher customs duties.

The people knew that liberalisation under the PN meant that what was created by the government and the people would be transferred to blue eyed boys on the eve of an election and prices would actually go up, for private profit. Ministers had been approached by certain people with regard to the importation and distribution of fuels. That was why matters were now being rushed. The Competition Act would also be amended to benefit these people.

A Labour government was prepared to allow the private sector to import fuel, as long as there was fair competition, a level playing field and no job losses. It was unfair to argue that Enemalta had too big a market share. It had always put the people's interests first and never sought exaggerated profits. It, therefore, deserved to stay in the market, even if private sector competition was allowed.

The government was undermining Enemalta through a depletion of its main source of revenue, which was the importation of fuel, by allocating it to the private sector, leading to job losses at the corporation.

Mr Mizzi said he was challenging the government to table the unit cost of electricity since 2000 and the actual cost of sales. The same also applied to the cost and sale price of the various fuels. That way the people could see where their money went.

How would the Malta Resources Authority henceforth determine the cost of electricity?

The Bill was providing that the prices charged had to be adequate to cover operating expenses, debt servicing, periodic repayment of long-term indebtedness, the creation of reserves to finance a reasonable part of the cost of future expansion and the provision of a reasonable return on investment and expenditure. This clearly meant that next year, after the general election, power bills would rise substantially.

Were these conditions aimed at preventing Labour from reducing the surcharge, something it was still committed to do? It was also being laid down that there should not be undue preference between consumers. Did this mean that industry, for example, could not be given preferential rates to safeguard competitiveness and jobs?

This Bill also included a hidden tax in that those who did not pay their bills in time would be sued and would also have to pay a fine.

Intervening, Dr Gatt asked if Mr Mizzi was saying that Enemalta could not sue those who owed it money?

Continuing, Mr Mizzi said the government was continuing to slip on its promises. The building of sewage treatment plants and the transfer of the gas division at Birzebbuga were way behind schedule. And now the government was planning to transfer some of Enemalta's most profitable fuel installations to the private sector. This was unfair on the people. What the people wanted was not to see Enemalta divested of its role, but to become more efficient.

Turning to the Water Services Corporation, Mr Mizzi asked if water tariffs were also set to rise in order to fund the operation of the sewage treatment plants.

The people were wary of what happened in the past and would not be deceived, Mr Mizzi concluded.