Government spending Lm20m on power surcharge

Public Investments Minister Austin Gatt said yesterday that the government would have spent Lm20 million by the end of this year to fund part of the surcharge on electricity.

Should all the surcharge be transferred to consumers, it would rise from the current 52 per cent to 82 per cent, Dr Gatt said.

Reacting in Parliament to comments made on Tuesday by Labour MP Joe Mizzi during the debate on a Bill amending laws on energy resources Dr Gatt said that if elected, Labour would need to find a further Lm25 million if it was to remove the surcharge from electricity bills, as Dr Sant promised in June. And if the surcharge was to be halved, Lm12.5 million would have to be found in addition to the Lm20 million already being spent by the government.

Such funds had to come from recurrent expenditure because in terms of EU rules they could not be reduced from capital outlay, Dr Gatt stressed. So what Labour say where the money would come from?

He insisted that the surcharge formula was based solely on the difference in oil prices since the surcharge was introduced in 2004. The government and Enemalta were taking every possible measure, including hedging and forward buying, to keep the oil imports bill low, but the trend was still upwards and oil prices were expected to continue to rise next year.

Dr Gatt said he was confused by comments by Mr Mizzi that he agreed with the liberalisation of fuel imports but Enemalta should remain a player in the market.

Malta, he said, had been obliged, following EU membership, to liberalise the importation and distribution of fuel and gas and the production of electricity. That process had now been competed and anybody could apply to import fuel or gas or produce electricity. But it appeared that Mr Mizzi was confusing liberalisation with privatisation. The process for the privatisation of Enemalta's fuel storage facilities and the gas division was currently in train. The MLP should be clear if it was against privatisation, but the government felt its companies should not be competing with the private sector.

Furthermore, Dr Gatt said, he could not see how Mr Mizzi could claim to know who would be awarded the contracts, when a call for tenders had not even been made. The Labour MP needed to back his claims by coming up with names. He had said government entities were ending up in the hands of a few contractors. Yet Mid-Med Bank was sold to HSBC, the Freeport went to the third biggest shipping company, Maltacom went to major investors from Dubai, Tug Malta went to one of the oldest Italian tug companies, Maltapost was sold to a long established Maltese bank and the airport was sold to a leading Austrian company. So where were the local contractors?

Mr Mizzi had also read parts of the Bill on the components of the Enemalta billing structure and claimed this would lead to power bills rising after the elections. Yet this part of the Bill was copied, word for word, from the original Enemalta Corporation Act of 1973, Dr Gatt said. It was worth recalling, however, that in the original law, Enemalta was prohibited from making a loss, a clause which this government had removed.

It was also not true that excise duties had raised fuel prices. The excise duties had substituted other taxes and prices did not rise by one cent as a result.

This Bill, Dr Gatt concluded, was aimed solely as making Enemalta and the Water Services Corporation more efficient in order to better meet the challenges of the modern world.

The Bill was then given a second reading.

Michael Asciak (PN), who spoke on Tuesday, said the aim of the Bill was to raise efficiency at Enemalta and the Water Services Corporation, two key corporations for the country.

Unfortunately in its arguments the MLP was showing it had not realised that Malta was now in the EU and had to follow EU rules and practices.

That the liberalisation of fuel imports and distribution was about to start was also thanks to EU membership.

The Opposition often hit out at the government over the power surcharge, conveniently ignoring the fact that the government was actually subsidising the cost of electricity by 40 per cent and capping the surcharge to large industries and 30,000 low income families.

Labour had never said how it would do away with, or halve the surcharge. How would it get the money to cover the shortfall. Which programmes would suffer? Would students' stipends suffer, like they had the last time Labour was in government? Would it be the education sector, the environment or capital projects that would see money diverted from them to fund the shortfall from the surcharge. Or would Labour raise taxes?

Dr Asciak praised Enemalta and the WSC for progress they had made, the latter now providing a reliable water supply and having practically rid the beaches of sewage overflows. The power supply too was stable, but it was about time to look to alternative sources of energy, in the short term from the sun, and perhaps the wind.

The fact that Enemalta was thinking of closing the Marsa power station was good news for the residents of that area and others who suffered because of this.

Marie Louise Coleiro-Preca (MLP) asked what had become of Enemalta's and the WSC's corporate social responsibilities.

The Nationalists were making it seem that crises in petroleum prices had never occurred in the past, but anybody with a moderate memory could recall otherwise. Malta had always weathered such storms because some governments had been careful and planned for such eventualities.

The Nationalists had been in government for the past 20 years, but the Marsa power station was still operating in spite of the government's promises that it would close. Indeed, if the power station had been closed as promised, leaving it all up to Delimara, Malta would have been in darkness most of the time.

Ms Coleiro-Preca pledged that Labour would not resort to raising taxes to make good its electoral promises.

Solving the sewage problems in bathing areas was not something to boast about, as Dr Asciak had done. Labour governments had done this repeatedly, notably at St Paul's Bay in the 1970s. The EU's Foundation for Living Conditions had established some four years ago that benchmarks of people's livelihood included whether families could live and pay for basic utilities. Yet the Bill included no mention of the two corporations' corporate social responsibilities.

Opposition leader Alfred Sant had been right to demand that the government publish the true costings of fuel oil supplies. He had been speaking for Maltese families who had a right to know what they were paying through the nose for.

It was no use saying that the surcharge was being alleviated for certain families. Its excruciating effects were being felt by one and all. Were not government spokesmen being approached by business and family people alike?

Ms Coleiro-Preca referred to her statement last week which had been promptly replied to by the Ministry of Social Policy. Following the opposition's criticism over several months, particularly that the 13,000 relieved families were just the tip of the iceberg, the government had said the number would go up to 17,000. But this was still not enough: There were still several vulnerable groups to think of.

In January 2007 Minister Dolores Cristina and Parliamentary Secretary Tonio Fenech had spoken of 30,000 families, including the original 13,000, who would pay no surcharge. The method of sending vouchers to the most vulnerable was only helping to identify them, to their humiliation.

There were too many families who could not afford the surcharge without financial aid. And the surcharge was not their only problem.

Some professed budget incentives were not really such, she said. An example of this was the so-called incentives for the installation of solar heating equipment, which was certainly outside the financial possibilities of even small families with a minimum wage.