Update 3: Surcharge to be announced tomorrow

(Adds GWU statement)

The new surcharge on power and water will be announced tomorrow and will apply up to the end of September or October when a new system of power tariffs will be introduced, Infrastructure Minister Austin Gatt told Parliament today.

He said that at current oil prices (and taking hedging into consideration), the surcharge should be 115 percent (from the current 50 percent). Without hedging, the surcharge would have been 160 percent.

Dr Gatt said the government was seeing how it could shoulder more of this burden through its subsidy to the corporation. It would announce tomorrow if the surcharge would be of 115 percent, or whether it could shoulder part of it for the next three months.

He said that in the three years 2005-2007 the government paid €72 million in subsidies to keep the surcharge as low as it could. This year alone it would pay €37 million. This, he said, was the people’s money which had to be found from somewhere.

Dr Gatt said work started in April on a new tariffs system to replace the surcharge, which had been a temporary measure. Although it had been hoped that the new system would be in place by the end of this month, its introduction had been delayed while further studies were made on its impact and how particular sectors could be assisted.

Dr Gatt warned that having a new tariffs system would not mean that any sector would be better off than the surcharge. High oil prices were a reality which could not be escaped. While some clamoured for a reduction in duties on fuel, the fact was that that duty too had to be recovered. One had to balance all sectoral interests and it was the national interest as a whole which had to be considered.

The government priority in drawing up the tariffs was to ensure that those with a low income could be helped to cope, that Enemalta did not sell power at less than production costs and that the tariffs were progressive and fair and promoted energy conservation.

The Labour Party in a statement said the government should not see the power tariffs and the surcharge as an accounting exercise.

In a statement, it said the movements in international oil prices did not only affect government finances, and measures taken by the government should not be aimed solely at balancing the government books but the needs of society as a whole.

Changes to the surcharge and the tariffs should stem from social realities, especially the needs of those with a low income.

The government also needed to keep in mind economic considerations, especially the impact of higher costs on SMEs and the people’s purchasing power.

The GWU insisted this afternoon that before announcing any increase in the power surcharge, the government should consult the social partners in the Malta Council for Economic and Social Development.

The GWU noted that according to press reports, the surcharge, currently at 50 percent, could rise to 75 percent or more and the tariffs may be revised.