Tuesday, 1st July 2008 - 18:05CET
Update 2: Power surcharge at 95%
(Adds MLP leader's reaction)
The power surcharge has been raised to 95 percent, the Infrastructure Ministry said this afternoon.
The surcharge was 50 percent for the past eight months.
The government in its statement said that the energy benefit currently enjoyed by low income people and the capping on the surcharge enjoyed by industry and hotels will be retained unchanged.
The government said it calculated that as a result of the new surcharge, 82 percent of Maltese households will see their bills rise by between €16 and €250 annually.
In its statement the government said that in the past three-and-a-half years the international price of oil had risen from $40 to $143 per barrel, an increase of 357%.
It explained that the cost of oil purchases by Enemalta rose from €93.3 million in financial year 2003/4 to €281.1 million in the past 15 months.
When the surcharge was established at 50%, the oil price $70 a barrel.
The new surcharge comes into force today and will be retained until new electricity tariffs are introduced in October or November. The new system will be discussed with the social partners, the ministry said.
Infrastructure Minister Austin Gatt told Parliament yesterday that after considering forward buying contracts which enabled Enemalta to buy oil at below market prices, the surcharge should be 115 percent, but the government had decided to ease the burden on consumers by increasing its own subsidy to Enemalta.
Speaking on the same day that international oil prices reached a record €143 per barrel, Dr Gatt said that without hedging, the surcharge would have been 160 percent.
He also pointed out 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.
MLP leader Joseph Muscat in a reaction to the increase in the surcharge said the government was looking at the issue of electricity solely as an accounting exercise. Apart from the impact on state finances, the government should have considered the social and economic impact.
Dr Muscat said the latest increase would be a blow to businesses, already reeling from the increase in fuel prices.
But the worst impact would be on the living standards of the people. Industrial competitiveness would also suffer.
The decision taken by the government, acting alone, was a millstone that would hold down society and Malta’s economic potential.
Dr Muscat said the MLP would be discussing alternatives to the government’s decisions.
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Comments
"If you are happy with the motorways in England which are not lit up, why don’t you go and live in England and let us live"
I'm sure that if the government will use alternate lighting for streets it will have a huge impact on our daily lives..NOT!! Don't we have common sense anymore, on a monday night at 3/4am how many cars are around? surley not as much as at 8am. It doesnt matter if oil prices are high or not, wasting resources is not benefitial. Let the lights on the weekend when people stay out late and there are more cars and save up energy on the rest of the week.
the Pn is in governemnt.. so he HAVE solve the problem. mux ha nigi jin intih is-soluzzjonijit. jin ma zattatx bix nidhol fil-politika! if Gonzi is the PM.. its his problem to solve it not mine. plus im not naiive. i know how things are better than you darling thank you! ;)
boycotted an alternative way of gaining energy from natural resources which actually led its inventor flee to Germany with it????
cancelled in its 100 days of government all energy subsidy schemes??????
It is true that the country is facing international problems but the government has to be practical rather than simply give the people news of ever-increasing fuel prices. Unfortunatley very few are aware of the government's taxation share in the price of oil. Apparently that surely is not the way to help and support self-employed and small business!!!!
I'm seriously considering implementing solar energy for my office. My calculations will not be based on the surcharge at 95%, but on a surcharge of 200%. I can bet a million that in 5 years time electricity will cost double, at least.
According to some Enemalta data, an solar panel installation of Lm7000 will generate an average of 22Kwh per day. I calculated that on average I consume 15kWh per day. At the current surcharge this will pay off in 14 years, but with higher surcharge it can pay off in 7 years or less.
Why isn't the government promoting solar energy ? Well very easy my friends... who is going to pay for the industry, hotels and the famous 30,000 households otherwise ?
Another myth:
The surcharge increasing from 50% to 95% does NOT mean a doubling in prices.
If you now pay a bill of €170
(€20 rent, €100 consumption of water and electricity, and €50 surcharge at 50%),
that bill will go up to €215 (€95 surcharge rather than €50),
which is a 26% increase.
Reading the comments here, you realize how many myths people labour under.
Alternative sources of energy still involve huge CAPITAL expenditure. They're not free at all. Wind energy costs MORE than energy from traditional sources. In future, we can perhaps buy electricity from the European grid. But that will only be cheaper if most European countries embrace NUCLEAR energy.
A basic law of economics is that COSTS CAN BE SHIFTED, BUT THEY CANNOT BE AVOIDED. The price of oil has more than doubled in the last year and a half. We cannot avoid paying the international price of oil. What we can do, however, is to import LESS oil. But that can only happen if we are paying our W&E bills at what they actually cost. Subsidies only mean that we import more oil products than we would otherwise do.
Hedging is no panacea for rising oil prices. No one is that stupid to sell oil at less than CURRENT prices. What one can do is to buy in advance at current prices. Then, if prices rise, one would be buying at the previously agreed price. If we hedge today, we will still be paying at today's prices.
If you are happy with the motorways in England which are not lit up, why don’t you go and live in England and let us live. Nowadays you can easily work and live in the UK, as we form part of the EU, not as we were in the seventies, considered by the British as third country citizens.
In the seventies we were obliged to live with alternate street lighting switched off because our labour government was a stingy government. I do not know if you actually lived through those horrible times.
@ Michael Debono and C. Catania
I must ask the same question that I asked yesterday. How can some of you (labourites) be so unbelievably naive? Instead, can you enlighten us with some alternatives that both of you or your party have to solve this international crisis? Because after all this is an international crisis and not a national one like that created by the Alfred Sant and his labour government in 1996.
I JUST CAN'T AGREE MORE WITH YOU MATE!!! :) where are the finanzi fis-sod that Dr.Gonzi promised us? Why did the PN talked about this situation NOW when he knew about this ages ago ??.... Oh yeah I forgot 3 months ago there was the election ux.. would have lost them votes. Issa hi PN supporters. ..bir-rispett kollu lejkom ... oqodu hallsu l-kontijiet wara li xejjirtu l-bnadar. Il-kanna li ha nehlu ahna li ma vvutajniex PN ukol maghkom. m'hemmx x'taghmel!
@ E Azzopardi. Further to your comment. There are 30000 households which are going to be exempt from paying the surcharge.
What the rest of us, who will be paying their bills would like to know is:
What is their energy and water consumption per occupant?
Are all occupants of these households unemployed and do not have another source of income?
How many have bothered to change to energy saving light bulbs?
What are their weekly expenditures on tobacco, alcohol and lottery tickets?
Do any of the occupants own a car and what type, age and fuel consumption figures does it have?
How many of these households have an airconditioner and more than one TV set?
Do members of these households go abroad more than once every 4 years?
None of the household members have a mobile phone?
I could go on and on. Some of this stuff can be easily checked out by legal Big Brother 'Orwellian' technology. Other information can be done by spot check sampling.
Dr Austin Gatt, show us we are not working for social parasites and many will stop moaning.
Let me remind you that the proof of the pudding is in the eating.
The way we were going to be i cannot tell you and neither you can tell . The only certainty we have is what we are in, and let me tell you it is nothing we were promised and what people were led to beleive. Remember to judge by the actions and not words!
The clamour about this surcharge is typical of the Maltese population which where all grown up with a nanny state mentality. In most developed countries not the government controls either electricity or water and this service are provided by companies which set their tariffs according to market prices and clients can choose from different providers. Yes everywhere prices are rising steeply. The point that I would like to make is that the idea of a surcharge is a non starter as users should pay on going market rates, which fluctuate up or down (generally speaking usually upwards). I do not know of ay country is the EU where water rates or electricity rates are subsidised by governement .
Finally at the end of the day we should pay for what we use, the less we use the less we pay and vice versa irrelevant of surcharge or not.
1) Surcharge by half (and than we will see from where we get the rest to make up for it!)
2) We would have our oil - remember Hon Joe Mizzi's statement?
Kemm jien cuc ghax ma vvutajtx il-Labour!
By the way I am ready to give my 5 energy saving bulbs to anyone. I did not wait for the government to help me out, I've been using them for years now saving on my pockets. Even the solar water heater it does work well on your pockets especially now - so be positive and ACT !
It would be very interesting to know who apart from the very low paid earner is exempt from this tax.
Do members of Parliament pay this tax? If not, what other perks these elite few get?
In most countries in the EU, the prices increase of fuel is cushioned by the fact that salaries are much larger then those in Malta;
Here we have no cushion left - you work to pay the bills.
Also one has to remember that we are not only going to pay more on surcharge, but also on everything else as these irresponsible measure have a ripple effect on the economy. Finanzi fis-Sod....LOL.....What about our salaries? It seems like that now we have to struggle to cope with bills and since the purchasing power is being diminished at such a fast rate due to price hikes on practically everything.
Dear GonziPN, thanks for giving us the opportunity to live on much lower standards of living.
Where are DCG and ABC... the oracles?
We have to take this opportunity to think seriously for such alternative solutions and not when it's too late and avoiding the 50 forthcoming nightmare years resulting due to global warming.
TONY FORMOSA
TONY FORMOSA
It is then that they will start acting responsibly.
There is no excuses for such issue. 20 years ago the government should ave invested in other energy sources. I remember back then that when oil was mentioned for Delimara it was already an unacceptable concept for many people as fossil fuels were being phased out in other European countries.
The government should now seriously invest in other means of energy as the price of oil will continue to rise and rise if this is the excuse. What is the next step? Earn wages just to pay bills?
I would have expected that with this increase in surcharge the government issues a project plan for greener energy sources.
What a great pity that the MLP was not even perspicaious enough to change its leadersip at the opportune time so as to provide us with an electable team that, hopefully, would have provided us with a cheaper solution to the rising cost of energy, something which the rest of the world has not achived!
I have just received a bottle of fuel as a birthday present from my wife.
Her birthday is in March. Would it be a good idea I give her a necklace made of macaroni as her birthday present? LAMO
Food prices are getting sky high. Now its time to pay for the false luxury we been living for many years. Or most probably we will immigrate to live in Africa!!
How worse would the government's finances be if the surcharge was cut in half? Where was Dr. Sant getting the rest from?
One has to remember that the surcharge is NOT a tax. It is simply to meet the price of oil which is not Malta made but imported. Even with the surcharge, there is still a shortfall which the government coughs up in subsidy to Enemalta.
So, if the surcharge was cut in half, the rest would have had to come from TAXES. If taxes were raised no one had a choice but pay. With a surcharge or increased tarrifs, user pays. Switch off and pay less. The consumer will have a choice of conserving energy. Pretending (through subsidies) that oil costs less would spur consumption rather than curtail it.
With all the rethoric by various contributors here, it would be quite interesting to see how much less power will be consumed in the next three months compared to the same months last year. Since many say that they would not afford to turn on their air conditioners and other power hungry appliances the consumption should go down by a third.
We shall wait and see.
You have to take into account the high cost of initial capital outlay together with the lifetime of the equipment and the maintenance costs!
Nearly all head of departments have funds allocated to purchase luxury cars for their personal use, In my opinion these funds should be used to install photovoltaic panels, instead of throwing away taxpayers money. If the current administration wants to be credible they should set the example. Maltese citizens are finding it quite hard to make ends meet, therefore privileges that high level civil servants enjoy must be abolished. Besides infrastructure projects the government is planning must be stopped. Currently the country can't afford them, funds allocated on these projects should be used to reduce the surcharge.
The wind farms the administration is so keen about will take a decade to be functional, action is needed NOW because the situation will become unsustainable very soon, a further increase in the surcharge would make it impossible for the low and middle class to carry the burden.
One practical and simple example of using solar is air conditioning. We need to cool our rooms when it is hottest: ie. during summer, when our islands are drenched in sunlight. Why don't we apply PV installations so that when there is most heat/sunlight, we get more juice for our AC units? Mater Dei, for example, has a large roof surface area for PV.
What are we waiting for? Let's invest in these technologies... they are no longer an option, but they HAVE to be our future!
Oh, and let's stop grumbling about rising electricity prices. It may be the thing we need to stop acting like spoilt brats. The honeymoon energy period for mankind is over - and we have tools at our disposal.
@Dr. Gonzi: We who live on the geographical periphery of the island are subsidising (through the petrol and diesel tax) those who have a shorter trip to work immaterial whether we drive it or bus it. I know this is a difficult one, but....Another one: Can we have LPG gas for our cars like the rest of the world? Its cheaper and cleaner.
We need to put our brains together and act fast to start a national project in generating alternative energy. Presently we are miles behind all other eu states. No more time wasting,lets act now before its too late.
I reiterate what I said before. We never manage to see beyond our shores. True 20 years ago the cost of alternative energy was too costly however we could have planned to minimise our dependence on fossil fuel. Examples: A good public transport system i.e. less cars on our roads, guidelines to build homes more energy efficient i.e. lesser use of heating and cooling, better water and electricity distribution systems i.e. minimum losses in distribution etc..
Setting up a national strategy requires people to have a vision of what the future world will be in 20 years time. These so-called experts should have easily anticipated the improvement in the Chinese and Indian Economies which are putting so much pressure on the rest of the world. After all, taking India as an example - in the early 70's they had the vision to be world leaders in IT. They succeeded. We're only just starting!
Well said Kevin.
What alarms me, is the island is expanding two quickly whilst an aging energy infrastructure will eventually brake down or will run at minimum inefficiency and burn Euro's up it's chimney.
There is no short fix for Malta's energy dillema, that does not require massive infrastructure costs.
I think the way to start is for Malta ship builders to work with civil engineers to build wind turbines and situate them on Dingli cliffs. They may look ugly, although i find them interesting
and sleep well that they are providing energy.
What with Enemalta's financial position, any funding should try to be obtained via EU.
I wish you luck,
If the PN did this 3 months ago, do you think they owuld win the election?
They knew well enough that the prices of oil was going up ; So why did they not do this?
ONE ANSWER:-
It is a party which deceived people. You only need to have a look at the way they managed the JPO affair to understand their deceipt.
GONZIPN = serhan tal-mohh, bil-but vojt
Well spoken and well said!!!
It seems that people don't realise that we still have to pay for the cost of energy directly or indirectly no matter what percentage the surcharge maybe. I prefer to pay directly for my consumption and not indirectly from my income tax. In other words I prefer to be let in control of my expenditure than having the goverment do it for me.
Had AS been elected PM he would have halfed the surcharge as promised but then he would have definitely increased water and electricity rates. And what do you think all Labour supporters would have said to this rise - "heqq, ghax iz-zejt gholla barra minn Malta". All of a sudden they all become international oil analysts.
You have all been taken for another expensive ride.
What is the situation regarding the Government finances?
Lies and lies and lies and lies.
Year after year, we have been hearing of the Government’s commitment in investing into alternative energy. Where did all those millions in each and every budget go?
Now enjoy the repercussions, while in the meantime all those that voted Labour are thanking God that PN inherited their own DISASTER in all spheres of the economy, from the 3.250 billion in National Debt, to the millions owed by Enemalta, and the millions unpaid for medicine imported directly + those owed to the importers?
Ziedu l-pagi sew, ghax ser toqtlu n-nies bil-guh!
Fejn huma l-pagi bhall ta’ barra, Dr. Eddie Fenech Adami?
Besides, with the dollar being so weak against the Euro how much are we paying in reality?
Considering the crises we are facing, wouldn't it be better if the goverment lessened the burden on all businesses by having them pay the domestic rate rather than the industrial rate.
Now seems that this plan was the nationalist's! Yesterday in parliament minister Austin Gatt already told us to be prepared.
Finanzi fis-sod my foot! At least we will have the promised TAX CUTS in the next budget!! (Imla rasek Dave!)
Yes I fully agree with your comment...we Maltese should serve as a case study for dementia..take taxes...so the government milks me for 4 years and then in the year prior to the election wonder of wonders he decides to lower tax rates etc....MY FOOT WOULD I VOTE HIM but guess this is not what most seem to think...
Take for example Noel Cutajar's comment and you will immediately realise how poor these people mentality is. The only thing that he was capable of doing in his comments was to try and make fun of the PM.
What would have done A.Sant with oil price 140 $. ? Do not forget that when A.Sant was PM oil was at 12 $ a barrel.
yeah right...and I am sure that Dr Sant's policy would have ended the spiraling international prices of oil.
Regardless of how we consumers pay for our energy, we will end up paying for it either through indirect taxation or directly, or a combination of both. Stop bragging and accept reality.
Let me explain what i beleive, which is also very simple. The present goverment about 3 months ago promised all the good on earth irrespective of if it could be sustainable or not. Now 3 months later we are in serious trouble, perhaps it is not all the goverments fault but at least a good part of it is. Then we have the next 3 to 4 years which will be tough for all the working class people since we are being faced on daily basis with price increases across the board. Then within a year from the next general election all will once again start to get better, prices will start to stabilise , so on and so forth. Simple it is the same procedure adopted over the past 20 years and in some 3 elections.
Trade Unions???????Time of Talks finished!!
The arab and some african & south american countries got oil and there is a demand. They see the European people and the americans who are rich compared to them and they push up the prices.
EU is also pushing for measures against climate change by introducing renewables that are costlier than fuel but in the longer time it is good for the environment. Malta is also introducing these ideas. Hence the price of electricity must go up. Who pollutes must pay!
Who said Hedging was gambling and not ethical? Where is Profs. Josef Bonnici now, he was so much against Hedging Agrements, what is his opinion now?
I think its about time that the journalists in this country DID THEIR JOB AS JOURNALISTS rather than simply act as reporters, and instead of just quoting what they are told, they investigate to check the facts and confront those who do not state the truth.
The last time the price of oil was at $70 was in SEPTEMBER 2007 !!! Way before the surcharge was set at 50% !! The statement by Dr. Gatt should have read : "When the surcharge was established at 50%, the oil price was not the deciding factor: the approaching election was!!!
Now, if someone distorts or hides the truth, what is he doing ? What do we call him ? Seems like its becoming a contagious virus !!!
1.storing rainwater rather than use electricity in RO plants.
2 Wind farms
3 Photovoltiacs in every household
4 Producing hydrogen from water using photovoltiac cells.
Come on guys do some more brainstorming rather than Gonzi bashing. It is more fun and creative.
Just to remind one and all that the Water and Electricity rates combined with 50% Surcharge that we had until yesterday, were cheaper than those imposed on us sixteen years ago, when Alfred Sant was Prime Minister of Malta and the price of oil was a mere $12 per barrel. Now oil costs $143 per barrel. Think about that.
In ALL EU TRADE UNIONS ALL GOING IN THE ROADS ECC....
AND IN MALTA...................??
I v been trying to be proactive all my life but now I`m fed up of being taken for a ride by these amateur politicians and fed up of a high percentage of Maltese treating political parties like football teams.
Rather than rolling up my sleeves I am seriously thinking of permanently
leaving this corrupt and Gahan land for good.
Government taxes should be used to subsidize health care, education, the young and the infirm and the needy not oil prices.
Our electricity demand has been going up at an unsustainable rate of 8% per annum with great detriment to the environment. .
I do not want a return to the draconian Mintoffian measures of the 70's when oil prices had exploded. However we can all cut down substantially on the use of these polluting resources.
We should learn to leave the car at home, and walk and use the buses more. We should , waste less energy by insulating our buildings better, installing alternative sources of energy,
and cutting down on the use of airconditioners.
This price hike is a blessing in disguise for the environment in that like smoking taxes it will hit people in the only way they understand namely their pocket
The minister is wrong with his calculations and past oil prices.
When the surcharge was first introduced it was 84%. The oil price was betwenn 60-70dollar per barrel. In December 07 the oil price was 110 dollar a barrel and the surcharge was 50%. Now the oil is 140 dollar per barrel and he calculated the surcharge for 95%.
Poplu ma ndinatux li qed jidhku bina. Tal_PN ma tistax tafdhom
But it is also true that this government has been in power for the last 20 years and finally it should be responsible enough to explain to the citizens of this country why nothing has been done in these 20 years to start investing in alternative sources of energy.
Today all the maltese are going to pay a surcharge of 95% due to the gross negligence and incompetence of various PN administrations.
It is highly unethical and irrisponsible to state that the surcharge has to increase as oil prices are increasing without admitting that you failed to invest in alternative sources of energy.
Show us the formula!
Come out with it, chickens!
What have you got to hide?
Try doing this sort of thing in another EU country!
Faqqalna ghax hekk niehdu gost - SWAT.
Incidentally, anyone has any idea of what's brewing for the coming budget? One suggests a weekly increase of 30 Euros, halli nigu fejn konna!
They promise a lot, they deliver very little, and when things go wrong, there is always a plausible excuse for their failures!
20 years ago alternative energy sources were still in their infancy and very expensive. It would have been foolish to invest then. Oil was very cheap - by today's standards. Also, with powercuts almost every week - if not every day - Malta desperately needed a new power station if it was to progress to where we are today.
@everyone:
Why keep blaming the Government? Is it Government's fault that the international scene has changed dramatically over the last 20 years? I don't think so. Please stop politicising the issue and view the situation from a realistic lens.
PS: wara kullhadd gharef.
So how come AS could not half it and in the same calendar year the PN Can?
Please enlighten me
Countries in the EU utilize for e.g. wind driven turbines or sea turbines which supply demands far greater than Malta s. In such a small country everything is possible (pun intended).
For me there`s simply no excuse.
If we had Sant we were going to end up like when VAT was removed , so we did not trust him.
This was not a GonziPn creation he would rather leave things as they were .
If the MLP knew about the prices we were going to face before the elections , it only shows what an irresponsible bunch of yes men they were when they supported Sant's off the cuff proposal.
No yupps from my side.
Before the election GonziPN always insisted that the surcharge should remain and be maintained to reflect fuel prices. In fact they criticised Sant who promised that the surcharge would be halfed. Sant's promise was also criticised by AD.
I agree entirely with your statements apart from one of them..
it is not the low income earners who are going to suffer the most... low income earners have energy benefits which allows the government to bear part of the burden.... it is the middle income earners who will suffer the most.. wage earners mainly...
the high income earners will not really suffer that much what is a max of 250EUR per year for one who earns thousands and in the case of business the increase is passed to the consumer.
Now bread will increase, milk, all services etc etc
I just hope that this is surcharge really reflects the increase in oil prices and not the inefficient operation of enemalta or else is the result of wrong choices made in the past..
I hope one day we will grow up and tackle problems as one whole nation without seeing blue or red. Let's try to learn from our European counterparts and neighbouring mediterrenean countries. We can start by asking all civil servants not to use government leased cars to go to work. Perhaps one option could be for the government to reduce it's tax on fuel and alternatively invest or give incentives for solar water heaters or photocells.
We only need to take a look back in recent history to learn that by politicising national issues, the whole nation stands to lose. I think that all political and social forces should sit down together and work as one to come up with a national emergency plan. Let's not forget that with these measures those that will suffer most are the low income earners.
1. How come there was no mention on this before the election? The oil prices were already going up at this time....
2. How come Malta, unlike many EU countries, has not invested in any alternative energy supply? Only promises, but nothing ever happens.
3. How efficient is electricity production in our power stations when compared to EU countries?
4. How come we are still reliant on Marsa Power station, when about 20 years ago M'Xlokk powerstation (which should be a more efficient plant - as it is newer), was supposed to replace it.
now it is up to me and you to pick up the pieces ...
A chain reaction on all items.
How would the pensioners cope,
Are we getting an other garantee on Price Clamp down?
Weldone to all that trusted you. Yupp GonziPN.
Toni