New power tariffs 'threaten thousands of jobs' - FOI

The Federation of Industry warned this afternoon that government proposals for an increase in power and water tariffs, if pursued, will threaten thousands of jobs.

“The tariff increases proposed by Government are clearly not affordable at this stage. It is unacceptable that Government should present such a one-sided approach to policy formulation, which caters only for the immediate financial sustainability of utility providers and completely rescinds its obligations to the rest of the economy and society,” FOI Vice President Helga Ellul told a press conference.

The government two days ago presented the social partners with five options for a new system of tariffs for water and electricity consumption.

Mrs Ellul said all of the options were based on a fundamentally flawed approach to policy formulation which, if pursued, was bound to have severe adverse effects on economic activity in Malta.

“The financial position of Enemalta and the Water Services Corporation is imperiled not only by the increase in international oil prices, but also and perhaps more importantly, by decades of short-term oriented policies. In the Federation’s view, it can only be restored when and if the entire economy, including households and business, will be in a position to afford it,” Mrs Ellul said.

She complained that the FOI was never consulted during the compilation of the tariff models.

Furthermore, the new tariffs were introduced retroactively as from October 1

“This will create a sudden economic shock, which will directly affect the current and planned investment expansions decisions as well as general business confidence level in the economy.

“Clearly, we feel that there will be an impact on employment, as these proposed tariffs will threaten thousands of jobs. There will be an increase in inflation rates and slow down of the growth of the economy. Of course, due to fall in competitiveness, Malta’s ability to enhance exports and its capability to attract new investment will decrease” said Mrs Ellul.

The FOI position was endorsed by the Malta Chamber of Commerce and Enterprise. The press conference was attened by Chamber President Tancred Tabone.