Competition for Enemalta

Enemalta Corporation is set to face competition after two licences were issued to private companies authorising them to import, store and distribute fuel.

Following the full liberalisation of the sector more than a year ago, the Malta Resources Authority received and approved three applications, according to sources close to the Environment Ministry.

Apart from Enemalta, which obtained a licence under the liberalised regime, MRA also gave the green light to two new companies: Fuel Energy Limited, a subsidiary of Falzon Group of Companies which has been connected with the fuel business for over 50 years; and to Island Petroleum Services Limited, a subsidiary of the Virtu' Group, operators of the catamaran service between Sicily and Malta.

It is not yet known in which fuel sector the two companies will compete with Enemalta.

Currently all fuel imports, from diesel to LRP to aviation fuel, are imported directly by Enemalta.

The two new companies may now start importing fuel independently and offer it at different rates to petrol stations and other distributors leading to more competition.

The sources said: "The private operators need time to adapt to the new business environment. The regulations and conditions attached to the operating licences are designed to allow for an orderly transition between a single-operator market to a multi-operator market. It is understood that the new operators are gearing up for their new operations."

Describing the granting of these licences as another step towards the dismantling of monopolies, the sources said: "MRA is expecting that as a result of liberalisation, competition is created, potentially leading to an upgrading of standards, not least in quality of the fuel and service, price and safety in operations".

Under the Accession Treaty, the importation of fuel was supposed to be fully liberalised by the beginning of 2006. Despite its commitments, Malta delayed opening up the market, prompting the EU executive to start legal proceedings. At that stage, the government adopted a new energy market policy and opened it up for competition in October 2007.

Fuel importation was liberalised in Malta the 1970s before the Labour government at the time nationalised the sector.