Updated: Muscat demands answers on utility tariffs
(Adds government reaction)
Opposition leader Joseph Muscat said this morning that the government should specify the oil prices on which its original and revised utility tariffs were based.
Speaking at a political conference in Kirkop, the Labour leader said the people would not be taken in by the small revision which the government made to its proposed tariffs last week.
What the people also wanted to know was whether or not the latest proposal was the final one. Infrastructure Minister Austin Gatt had declared that consultations on the tariffs were closed, but Parliamentary Secretary Chris Said, after a phone call from Dr Gonzi in China, had said that the tariffs were not written in stone. Would the real prime minister please stand up?
The people also wanted to know when fuel prices would go down, as was happening abroad, once oil prices were going down.
Dr Muscat said that at a time of financial and economic turmoil, the tariffs were the last thing that the economy and Maltese families needed. The government had declared that the international financial crisis had not hit Malta. But instead of enabling Maltese businesses to benefit from the situation, the government had created a crisis of its own in Malta.
Dr Muscat said that in the Budget, the government would be judged by what it did, and what it did not. The government would admit that it had not achieved its targets – which was not a surprise since those targets were unrealistic anyway. But it would be unacceptable for the government to blame its failure on circumstances abroad. The budget was prepared on the basis of the financial situation in the year up to September, and there was no crisis in 11 months of that period. What had happened was that in the run-up to the election, the government exceeded its spending projections by €70 million.
Dr Muscat said the government needed to present a budget which boosted the economy, put money in the people’s pockets and encouraged the nation. This was the time for tax cuts.
The Labour leader referred to the theft of 20,000 usernames and passwords from a MITTS server and said that since it was a policy decision which led to all this information being stored on one server, the IT minister should shoulder his responsibilities, more so when he had refused the resignation of the MITTS board.
The Infrastructure Ministry in a reaction to Dr Muscat’s comments on the power tariffs, said the Labour leader could not make himself out to be an authority on international oil prices and how they should be reflected in local tariffs when he had published a report in which he did not reveal his consultants and did not substantiate his findings.
The Labour leader’s comments earlier today showed that he had not even read the government documentation, the ministry said. The first proposed tariffs were based on the oil price in September and had therefore already factored in the drop in oil prices from earlier this year.
Following consultation in the MCESD, the government reduced its revenue projections by €50 million on the basis of an expectation that oil prices would continue to drop.
The government had also said that electricity tariffs would henceforth be revised every six months, except when fluctuations exceeded 15%, in which case revision would be immediate.
Popular Stories
Update 3: Woman found dead in car,...
Updated: Woman dies in car crash
Part of Dwejra 'Azure window' collapses
The end of the bar that ‘never closed’
Bundy does not know whether to...
This WAS the night - Kurt makes it...
Updated - Jason Micallef demands...
Petrol price up 6c
'No need for early election if PM's...
In Discussion
19 Comments
Post comment
Please sign in or create your Account to post comments.
C. Scerri
Oct 26th 2008, 22:41
Can someone tell Dr Joseph Muscat, that:
1. The usernames and passwords of 20000 persons were compromised and not stolen - passwords are encrypted and not even the systems administrator knows them. On the other hand, hacking software exists that records keystrokes and thus when one logs in, his/her password can be recorded. As it could not be ascertained how many passwords were in fact hacked, the decision was taken to change all.
2. With all the security in the world, humans remain the weakest link - in the UK an employee lost a whole disk full of personal data and income tax records of millions of people. Once a person got hold of an administrator username and password, then he/she can do anything he/she likes on a system
3. Usernames and passwords are kept on the server (though a number of backup copies usually exist) - so it was not a policy decision, but actually in built in the system(whatever system one is using - Unix, Windows etc.)
Marco Spiteri
Oct 26th 2008, 21:08
Of course the hedging agrement was done at a high price...otherwise why are Gonzi, fenech and gatt so quiet about it. The only thing they are not quiet about is how much each one of us has to sacrifice for their mistakes.
Tony Borg
Oct 26th 2008, 20:56
@ Joe Vella
I am no expert and for that matter no expert will guarantee you a future price for oil. If that was the case no one would hedge!!
I gave you a clear example of a company who has forseen that the prices of oil will be going down. If you dont believe me then check their website out.
To make a good deal out of hedging, you have to have the right people that know the market well and not those who rely on speculative pressures.
For most experts the price of oil at those levels were simply unsustainable and time have proven them right.
Noel Cutajar
Oct 26th 2008, 20:31
As P. Schembri said...everyone will have to pay the bills, unless you want to light your house with candles...
Joe Vella
Oct 26th 2008, 19:38
@ Tony Borg
Hedging is a double edge sword. Most analyst just a month ago were talking about a $200.00 a barrel before year end. No analyst had forseen that oil prices would go down so fast and to these levels. I would like you, or suggest to me anyone who would guarantee me what the opening price of oil would be on Thursday morning.
Joe Vella
Oct 26th 2008, 18:44
@ M. Buhagiar
Actually the price you quoted was the opening quote for the Dec./08 future, which closed at $64.75.
Open High Low Last Time Sett Chg Vol Sett OpInt
Dec 08 63.70 64.75 63.15 64.75 Oct 24, 17:49 64.15 -3.69 256890 67.84 332990
Joe Vella
Oct 26th 2008, 18:13
@ M. Buhagair
I believe what the Minister said that present petrol prices reflect the world's oil price of $85.00 range, at which the last batch of oil was purchased. .
P.Schembri
Oct 26th 2008, 17:24
@E. Formosa. Min ghalqilna halqna? La jasal il-kont hallsu maghna siehbi. One thing is for sure, Your Minister will shut your mouth too when the first bills with the new tariffs arrive. He ought to do the same himself. Don't promise anything you can keep. The oil is now below the $70 mark. Is the minister going to decrease the tariffs? Of course not. And if he does, it would be the card he played from the beginning, to make us think how kind he is.
Joseph Attard
Oct 26th 2008, 16:55
The options first presented by KPMG were based onthe average price of oil between 1st and 26th September 2008 as stated inthe KPMG report.
.At the time of writing I am not aware on what basis the sixth option presented last Thursday was based.
One thing is sure, The Government is making a mountain out of a mole. The problem is not the price of oil. That fluctuates and the public should be ready to take up that cost or albeit most of it, but the Public and the businesses and Industry should not be made to pay for inefficiences and unsustainable overheads and very bad long or short term investment.
Why did Enemalta obtain a Euro 210 loan in 2005 with a one time bullet repayment on 22nd June 2015? Can someone explain? DId we have any other loan options? Who made the choice? It is unfair for any one to be burdened with other then the realities of the price of oil.
Also to note is the way Government decides on certain issues before or after an election. In 2006 the Government (as reported by Deliotte Touche) agreed to subsidize the oil prices by 52%...........and why not anymore!
Tony Borg
Oct 26th 2008, 16:50
@ Edwin Formosa
Hedging is an excellent tool if used well. Our government does not hedge when prices are low and hedges when prices are high!!
Most probably you are going to tell me that no one predicted that the prices of oil will go down by the end of the year.
Sorry but you are wrong in this one. There were many experts who predicted that the price of oil will go down. Just one example, Ryanair did not hedge for Q4 period (i.e. the first 3 months of next year) since they predicted that the price of oil will go down. They were right and the Maltese government, unfortunately, was wrong again.
l Galea
Oct 26th 2008, 16:02
Charles J Buttigieg
First the Nationalist Government remove hedging because Prof Josef Bonnici said it was wrong.
Then the Nationalist Government woke up and realized that hedging was good.
However, the Nationalist Government seems to not get anything done correctly, because it hedged when the price was high not when it was down.
Now we are feeling the wrong decisions taken by the Nationalist Government as oil has dropped to between $61 and $65 a barrel and may still drop further and we still have to pay a higher price for it.
M.Buhagiar
Oct 26th 2008, 15:58
@Joe Vella
Kindly answer this question :
Was it or was it not that Minister Gatt who stated that if the oil price went down to 85$ , the Government would have reduced the surcharge!!
For the benefit of everyone the price of oil is 63$ a barrel so its a case that on hand says something and the other does another !!
So kindly Joe Vella stop all this rhetoric of yours to defend a Government which is frankly UNDIVENDABLE
Edwin Formosa
Oct 26th 2008, 15:08
Prosit Joe Vella. Ghalaqtilhom halqhom. Ghamlu s-snin iwersqu bil-hedging imma meta jaqbibillhom ma jsemmuhx. And yes ,the government should specify the oil prices on which its original and revised utility tariffs were based. But Muscat never demanded these answers from Sant.
Keith Davis
Oct 26th 2008, 15:01
Dearest Michael Fenech, unlike Canada and USA our energy prices are heavily subsidised and thats why our prices need to go nearest in line with the actual foreign fuel prices! With the current prices of oil at $70 a barrel the governement is still getting minus Eur7 million!!!
M.Buhagiar
Oct 26th 2008, 14:55
After listening to Joseph`s speech this morning , what impressed me most apart from the sense of leadership he inspires , Joseph is expressing the true feelings and concerns that the public in general from different spectrums of life are feeling be them Nationalist or Labour .
Also , what the article failed to mention is the thorough explanation that Charles Buhagiar and Joseph gave with regards to Gas Issue about the FROGA and spin that the PN in Government once again performed ,similar to the HSBC issue and even more.
No wonder that the MLP had every right in voting against !!
By the way. I am a resident from Birzebbuga and in these 20 years , the PN in Government has done.... NOTHING for Birzebbuga and its residents!!!!!
Joe Vella
Oct 26th 2008, 14:19
@ michael Fenech Petrol prices in Malta are adjusted every month and based on the average cost at which the oil was purchased. The Government announced that no increase in petrol is forseen in the next six months as this oil has already been brought. Michael Malta is not as privy as Canada is. Malta purchases its oil requirements most often up to six months ahead of time. Whereas in Canada, being a producing country, oil reaches the pumps within a few days of production. In Malta we don't don't experience the swing in oil prices at the pumps like Canada for the reasons just given. For a country, second only to Saudi Arabia in known reserves, I still think that petrol prices in Canada are still high at $0.85 a litre. I believe not too long ago prices were at approximately $1.35 a litre in Toronto.
Joe Vella
Oct 26th 2008, 14:08
@ Charles J. Buttigieg In hindsight everyone is smart. If I am not mistaken it was mentioned that the Government bought the last oil consigement for the next six month at a price between the $80.00 -$90.00 price range. At the time of the purchase the oil was being quoted on the NYMX at the $130.00 range, so I presume that it was purchased some time before. Hedging is like a double sided sword. I guess my question to you Charles is would you have bought it at $147.00 a barrel when analysts were saying that oil was going to hit $200.00. When the oil hit the high of $147.00 oil analysts were saying that in a month's time oil would hit $200.00. Then in a matter of a month oil dropped to below $70.00.
michael fenech
Oct 26th 2008, 12:58
All I would like to say that patrol prices here in Toronto Canada and the USA in the last 4 weeks went down 85c (Canadian) a gallon. How is it that in Malta the GOVERNMENT is so quick to push the price up but not down????????????????????
Charles J Buttigieg
Oct 26th 2008, 12:48
A gut feeling tells me that our ace economists misjudged the level of escalation in the cost of crude and hedged to a higher mark than the current price. In layman’s terms this means that after the hedging agreement we are paying much more than the market price. Can we have some answers?