Thursday, 30th October 2008
New utility rates
Worried companies forecast dwindling cash flows
ST Microelectronics will see water and electricity costs go up by a staggering €3 million each year - industry sources
Commercial companies are already seeing next year's cash flow dwindling as they calculate the cost of the new water and electricity tariffs.
Farsons will have to fork out "hundreds of thousands of euro", its chief executive officer Louis Farrugia, said. "We will have to make savings in other areas because we cannot put our prices up due to competition," he said.
Asked whether this would mean job cuts, Mr Farrugia said Farsons had a policy of reducing numbers but was doing this through early retirement schemes.
Industry sources said ST Microelectronics will see its water and electricity costs go up by a staggering €3 million each year, not including the secondary effects of higher water and electricity bills.
Joinwell managing director Martin Galea said the company's bills will shoot up by 60 per cent and the general secretary of the Union Ħaddiema Magħqudin, Gejtu Vella said Malta Freeport will see its annual costs rise by about €2.5 million - a figure that was neither confirmed nor denied by the company.
However, Finance Minister Tonio Fenech said the government did not think the Freeport was in an uncompetitive situation that should threaten jobs.
He said ST was the only company that would be impacted to the tune of millions of euro and this blow had been significantly reduced with the revised tariffs.
According to the Malta Hotels and Restaurants Association, hotels will be paying a total of €5 million more on electricity bills over the next five years, with the cost being mainly absorbed by the larger hotels.
The MHRA said any increase in costs would be difficult to sustain in the present scenario, which was seeing the industry bracing itself for a downturn due to reducing traveller numbers.
It noted that the final tariffs reduced the impact of the original proposals on hotels, which would have meant an increase of 56 per cent in their utility bills, making their operation unsustainable.
The revised proposals meant hotels will have to fork out an extra 12 per cent for their water and electricity next year and a further seven per cent in 2010 and 2011.
The association said the higher-rated properties will be seeing their bills go up by up to 20 per cent and the smaller and lower-rated properties will be making savings of up to 20 per cent in the first year.
While not agreeing with the backdating of the new tariffs, Mr Farrugia said some of the employers' arguments had been accepted by government.
He pointed out that staggering the removal of the €50,000 surcharge capping for industry was necessary to give it time to introduce energy-saving measures and take advantage of any incentives to use alternative energy sources.
Mr Fenech expressed his belief that employers appreciated the changes made by the government to limit the increase in energy bills to 40 per cent in the first year for companies that used to enjoy capping.
The Chamber for Small and Medium Enterprises - GRTU slammed the tariffs, saying the rates will create hardships for business and pledged to take the necessary measures to safeguard its members, including taking the issue to the European Commission.
The GRTU had made it clear from the beginning it was against small businesses carrying the burden of staggering the removal of the capping over three years.
RSS
Comments
Yes there is a very good reason why the Maltese should not pay for energy like the rest of Europe, BECAUSE OUR WAGES ARE NOT THE SAME AS THE REST OF EUROPE,THAT'S WHY.
These are some reasons why we shouldn’t pay the energy in line like the rest of most European countries:
1. Because our wages are not in line with European countries.
2. Our economy depends from the manufacture industry and tourism, and these need a good lift to continue operating in Malta.
3. And foremost because before last March it was said that we have Finanzi fi- sod and Par Idejn Sodi that are ready to continue governing this country.
4. Also before March 2008 we were promised that fuel surcharge will vary with oil price.
But now seems all that meant to be fi-sod is rotten, because we are far away from a General Election. Now we are facing a bulldozer Government that is rolling over the Maltese families without Kuxjenza Socjali.
if this won't be enough these will close or shift business to another money wise cheaper country.Industrial/ommercial investment will stall and stalled completely.
Jobless workers and their families aren't the only ones who suffer , we are a chain , once a loop weakens all the chain is useless.All the economy suffers , less money in hand , no broadband , mobile telephony will be used for bare necessity , clothes , shoes , new tv's , mobiles , computers aren't bought if older ones are still ok / working , etc , etc .The reduction in sales both services and goods will result in more redundancies .By the way the government won't get taxes from jobless , on the contrary he has to maintain these people.
A MINOR increase in my household so to cover a bit companies expenses, thus safeguarding jobs is accepted - but not exurbitating increases though.
Nigel , Karl - if people get jobless as described above whatever is your job , you will feel the effect too , nobody is immune to these things.
If Enemalta needs to be privatised get an extension from EU for its privatisation deadline , the present times are the chance to get it.
Companies forecast profits , if they forecast a 500,000 Euro profit , and they get 499,990 Euro profits , these take measures since they aren't going that much good ( with a profit of 499,990 Euro ! ).
So imagine with a higher utilities bill , finished product will end at a higher cost and less profits !, and with Globalisation this isn't feasable due to high competition.This will result with direct reduction of costs by redunding employees ( since this is their ONLY expense which can be easily controlled ) ,
continues...
U lanqas il-bolla balla.
Karl Abela
The Gonzipn Government is doing this because the eu is breathing down Gonzi's neck to balance everything and the eu dictators do not care a hoot about the hardships they are going to cause to the people.