Worried companies forecast dwindling cash flows

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.