Cynthia Busuttil
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.
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In Discussion
14 Comments
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michael fenech
Oct 30th 2008, 21:37
@CARLO DE AMICIS.
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.
P.Schembri
Oct 30th 2008, 17:05
@Carlo de Amicis. If we have your kind of salaries, we wouldn't mind paying the energy bills. But our salary is one-third yours. That's why it's very difficult for us to foot your kind of energy bills.
Andrew Cumbo
Oct 30th 2008, 17:04
@ carlo de amicis
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.
carlo de amicis
Oct 30th 2008, 15:50
Is there any particular reason why Maltese people and companies shouldn't pay the energy in line with the rest of most European countries?
Aldo Demanuele
Oct 30th 2008, 15:03
continued ....
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.
Aldo Demanuele
Oct 30th 2008, 15:02
The Government couldn't match a better time to increase the utility bills - when the world including Europe is in recession , well done ! Its already a problem with international /corporates trying to minimise costs and redunding employees due to present international situation.The utilties increase is the cherry on the cake, we already seen this locally , these last 2 weeks - and most probably more to come in next couple of months.
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...
Joe Bonello
Oct 30th 2008, 14:57
It seems that in the MCESD everybody is represented except the Taxpayer ! Nobody likes to pay his share for the increased cost of utility bills - and expect the tax payer to keep 'subsidising' . What are the Social Partners (all for their own reasons) expecting ? to subsidise ship owners (through Malta Freeport), to subsidise the tourists who visit us, to subsidise buyers of furniture ? to subsidise the electronics industry (through ST Microelectronics) ?
l Galea
Oct 30th 2008, 13:47
N Tabone
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.
Victor Calleja
Oct 30th 2008, 13:17
Who is the real prime minister, Lawrence Gonzi or Austin Gatt? One promises one thing while the other do exactly the opposite. Hawwadni ha nifhem.
N Tabone
Oct 30th 2008, 11:58
Jahasra Karl u Nigel mhux qed tifhmu li jekk ma thallsux is sussidji xorta ha tibilawha mod iehor ghax tridu thallsu ir relief tan nies li ha jispiccaw jobless! Il gvern anzi tigih aghar ghax lanqas income tax min dawn il haddiema ma jdahhal! Tafu jew ma tafux li 6% tal ekonimija maltija hija il manifattura, tafu jew ma tafux li il manifattura timpjega 23K ppl, tafu jew ma tafux li min dawn it 23K il gvern jigbor 2 billion taxxi! Ibqaw ghaddsu raskom fir ramel ghax hekk tafu tghamlu l-aqwa li naraw kollox blu u li jghid il PN kollu tajjeb! :) Jahasra what a sorry state we're in!
John Portelli
Oct 30th 2008, 11:45
Well the people of Malta voted for it and they got it, Enjoy
P.Schembri
Oct 30th 2008, 11:33
While I don't agree with any sort of subsidies, I think it's out of synch with the world's economy to take off the subsidies now. Hotels and the tourist sector employ many workers. Imagine what will happen to the country if these start losing their jobs. The hotel owners won't find it difficult to close shop, I'm sure they're well of entrepreneurs. But let's think about the workers. What will happen to them if they lose their jobs. If the government is doing this to get Lm55,000,000, then worse it could, if there 3,000 jobs lost? Ask yourself these questions and then talk. The tariffs can wait for a year or two, until we get out of this mess of a crisis.
Nigel Lawrence
Oct 30th 2008, 11:10
This list of increases in bills just shows how much John Citizen has been helping big biz with their profits
Karl Abela
Oct 30th 2008, 09:23
Its about time everyone is more independent. The government has subsidised everyone for far too long at the expense of those who are correct and pay their taxes as required.