Sunday, 16th November 2008
Enemalta admits €16m of losses are avoidable
Analysts believe figure is €27 million
* Figures confirmed by three independent analysts.
Enemalta has admitted for the first time that it is making avoidable losses of €16 million, though analysts believe the figure is actually much higher.
The social partners have been asking the government to quantify Enemalta's cost of inefficiency amid the controversy of the hike in electricity and water rates.
Though Enemalta confirmed its percentage of inefficiency to the social partners, it had failed to quantify it in terms of euro losses. These losses range from theft, to billing inaccuracies, to the inefficiency of the Marsa power station.
Figures compiled by The Sunday Times based on 2005 production figures - the last time the corporation's accounts were audited - show that the avoidable losses are actually closer to €27 million. This figure was confirmed by three independent analysts. The discrepancy arises because the estimates provided by Enemalta are not based on the production cost provided recently by the Prime Minister and the Infrastructure Minister.
They both said the cost of production per unit was 18c, whereas Enemalta is basing its figures on a cost of 10c8. A total of 2.26 billion units of electricity were generated in 2005.
These figures relating to inefficiencies do not take into account unavoidable losses, which account for six per cent of total units sent out to the grid. Were these to be included, the cost would rise to almost €30 million based on Enemalta's figures, and €50 million based on the figures compiled by The Sunday Times.
The Infrastructure Ministry said yesterday that the cost of inefficiencies should only take into account the seven per cent resulting from non-technical losses such as theft and billing system inaccuracies.
"The 2007 losses ought to be measured by what potential revenue the 13 per cent losses could have given Enemalta at the time had it indeed run at a 100 per cent efficiency level.
"At an average revenue rate of 10c8, the number of units lost, whether as a result of technical or non-technical losses, could have been sold for €29.8 million. Given that six of the 13 per cent are irreducible technical losses, the figure goes down to €16 million," the ministry said.
The ministry said it was reasonable to expect that "at current rates of improvement" unbilled units should be reduced to nine per cent - down from the current 13 per cent. This could be achieved through substantial investment, the ministry said. On this basis, estimates would reduce the cost of inefficiencies to €9.2 million.
The ministry said Enemalta had invested in the renewal of its distribution infrastructure and, with the Water Services Corporation, had signed an agreement with IBM for the replacement of meters.
Contacted yesterday, Labour leader Joseph Muscat, who was the first to mention the €50 million figure, stood by his claim. "They are evidently playing around with words and figures. I maintain that independent experts have conservatively estimated that Enemalta loses some €50 million a year through inefficiencies and theft," he said.
Dr Muscat pointed out that the KPMG report provided to MCESD partners before the revision of tariffs was based on unreliable figures provided by Enemalta. He insisted that the government also needs to explain why a state-owned corporation has failed to publish its audited accounts for three years.
Members of MCESD also cast doubt on the official figures regarding Enemalta's inefficiencies. Union Ħaddiema Magħqudin general secretary Gejtu Vella said: "We have long been hearing about Enemalta's inefficiencies but we were never given a true picture."
As one of the social partners involved in the consultation process leading up to the revision of utility tariffs, Mr Vella said that dialogue with the social partners was nothing more than a simulated exercise.
Malta Employers' Association president Pierre Fava was one of those who asked Infrastructure Minister Austin Gatt for an explanation of Enemalta's losses during an MCESD meeting.
"He was his usual abrupt self and told me that the details were in the report.
But they weren't," he said.
Mr Fava described the 13 per cent registered losses as excessive and said that one of the obvious issues which could be tackled at once was Enemalta's excessive workforce.
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Comments
The real inefficiency of Enemalta is not shown in the figures. It comes from having inefficient generating plant. Some of Marsa's turbines are over 50 years old. If Marsa power station was as efficient as Delimara the gain would be about 27 million euros a year as against 1.8 million eoros to non technical losses.
W & E meters are the most expensive meters in the whole wide world.
A fresh approach would be that new meters be installed and given free to each and single household or sold at a low price.
The consumer is given a key having a magnetic strip where the consumer can buy units of water and electricity from a registered shop (an ironmonger.)
The consumer would buy any amount of units that he desires He pays a small percentage to make up for the cost of meter and the installation if the meter is to be bought.
Once the consumer arrives at his residence he inserts the key in a special slot, pushes a button to transfer the units to the meter.
A quite neat and inexpensive way of providing this service.
I have seen this in London.
The bonus is that the consumers sees what he has bought.
The present system of water and electricity meter rental is outdated, inefficient, expensive and is not fair to the consumer.
Finally some truth is coming out in the open.
Why the records of 2006,2007 were not published?
It throws a dark shadow on Enemalta style of business management and the inept way that the Government has dealt with the situation.
And he wants us to make up for the gross inefficiences?
Treat us with respect and you get the same treatment.
Theft is a very convenient way of hiding the truth. I am sure that they would notice any tempering with the meter.
I think that this way of management is out dated and quite useless.
The news is that in whatever the Government comes out with, it is losing it's credibilty very fast and it cannot keep on going this way.
It is not credible as the citizens are catching up of being wiser by each and single day that passes by.
Unless the Government stops treating us like fools, it won't get any respect and troubled times have already started.
So.
Beware!
Somebody should be?
Again if Enemalta has only published the audited figures to 30th September, 2005, 3 years ago in what is called a Smart Country in IT, how can they give us the 2008 figures. Please do not try to insult our inteligence. Be transparent and publish the audited figures for year ended 30th September 2006; financial year ended 30th September, 2007 and the figures in the management accounts for the first 12 months of the current financial year to 30th September 2008.
Surprised to see that the technical losses went up from 5 to 6% after all the investments done on the transmission of electricity, with higher voltages and aerial lines changed to underground cables. With such an investment technical losses should have gone down not up. Something is very wrong on this score.
Were all outstanding payments, including those of the hotel industry , industrial and commercial enterprises paid in full and without delay would that justify a revision of the domestic tarriffs to realistic and much more bearable rates?
We need to have a transparent picture of the situation and will take no minister`s word that we`re not being OVERBURDENED for the wrong reasons just because we`re Mr. Ordinary Citizen who unfortunately occupies the lowest rung of society.
Notwithstanding all that is being said and done, the trees on Tower Rd, Sliema will continue to have the fairy lights switched on 365 days a year and while in our homes we will celebrate a dark Christmas but for the faint light of a few candles, the govt. will switch on christmas lights in the roundabouts and who knows where else just to add salt to the wound that will take a long time to heal.
Are they not obliged to report such suspicions for further investigation?
To blame management for such losses is unreasonable, but I would blame management if figures are fudged. There is no excuse for that.
Any inefficiencies resulting in losses are ultimately covered by the taxpayer and this is an opportune time to put Enemalta's house in order at the least possible cost and start with a fresh page, as one would hope that the Shipyard's operation will soon be.
Past avoidable losses are unjustified but a couple of years ago an anti-theft exercise was undertaken with some success. Why is such an exercise not ongoing? Why are electricity thieves any different than burglars since it seems that the former, after amnesties, the ones hauled to court are only given a light tap on their wrists and a small fine?
Enemalta is a government backed entity and any deficits in electric generation are covered by the government which collects taxes from, who else, but the taxpayer!?
This smells similar to the MittsGate.
What about bad decisions by the management, it is surprising that managers in Malta are not held responsible for their bad decisions but it is always the workforce fault,.
Why is it that the last audited accounts were held in 2005 isn't this gross inefficiency on Enemalta's management if no audited accounts are not held annualy how can they plan for the future?
But do not worry because their is always the tax payer that is going to make good for these inefficiencies
How about refraining from paying for this company's inefficiency? Shouldn't we just pay for our own consumption, and let Enemalta sort it's own mess? Why should I, the tax-payer, pay for someone else's ineptitude??