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.