Fuel prices fall by 20 per cent

Petrol and diesel prices will drop by around 20 per cent tomorrow, after a surprise announcement by the government yesterday.

The price of unleaded petrol per litre will be 99 cents, down by 25c, while the price of lead replacement petrol will be €1.06, a reduction of 25c. Filling your car with diesel will set you back 99c a litre, 24c cheaper, while kerosene will cost €1 a litre, down by 30c.

While consumers will welcome this move, petrol station owners were up in arms yesterday claiming that the government's decision means they will lose thousands of euros.

The majority of petrol station owners, 85 per cent of some 90 stations, which form part of the fuel section of the Chamber for Small and Medium Enterprise - GRTU, are calling for an urgent meeting this morning to decide what action to take. They are not ruling out a strike, just days before Christmas. Joe Falzon, a member and owner of one the larger petrol stations, said he stood to lose some €20,000 with the announcement of the reduced prices because he had just stocked up with fuel.

"In the last budget the government had said it would announce fuel reductions in January. We had been asking for the date and never got a reply. We were not expecting this move," he said.

The Transport Ministry said the reductions were possible after Enemalta's previous fuel agreement had expired, which meant that the diesel and petrol consignment could now be priced at current market rates.

The corporation had signed an agreement last May in a bid to avoid the spiralling price of crude oil, which at the time was climbing over $100 a barrel.

Enemalta committed itself not to review the prices for unleaded, lead replacement petrol and diesel before the end of this year by purchasing in advance and covering the cost. However, the price of crude oil has since dropped to well under $50 a barrel - putting pressure on the government to reduce prices as has happened in other countries.

The reduction in pump prices takes place a couple of months earlier than planned. Last October, a ministry spokesman had said that any changes to fuel prices would be in February or March - after the January consignment had been priced.

Oil prices fell below $40 a barrel last Friday, amid more worries that a global recession will erode fuel demand. In the meantime, the Labour Party yesterday said it was expecting the government to withdraw its new water and electricity tariffs.

The party had been appealing for the revision of petrol and diesel prices since October in the light of plummeting international oil prices, it said in a statement yesterday, while welcoming the government's "belated" decision.