Oil hedging left balance of $10.7m - Enemalta
Enemalta said this afternoon that its hedging of oil prices over the past 15 months had kept electricity tariffs stable and left a positive balance of $10.7 million.
The corporation published a 15-month account of its profits and losses as a result of hedging. It said it had a positive balance in the first months as oil prices rose. The $46m profit made during this period was used to keep the surcharge lower than it would have been without hedging.
As oil prices collapsed over the past four months, the profit made in the previous months was almost completely eclipsed.
"It is clear, however, that at no time did hedging keep electricity bills higher than they should have been," the corporation said.
The figures show that while Enemalta saved $9.3 million on oil purchases in June and $7 million each in May and July, as international oil prices soared, but it made losses of $16 million last month, $12.5 million in November and $7 million in October as prices dropped fast.
Enemalta recalled the policy paper prepared by the Hedging Policy committee headed by Roderick Chalmers where it was declared that Enemalta's purpose in hedging oil prices was no to make a profit but to maintain price stability as far as possible despite fluctuations in international oil prices.
That purpose, Enemalta said, had been met.
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P. Aquilina
Feb 1st 2009, 12:04
Where have we ever heard that a company increases it's prices to upgrade it's systems like Enemalta is doing. It's a pity we cannot change providers for Electricity in Malta. Government (Enemalta) has never looked into the Future it works on a Day by Day basis.
john fenech
Jan 30th 2009, 22:27
Minister Gatt insisted, and rightly so, that we have to pay for what we consume and that we cannot afford to support lame industries. And he also made a solemn statement that the utilities cost will be revised if the price of oil varied by 15%. Now we have this revealing news that Enemalta, bless her management, through its hedging of oil prices over the past 15 months had kept electricity tariffs stable and left a positive balance of $10.7 million.
But there are two items that confuse me; First the tariffs were not kept stable since we had several surcharges added on to our bills. The second if the new tariff rates are not the direct result of the oil price increase, since the company registered a profit, then what is the reason for the hike in the tariffs? Is it to support a lame duck?
Or is it to finance the cost to upgrade the power supply system in the country and make it more environmentally friendly by 2010. The projected budget for this programme is 290 M €. 150 M € have already been granted by the EIB last September.
Joseph Zammit
Jan 30th 2009, 21:57
i'm not in any way trying to defend enemalta and am not happy to pay high electricity bills either, in fact i have no connection or interest whatsoever. i just wanted to point out that the press release may have been wrongly interpreted - in short Enemalta has not made $10.7m profit, but has saved said amount compared to what it would have paid without a hedging agreement - a hedge can go either way, and no expert can guarantee that it will pay in the end, it's a calculated risk and in the end it paid off in this case.
as far as i know the hedging agreement is now close to or already ended and hopefully we should see a reduction in utility rates in a few months' time, at least according to Dr Gonzi, though I must say, if I have learnt one thing, it's to never believe a politician's word as it's worth less than the paper it's written on.
PAUL V. AZZOPARDI
Jan 30th 2009, 21:53
Reading this article, it seems to me someone must have panicked and hedged at a high price. It was probably a reaction to being unhedged for so long while facing an increasing price of oil. A hedging programme is a long-term thing, gradually balancing the current price with likely future prices and procurement needs, not a to-and-fro political football. When you know for sure that you will be needing oil, hedging is not a bet. It is leaving oil unhedged and then panicking which is tantamount to betting. You won't get stability this way !
T Abela
Jan 30th 2009, 20:51
Hawwadni ha nifhem..Enemalta registered a profit of 10.7 million dollars from the hedging agreement and my electricty bill tripled. Ahna ahna jew m'ahniex. As the saying goes.. Arrogance and Inefficiency go hand in hand...meditate gente meditate
Clint Taliana
Jan 30th 2009, 19:56
Enemalta should publish its auditied accounts and provide us with details of the ''inefficiencies'' within the REAL reason why this ONLY Malta got a price hike around the globe.
joanna farrugia
Jan 30th 2009, 18:23
so since you are such an expert mr.zammit explain to me why i am paying for such high bills and pls keep in mind that they are estimated.
r.lewis
Jan 30th 2009, 18:07
@Joseph Zammit It seems that most of the bloggers don't know how to read. We don't understand what Enemalta said but we know how to make calculations. Only one problem here that you do the hedging when the price is low and not vice versa. Now if you are happy pay higher rates for someone else's mistakes, and no one is accountable for. Enemalta saved $9.3m in June, $7m in May and $7m in July total $23.3m, and lost 16m last month, 12.5m in November and 7m in October total $35.5m, because prices dropped fast. Good job they didn't go up fast. Like we say in 'Maltese 'bhal granc, pass il-quddiem, u tnejn lura, u il-poplu jhallas, so what'.
Abel Abela
Jan 30th 2009, 18:04
@ Joseph Zammit Mr Zammit, on the contrary, Times readers do get the message - that Enemalta is saving 10.7 million USD thanks to hedging. But as you rightly say - the last audited accounts go back to 2005. Yet it was all so easy to produce this table of 'savings' up to end December 2008. May I ask a question - is the hedging arrangement which led to savings of 46 million USD between Oct 2007-August 2008, and then to losses of 36 million in September - December 2008, still in force? Are we consumers to brace ourselves for yet further losses on the pattern of the 16, 12.5 and 7 million USD lost over the past three months?? Or is this document really meant to justify the Govt's gigantic U-TURN these past few days?
Joseph Zammit
Jan 30th 2009, 17:16
Most of the commentators here aren't even understanding the gist of the article. If Enemalta had not hedged, it would have paid $10.7m more to buy oil, which would either have been subsidised by Enemalta (i.e. more losses), or paid by us (over and above what we already paid). I think Enemalta should issue a clarification to put minds at rest that this was not profit made at the expense of customers but cost savings. I had a look at the latest audited accounts available for year ended Sep 2005. Back then Enemalta posted a loss of Lm6,528,000 (over €15 million), and I don't think that it has made a profit in 2008.
A. Mizzi
Jan 30th 2009, 17:02
When will ENEMALTA's Audited accounts be presented to give an overall view of operations and accountability? Can an audit be presented to rebut any allegations of pre-electoral promotions and jobbs with Enemalta?
joanna farrugia
Jan 30th 2009, 16:43
so since enemalta has a balance of $10.7m how come our bills tripled?in 3 weeks i got 3 estimated bills and i had no eco reduction in them.are we paying all this money for something else instead of oil?
Abel Abela
Jan 30th 2009, 16:28
Dear Malta Government: since Enemalta's performance was so good and it was able to make savings of USD10.7 million through hedging, how come you were so ill-advised to defy society and push through the new tariffs? Didn't anyone show Prime Minister Gonzi the figures up to 31 August 2008 by which time Enemalta had made gains of more than USD46 million? Why weren't these figures made public before??
Enemalta Corporation will your customers benefit at all from this balance of USD10.7 million?? Much as you are congratulating yourselves for these figures, Maltese families and businesses don't care if your balance is 10c or 100 million, they only care about the crazy BILLS they are receiving in their mailboxes.
R Agius
Jan 30th 2009, 16:19
@Marvin Mizzi
You are living in a dream world if you think that we can get away from paying for the cost to run Enemalta - warts and all. The fact that there is a balance of 10 million means that you and I will not be paying the 10 million. We should be thankful!
As for the inefficiencies at Enemalta the fact is that to make it lean and mean means that a substantial number of semi skilled persons, probably most in the later years of their careers, will need to be made redundant. If you can solve that problem without causing social upheavel then I am sure the Government will be more than pleased to consider your contribution.
Joseph Zammit
Jan 30th 2009, 16:08
I think profit here refers to the amount saved by hedging compared to the prices that would have been paid had hedging not been used. And now that oil prices have fallen Enemalta made a 'loss' since the hedged price was higher than the current oil price.
mario mifsud
Jan 30th 2009, 16:05
"It is clear, however, that at no time did hedging keep electricity bills higher than they should have been," the corporation said.
So right, it was Enemalta that kept the bills higher
J Busuttil
Jan 30th 2009, 16:03
@ Marvin Mizzi
It seems that you did not read the statement correctly or you do not want to understand. See the losses of the last three months despite of 95 per cent surcharge and new tariffs. If profits were not made in previous months we will have to pay more. It is simple if you want to understand.
Marvin Mizzi
Jan 30th 2009, 15:05
it was declared that Enemalta's purpose in hedging oil prices was no to make a profit but to maintain price stability as far as possible despite fluctuations in international oil prices. Enemalta said this afternoon that its hedging of oil prices over the past 15 months had kept electricity tariffs stable and left a positive balance of $10.7 million. And what about the exhorbitant tariffs received when the oil prices are so low.................... are we living in dream land when speaking of maintaining price stability..........