Enemalta publishes two-year-old accounts

Audited Enemalta Corporation accounts for the year October 2005 to September 2006, tabled in Parliament today, show a corporate profit of Lm2.5 million after government payment to Enemalta of Lm21.3 million equal to a 195% increase over the compensation paid in 2005 (8.3 million).

In that period the surcharge on electricity bills fluctuated between 17% and 67.5% and government payments were used not to pass to consumers the full impact of increased fuel prices, the Infrastrcuture Ministry said. In fact, Lm19.2 million were used for fuel in electricity generation; and Lm2.1 to subsidise the price of gas cylinders.

Fuel costs for the generation of electricity rose to Lm78 million compared with Lm54 million in 2005, an increase of 45%.

On an operational level (before considering finance costs), the profit registered by the corporation was Lm7.8 million (compared to a loss of Lm1.3 million in 2005) derived as follows: Lm995,000 from the Electricity Division; Lm7,875,000 from the Petroleum Division; and a loss of Lm1,069,000 from the Gas Division.

Finance costs of Lm5.2 million were allocated at corporate level but if this had to be allocated at departmental level, the electricity division would have made an operational loss as well.

Other highlights from the audited accounts are:

· a reduction in electricity losses from 15.8% to 13% compared to 2005. Considering justified technical losses at 5%, losses for theft, meter malfunctions and mis-reporting stood at 8% of units generated, equivalent to some Lm 8 million in lost revenues, the ministry said. "This problem is being addressed through the Smart Meter project, Enemalta’s contribution to which will be some Lm17 million and has a payback period of 2 years following full implementation"

· The ministry said that despite the introduction of the surcharge, units sold increased by 59,000 or 3.2% over the previous year. This is partly due to a reduction in electricity theft;

· Enemalta absorbed Lm4 million in increases in excise duties on diesel, petrol etc. that were introduced in 2006. These increases were not passed on to the consumer;

· since LPG international prices rose by Lm1.6 million, Government increased its compensation to cover part of the difference and maintain prices;

· Enemalta invested Lm5.2 million in transmission and distribution equipment;

· staff, finance and administrative costs basically remained at previous year levels except for an increase in the provision for bad debts. An increase in debtors from Lm51 million to Lm73 million and in borrowings from Lm120 million to Lm140 million was registered, the latter largely due to the increase in debtors and in stocks;

· a detailed statement is given of the hedging reserve account which shows:

a) a gain of Lm127,000 on currency forwards;

b) a loss of Lm434,000 on interest rate swaps;

c) a loss of Lm1.1 million on fuel swaps.

The audited accounts also give the fair values, at the time of the audit, of forward derivative financial instruments then in place.

"Enemalta believes that a fair reading of the audited accounts show that Enemalta made substantial improvements to its operations in this financial year resulting in much improved financial results," the ministry said.

"Neverthless were it not for government’s compensation of Lm21.3 million, Enemalta would have had made a corporate loss of some Lm18.8 million. The government compensation is equivalent to Lm532 for every man, woman and child which everyone, deserving or otherwise, gained from."