Gatt calls for realism on electricity tariffs
Infrastructure Minister Austin Gatt said today that while he expected electricity tariffs to fall, he was not prepared to seek popularity while putting Enemalta in a position where it could not finance itself.
Speaking in Parliament, Dr Gatt said that the Enemalta's revenue from tariffs last year did not even come close to covering the oil purchase costs - let alone the total cost of electricity.
Revenue from tariffs, including the old surcharge and the new tariffs system, was €292 million while oil costs were €333 million.
When one included the wages bill and Enemalta's other costs on electricity, as well as the government's direct subsidy of €70 million to the corporation, Enemalta still made a loss of €68 million last year just on electricity.
Dr Gatt said that no one had disagreed with the principles on which the new tariffs model was based - principally that consumers should pay for their consumption, that there should be no cross subsidisation, and government subsidies should go directly to people who could not afford the bills and to Enemalta for its public service obligations. The only objection, by the GRTU, was on capping for large industries.
Yet all hell broke loose over the applicability of those principles.
The fundamental question, which no one had answered, was how the costs were to be met. The PL and the GWU called for the tariffs to be cut - even though they did not even cover oil purchase costs - but they never said whether they expected the shortfall to be paid through higher taxes or a bigger government deficit .
The government, Dr Gatt said had responsibly decided to introduce the new tariffs, rather than extend the old surcharge system, because the old system subsidized everyone, rich or poor, it subsidised consumption and did not encourage people to change their consumption patterns.
It was worth pointing out, Dr Gatt said, that the record oil prices in July and August of last year were never passed on to consumers. The old surcharge system had been retroactive while the new tariffs, introduced in October, was forward looking. The transfer from one system to the other had cost Enemalta €23 million.
Looking forward to the revision of tariffs, Dr Gatt said the process was started when Enemalta sent the Malta Resources Authority the principles on which the tariffs would be based. The MRA held a public consultation and, amazingly, there were only 15 submissions, 13 by individuals, one by the GRTU and one by the FOI. There were no submissions by the GWEU and the PL. He could assume, therefore, that they agreed with them. One would see, now, whether they agreed with their application.
Dr Gatt said Opposition leader Joseph Muscat was wrong yesterday to say that oil purchase costs for the coming year would be €122 million. A simple check of futures showed the bill would be between €150 million and €170 million. And, Dr Gatt admitted, there would be some losses on hedging if prices continued at the current trend, after a profit on hedging made last year.
Dr Muscat had also claimed that the total cost of electricity over the coming year would be €204 million, meaning wages, depreciation and costs Enemalta costs would be €82 million. How did he reach this figure when such costs last year alone were much higher?
The fact was, Dr Gatt said, that the total cost of electricity next year would be between €250 million and €260 million.
Therefore, while he expected tariffs to fall, he was not prepared to be popular at the risk of putting Enemalta is a position where it could not finance itself.
There was no magic wand to solve this problem and his appeal was for seriousness and realism, Dr Gatt said. The only question was: how would oil purchases be paid for if not by the tariffs. Would it be higher taxes or a wider deficit? It was an issue which the unions and the PL needed to address as well, Dr Gatt said.
The Opposition motion for the repeal of the new tariffs system was then defeated.
In a statement after the vote, the Labour Party said the government had shown it was cut off from reality and did not know of the hardship which the people were suffering as a result of the new tariffs. It also insisted that the figures given by Dr Gatt were wrong, as would be proved in the coming days.
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mike pace
Mar 12th 2009, 09:31
That why you losing the public confidence were ever you go everyone is urging the problems you creating by yourself without you care at least for the common citizen with taxes so called burden and public finances off control - now you calling realism on bills tariffs- please mr minster try again to go public bases and feel the pressure of the nation because when the true polls comes around don;t cry as a dead wolves in the outback
joe vella
Mar 12th 2009, 09:04
well dr gatt, you said it all, you couldn't have been clearer-you and your government just spend and extravaganzas galore and we pay for all your ineffiencies. Isn't that nice!
It really is time to give you all the lesson you deserve, I just hope the Maltese feel the same and give you the drubbing you deserve come June.
Maybe somebody decides to stop the cosmetics earlier and shut the door for you before end of the year
Miriam Mercieca
Mar 12th 2009, 08:53
For you Mr Gatt balancing Enemalta's books to make good for administrative errors resulting from wrong ministerial decisions in the past are much more of a priority than any social aspect. What a pity Malta has now come to this.
A.Saliba
Mar 12th 2009, 07:38
We pay your bill from our taxes.PN are not close to reality
Lorna Pace
Mar 12th 2009, 07:25
The minister should have seen to the deficit increase before he went on to pay the drydocks 55 million euro from tax payers money to solve the problem. This after years of abuse and subsidies from the same docks. This money could have absorbed the inflated cost of oil in the first and second quarters of last year.
Therfore in real terms, the price does not only reflect the inefficiencies by Enemalta but also by the way government spends tax payers money. The country is scourged by social benefits and wastage when this money, which incedentally is hard earned by the diligent worker is
being squandered in waste. Unmarried mothers, unemployment, retirement schemes, overburdened civil service and numerous unproductive authorities all contribute to the deficit while our roads are some of the worst in the world and our nation continues to be taxed till the bone to subsidize these inconsistencies.
A. Mizzi
Mar 11th 2009, 21:58
It is not only Minister Gatt that wants realism on electricity bills , all consumers want it and want a good deal and value for all the money paid in electricity bills these passed 20 years.
After 20 years of PN. administration, an enterprise without audited accounts, no direction, no planning or contingency plans, losses both financial, theft, losses, recent bad hedging agreements, and lack of overall control and the consumer is expected to make good for all this even when, as reason prevails when there is a reduction in the price of oil from abroad this should also be reflected on the bills issued as well. Malta seems to be the exception, it is just Mickey Mouse Land.
All we hear about is Enemalta Losses for how long have these losses been coming without control? What about the H.R. position within Enemalta? Has an HR audit employment and promotions been ever made to control these costs ?
If Dr. Gatt is looking for sympathy and understanding , it is just too late in the day for that.
Clemens Hasengschwandtner
Mar 11th 2009, 21:53
Enemalta is the most inefficient company one can imagine and I don't understand how these politicians can always ask for more money without tackling the roots of the problem.
Have you ever tried to get a bill from Enemalta for your electricity. I tried once and let me tell you. They send you a lot of paper with a lot of figures but it's impossible to figure out what is what. I went so far to go to Enemalta and spoke to one of their pretty ladies - she was even more clue less than me and had no idea whatsoever.
It took her quite a lot of time to find my account on the computer and then my papers and their computer did not have much in common She promised to clear it out and send it to me by mail.
I got the mail but it was dated sometimes in 2007 showed again something totally else and aaaargh - just hopeless.
How can someone run a company like this? Every Band club has a better accounting system and is run more efficiently.
MARIO NICHOLAS PACE
Mar 11th 2009, 21:46
Both Austin Gatt and the Prime minister should be ashamed of their utter arrogance shown against us citizens . I f these things happen in Zimbabwe I would not be surprised but to happen in this supposed to be a democracy in Europe it is really a great shame on the PN part. This is pure Dictatorship where the prime minister and a chosen few do what they like in detriment of everyone .I just hope and urge the unions to organise a general strike to remind this arrogant government that they are not the only maltese citizens.I urge also my felow Maltese citizens to protest in every way they can .
edward bartolo
Mar 11th 2009, 21:12
@Austin Gatt
Why did the government "donate" the petroleum section to the private sector? Privatisation?! What a joke!
The government is "giving off" its profit making departments/corporations to the private sector while keeping the bankrupt ones for itself!
The perfect example of all economical management! LOL!