One reason why the government is at a low ebb in its popularity is the extent of unfinished business on its agenda, including the water and electricity tariffs. They offer subject matter for a case study on how not to do things. It starts off with a Nationalist administration taking good decisions to increase and upgrade our energy generation capacity over two decades ago. Very heavy capital investment was involved, financed through loans.

Any private company following that path would have worked out a recovery programme - loans have to be financed and new investment depreciates and must be replaced eventually. The government ignored such basic principles. Tariffs remained static and, thereby, heavily subsidised. When a Labour Administration came along in 1996 and tried to start remedying the situation the Nationalist opposition decided to play politics. All hell broke loose, aided along by one Dom Mintoff from the government's own backbenches.

Not too long after the Nationalists regained power they eventually realised that the heavy subsidies could not continue. They did not make financial sense. Nor would they prevail should Malta become a member of the European Union. A sensible objective to introduce gradual recovery was finally set. It was ham-fistedly implemented.

By and by a new-fangled system was introduced whereby old tariffs were subjected to a fluctuating surcharge. This was linked to the international price of oil derivatives used by the power stations. Purchases of these derivatives were not necessarily made according to best practice of reasonable international expertise. One reason was that the Nationalist opposition had criticised the short-lived Labour government for making forward purchases of fuel requirements.

Sense dictated that a Nationalist administration should also deploy hedging techniques in securing fuel requirements. This was attempted, but not with the necessary expertise. A review group headed by the very experienced Roderick Chalmers was appointed. A path with clear guidelines was mapped out. But nobody outside Enemalta and the inner sanctum of the government knows whether Mr Chalmers's path was jealously followed after he and his colleagues had completed their work and departed.

Meanwhile, it transpired that the government itself eventually concluded that the way they had gone about creating and imposing the water and electricity surcharge was wrong. The surcharge had not simply been crass announced and badly implemented, as the responsible minister confessed. It was also technically wrong.

A new tariff system was devised. It took long in the making, creating a general restlessness. The regulator took ample time to review it. As expected the restlessness grew. When it was unveiled there was widespread disenchantment with the massive increase inherent in the new tariffs. That a political issue was made out of it goes without saying.

The government pointed out that thousands of social cases were offered extensive tariffs relief, at a direct cost to the Exchequer. And in the Budget for 2010 the Finance Minister allocated €10 million give one-time relief to practically every remaining household. No relief was offered to economic operators, whose fuel costs were set to increase by up to around 50 per cent.

Little wonder that it was not only the opposition who screamed blue murder. Economic operators remain aghast that they seem to have been singled out for the roughest treatment. They remain very restless. They believe, as I continue to do, that tariffs have to be related to the international price of crude oil, but point out persisting inefficiencies at Enemalta. They refer to Maltese failure prevalent in the Maltese economy. The government says that inefficiencies are being reduced, and that anyway it is not charging the public for them. It says nothing about market failure.

If the government believed that the (contradictory) €10 million subsidy was going to convince domestic consumers and, at least, placate the trade unions, it had another thing coming. Households are simply holding their breath until they see how much the new tariffs are truly going to hit them, and the extent to which the blow would be mitigated by the one-time subsidy. They also wonder what happens after the one-time is over.

Part of the trade union movement accepts it should wait and see. Not so another 11 unions, which include the GWU. They are again up in arms. The government's reply was again lame, and also political.

It singled out the GWU for vitriolic attack with the usual charge that it was politically motivated. It doesn't say anything about the 10 other unions lining up with the GWU. Nor does the government react to suggestions elaborated upon by the Malta Employers' Association that it should benchmark its new tariffs regime and overall Enemalta performance to comparable countries and institutions. Cyprus and its energy generating and pricing system come readily to mind. There are no doubt other examples.

So it will come to pass that the government will not recognise or concede that the new water and electricity tariffs remain very much open business. It will find relief in the fact that the opposition is giving hostages to fortune on this issue, exactly like the Nationalist opposition did in 1996-98. That can only be small consolation as widespread discontent grows. And that is without taking into account the effect on the government's edgy backbenchers.

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