Electricity bills will not be increased any time soon as the Government plans to extend its €30 million subsidy to energy corporation Enemalta in next week’s Budget.
Government officials are assessing Enemalta’s financial situation to see whether the €30 million subsidy will suffice, although Finance Minister Tonio Fenech is optimistic.
“It seems our oil price hedging arrangements mean that the existing subsidy will be enough,” he said yesterday.
However, the Labour Party did not accept this, saying that the European Commission’s autumn economic forecast had unmasked Mr Fenech’s intentions to raise tariffs after the election.
“Today’s declaration is a mirror image of the promise made by the Nationalist Party before the 2008 election,” the PL said.
Mr Fenech attacked the PL for its promise to lower tariffs if elected and said the pledge “just isn’t possible” unless they planned on augmenting government subsidies to Enemalta or raise taxes.
“(Labour electoral candidate) Konrad Mizzi, who is supposedly drafting their energy policy, has said there is no need to increase the subsidy and that lower rates could come from alternative technologies.
“But they’re pulling the wool over people’s eyes,” Mr Fenech said.
Dr Mizzi later stood by his statements, saying “the PL will reduce energy costs for families and businesses”.
He said he was “saddened” that the minister felt Enemalta could only be competitive if it was Government-subsidised and accused the Prime Minister of having “sold the health of Maltese children” by commissioning a power station that ran on the highly polluting heavy fuel oil.
The minister argued that alternative technologies – from the carbon capture Sargas proposal to various gas-powered technologies – all required hefty investment and would take several years to come on stream.
According to Mr Fenech, three gas-related options were viable. One involved the construction of a gas pipeline, another meant installing huge gas tanks across Delimara and the third would see Malta importing gas using specially designed ships.
All three options, he said, would involve a lot of time and money and price benefits would be marginal.
“It costs us 16c to produce each unit of energy. Using gas, that would fall to 15.4c. And, in the time it would take to build the necessary infrastructure, gas prices would have risen even further,” he noted, saying that installing the necessary infrastructure would cost upwards of €300 million and require “substantial” EU funding.
As for renewable energy sources, Mr Fenech said that it was not a cost-effective solution. “It’s still relatively more expensive to produce (alternative energy power) than fossil fuel-generated power.
“Renewable energy is important but it can never provide all of our energy, at least not until technologies improve and prices come down substantially.”
EU targets mean Malta must generate at least 10 per cent of its total energy consumption from renewable sources by 2020, the lowest target among the EU’s 27 member states.
Mr Fenech again challenged the PL to explain how it planned to lower energy tariffs without meddling with taxes or Enemalta subsidies.
“So far, we’ve had splinters of ideas. People know what our vision is, they just have to look at our Budgets, pre-Budget documents and other reports. But what is the Labour Party’s?”