Energy Minister Konrad Mizzi promised this evening that fuel prices would go down once hedging agreements expired over the coming months.

'I can assure you that prices will go down and savings will be transferred to consumers, not because of you, but because hedging would have expired," Dr Mizzi told the Opposition during a debate in Parliament this evening.

The debate was held on a government motion praising the administration for the agreement reached between Enemalta and Shanghai Electric.

The motion was moved by Prime Minister Joseph Muscat who said that the Opposition was being deceptive in its fuel cost calculations and it was failing to tell the people that when it was in government, it twice raised fuel and electricity prices at a time when oil prices dropped.

Dr Muscat said the deal between  Enemalta and Shanghai Electric meant that Enemalta was no longer a financial millstone for Malta, and the jobs of its workers had been saved. This deal was hugely advantageous for Malta and would help boost its economy.

This deal represented the biggest ever foreign investment in Malta, at €320 million. In contrast, the former finance minister had been prepared to sell Enemata for just €1.

The deal with Shanghai Electric had been welcomed by the rating agencies. S&P, which had described Enemalta as 'vulnerable' in the past, said after the deal that Malta would continue to grow more quickly than the Eurozone, principally due to investment in the energy sector.

This deal meant Malta would have cleaner energy and the people would continue to enjoy cheaper electricity tariffs. Enemalta through a joint venture would also become a regional player in the provision of electrical equipment.

It was ironic, Dr Muscat said, that this debate was being held at a time when more details on the oil procurement scandal were being revealed. The Leader of the Opposition had described that scandal as a smokescreen and was trying to sweep under the carpet revelations of what used to happen when his party was in government and he was the party deputy leader. This was a disgrace and something he would have to shoulder responsibility for.  

FUEL PRICES

As for fuel prices, about which emphasis was being made by the Opposition, it was worth noting that in the past, people argued about price rises, and now they argued about how much prices should decrease. That, in itself, was positive.

Dr Muscat insisted that the Opposition was wrong that the cheapest fuel under the former government was in October 2009, when it was actually in December 2008.

This was not a mistake, but a deliberate omission to skew the calculations they gave the people.

From June 2008 oil prices started to decrease but the former government in June raised fuel and diesel prices and in July raised electricity prices. So how could Dr Busuttil with a straight face now argue about reducing prices as the oil price went down?

Oil prices had continued to go down in October 2008 but the then government still raised electricity prices, followed by fuel prices a month later. 

In December 2008 the oil price was 51% of what it was the previous year but local prices of electricity, water, petrol and diesel were 20% higher.

In December 2008 consumers were being robbed of 71% of what they paid.

Dr Muscat said that even before oil prices started going down recently, the present government reduced electricity tariffs for families by 25% and fuel prices also started going down. Petrol prices were reduced six times under this government and where possible, more price cuts would be passed on to consumers.

Dr Muscat said there was no EU country where consumers paid the sort of prices which the Opposition claimed should be the current pump prices in Malta. Would the Opposition list which countries had the prices they were saying should be charged here?

He said Dr Busuttil was ignoring the fact that the exchange rate of the euro versus the dollar was down by 13 per cent and was even expected to drop more, possibly reaching parity. 

Dr Muscat said the opposition was amateurish in the way it viewed the energy sector. The people and businesses wanted stability. Prices should not be seen over six months but over two years or three.

At present, for example, it made no sense to have the interconnector since it was cheaper to produce electricity locally and save the transmission costs. 

Dr Muscat reiterated that efforts would continue to be made to reduce fuel prices, while also cutting electricity tariffs for businesses.

See Dr Busuttil's reply reported separately.

ENEMALTA NOW RUN ON COMMERCIAL LINES, DEBT HALVED

Energy Minister Konrad Mizzi underlined how this was a strategic investment which had put Enemalta back on its feet. This was not a privatisation exercise as the majority shareholding remained in the government's hands. Shanghai Electric had acquired a 33% stake. The chairman, the majority of the board and the management team were still appointed by the Maltese government.

He spoke on how Enemalta had been in deep financial crisis and was unable to make much needed investment. It had been a shipyard in the making and had risked bringing down the banks and the country.

Much was achieved in 20 months. While energy tariffs were reduced, the government started addressing the legacy of debt which had been inherited from the former government. Enemalta had received a massive cash injection of €250m. Half of the debt was now being settled and the remaining debt guarantees had been reduced in proportion to the shareholding structure.   Through more investment by the Chinese, by June 2016 the BWSC plant would be converted to gas. Heavy fuel oil would be eliminated but gas oil would remain as an alternative for emergency use.

Enemalta, was no longer a corporation but a plc run on commercial lines. 

Enemalta had retained dispatch rights and could source its electricity supply from where it thought it according to a computer model which pointed to what was cheapest. At the same time the Chinese could not sell electricity from the BWSC plant to another country without Maltese government approval. 

Dr Mizzi said the joint ventures formed between Enemalta and Shanghai Electric had been formed and the relevant companies registered. One joint venture company would develop renewable energy equipment in Europe, and feasibility studies were under way. Another company would absorb Enemalta workers and train them for major and medium sized projects locally and abroad.  

Touching on fuel prices, Dr Mizzi said prices had gone down six times under the present government and once hedging terms ended, saving would be transferred to consumers. 

He said the fuel price calculator produced by the Opposition on its website was skewed as the lowest price was not in March 2009, as the opposition had said, but December 2008.