Why is the Malta Competition and Consumer Affairs Authority taking so long to look into fuel supply and prices? As the consumer watchdog, it is expected to work with greater efficiency, more so now that the government has had to bow to increasing pressure to start passing to the consumer the benefits from the sharp fall in oil prices.
The authority has confirmed it is investigating the case of a Rabat petrol station owner who is claiming that he had to reverse a decision to sell diesel at a lower price following pressure from the supplier. All that the owner had wanted to do was to pass on to the consumer a higher profit margin allowed by the supplier.
While the consumer has a direct interest to know what exactly happened in this case, it is also important for the authority to go into the way the government has been handling the petrol and diesel price issue. Since the government is the major player in fuel supply, there ought to be greater administrative transparency.
The Opposition has long been insisting that fuel prices ought to be brought down immediately to reflect the drop in the international oil prices, but the government had argued all along that it would only be in a position to do so when the hedging arrangements it has in place come to an end next month.
However, the government’s stand prompted a strong reaction, with practically all constituted organisations insisting that the prices at the pump ought to reflect the decline in the oil price abroad as has happened in most European Union member countries.
As the backlash gathered momentum, the government appears to have relented and has now reduced the fuel price by four cents. However, the reduction is far too low considering the extent of the price drop in other countries.
The government’s argument that, through the hedging arrangements it made it had managed to keep the prices of petrol and diesel stable, was valid. But since the price of oil continued to fall, it could no longer keep to this argument and has had to give in to pressure to reverse its stand.
It has also had to change its tune for, while before it was arguing that it would only be in a position to reduce prices at the expiry of the hedging agreements, it has now said that Enemed has negotiated a number of transactions that would enable it to bring down the price “significantly” in the coming months.
This represents quite a significant shift in its stand. No wonder many are getting confused as to what the state of play is exactly. Meanwhile, the Malta Council for Social and Economic Development has given the impression it is dragging its feet over the issue. Another point is that regulatory authorities ought to keep the public informed of studies or investigations they carry out on behalf of the consumer.
As the situation stands, the government appears to be acting only when it comes face to face with mounting public pressure. The Consumers’ Association was spot on when it said that, despite the liberalisation of the fuel import market, there seemed to be a cartel in place.
As in the case of the agreements with Shanghai Electric and Electrogas, the government is keeping its cards close to its chest over fuel supply and prices. The upshot of all this, however, is that the consumer is getting a raw deal.