Opposition leader Simon Busuttil said this evening that the way how the government had kept fuel prices high showed Joseph Muscat's inconsistency.

Speaking in Parliament, Dr Busuttil recalled that four years ago, Dr Muscat had led street protests over fuel prices even though the prices at the time were actually lower than they are now, even though oil prices were twice as high. 

Dr Busuttil said government speakers were repeatedly accusing the Opposition of not knowing the workings of fuel procurement. But if the government was so intelligent, why were fuel prices in Malta considerably higher than abroad?

The prime minister's attitude was markedly different from what it was four years ago.

In January 2011 he led street protests against fuel prices when oil prices were twice as high as at present. At the time, local fuel prices were: petrol €1.31 per litre; diesel €1.21 and gas €17.30. Yet now petrol cost €1.38; diesel, €1.31 and gas now was 70c more expensive.

Dr Muscat writing in It-Torca four years ago accused the then prime minister of not protecting the interests of families and businesses. So what was he doing now?

At the time Dr Muscat accused the government of arrogance and of living in an Ivory Tower. Had he moved in now?

If this was not inconsistency, what was it?

Later Dr Muscat wrote that the government was heartless? So what was it now? Was he now anti-social?

Four years ago, Dr Busuttil said, the government had given a cost of living increase of €1.16 and Dr Muscat has said that was how much the government of the time valued solidarity. Now the government had given an increase of just 58c. So this was half price solidarity.

Dr Muscat had argued four years ago that the high prices were undermining competitiveness and jobs and dampening consumption. So what about today?

The prime minister had fallen into the trap of his own words, like he was hostage of his promises for votes, Dr Busuttil said. 

Dr Muscat four years ago had also thanked the GWU for taking part in the protests. Indeed, where was the GWU now? Where was Tony Zarb? Where was Issa Daqshekk now that prices were higher? Indeed, the GWU was silent while making money from government rents. It had been bought out by the government.

It would be appropriate, Dr Busuttil said, for Dr Muscat to cry mae culpa because he and his government were to blame for the current high fuel prices, and the lowest cost of living increase in years. As a result, many families could not make ends meet.

In terms of current oil prices, the government should have reduced fuel prices by 40c and not 4c as it did recently. But the people were being made to pay more because of the government's failures, such as its failure to build a power station within two years. The people were being made to pay for for the squandering of those in the government, including the backbenchers such as Luciano Busuttil, a part-time chairman with a full time driver and MPs Charles Buhagiar, Silvio Parnis, Silvio Schembri and Deo Debattista who also had a government car (uproar).

At the opening of the debate, Shadow Minister Marthese Portelli asked why the government had not immediately reduced fuel prices after reportedly negotiating an agreement to buy oil at $43 per barrel.

Replying, Energy Minister Konrad Mizzi said Enemed (which has replaced Enemata for oil procurement) had negotiated a new short-term hedging agreement with BP at an advantageous price which was lower than the current oil price, but, he said, he never mentioned the figure of $43. The exchange rate has also been locked and fuel prices will therefore go down in March and April even if international oil prices rise.

Dr Portelli was the first speaker in a debate on an Opposition motion calling for an immediate cut in fuel prices in line with internal prices.

Dr Portelli said the Opposition was calling for a drastic cut in fuel prices because the international price of oil had dropped by 55% and stayed down.

Fuel prices in Malta, excluding tax, were the highest in Europe. Prices were also among the highest when tax was included.

While the government was currently robbing motorists at the pump, one only needed to remember that when under the former government, prices were similar to what they are today, and oil prices were twice as high, Joseph Muscat had held street protests calling for lower prices.

Energy Minister Konrad Mizzi had been quoted as saying that the government recently negotiated an oil procurement hedging agreement at $43 per barrel - when oil prices were over $100 a year ago. If that was the case, why had the savings not been transferred to motorists immediately?

The current high prices were robbing ordinary people and undermining businesses and Malta's competitiveness, Dr Portelli said.

Replying, Prime Minister Joseph Muscat said the Opposition did not know how fuel procurement was made. 

In the past the discussion was on price rises, now it was on price cuts, he said.

But it was worth pointing out that this debate was being held in the shadow of the oil procurement scandal which took place under the former government.

In June 2008, he said, oil prices had dropped by 51% from the previous year, but in Malta fuel prices and electricity tariffs were raised by 20%.

Under the former government, prices were meant to fluctuate according to market forces.

The present government, however, introduced stability, while it still reduced petrol prices seven times, and diesel prices five times. Electricity and water tariffs were also going down.  

Dr Muscat said oil prices were volatile. The Opposition announced this motion for debate on January 25 when the oil price was $46 per barrel. Within a day, the international oil price rose by 8% and now it was $58.

When the exchange rate of the euro vs the dollar was also considered, from the day when when the motion was presented to the present, fuel prices would have had to rise by 23%.

But for the coming two months, despite indications that oil prices would rise, local prices would fall next month and in April.

Stability and a long-term view of things were needed, Dr Muscat said. Over the past year, the prices in Malta were lower than the EU average because government policies worked.

PRICES KEPT HIGH 'FOR STABILITY'

Mario de Marco (PN) said it was unacceptable to argue that prices were not being reduced in order to maintain stability and prevent uncertainty for businesses. Oil prices did not affect just Malta but every other country. Yet other countries had reduced pump prices substantially. Malta had not. This was not good for competitiveness.

The government, despite promising transparency, has stayed silent for weeks amid calls to cut fuel prices and then only marginally reduced prices following pressure by the opposition and most of civil society. Finally the government admitted it was bound by a hedging agreement but still refused to give details on the process leading to that agreement. The opposition was not against hedging, but it wanted to know what had happened. Who had approved the hedging agreement? Were ministers involved? Was hedging on total supply or part of it? Was hedging on the oil price, the exchange rate or both?

Labour, Dr de Marco said, needed to be consistent. In the past, when oil prices were twice what they are today, it called for lower prices and made no arguments about stability or exchange rates. It would be judged by its own yardstick.

Dr de Marco said it was regrettable that although the fuels sector had been liberalised, consumers were not seeing benefits. This was something the government needed to tackle with urgency.

ELECTRICITY TARIFF CUTS MAY NOT BE ENOUGH

Concluding, Dr de Marco said the drop in oil prices was also leading to substantial electricity tariff cuts abroad. In Malta, Labour promised a 25% cut in tariffs when the oil price was at $120 per barrel. Now the oil price was half that.

So was a 25% tariff cut, however welcome, enough to maintain competitiveness when other countries were also reducing their tariffs?

Furthermore, with oil prices having dropped, were the power purchase agreements the government had negotiated with Shanghai Electric and Electrogas, the builders of the new power station flexible enough for Malta to get the cheapest electricity rates? 

BOTH SIDES SHOULD WORK TOGETHER FOR COMPETITIVENESS - MARLENE FARRUGIA

Marlene Farrugia (PL) said the two sides agreed that Malta needed to maintain its prices and tariffs at a level that ensured that competitiveness was safeguarded.

The countries around Malta had seen inflation grind to a halt and were even experiencing deflation. Their prices were going down and Malta therefore, needed to reduce its own prices to reflect international prices. 

It was understandable that a government which had a hedging agreement had to be careful in cutting prices in order to ensure that the cuts were sustainable.

Mistakes made in the past could not be justified. Nor could they be used as an excuse for new mistakes. Prices had to be as low as possible, as long as they were sustainable and stable. The two sides should work together to safeguard Malta's competitiveness, as well as their own credibility as politicians.

NEW HEDGING AGREEMENT WITH BP

Energy Minister Konrad Mizzi said he had enjoyed the frank discussion he had in the morning with the members of the MCESD, which was in contrast to the debate in Parliament. 

He noted that it was the European Commission itself which said in its winter forecast that the government's energy policy was one of the reasons why the economy was growing at a faster rate than the EU average.

Over the past 20 months petrol and diesel prices had been reduced consistently and would continue to be reduced.

Over the past year, local prices were lower than the EU average. In December, oil prices fell and Malta had thus needed to make adjustments. Enemed had since made arrangements with BP to hedge oil prices and also locked the exchange rate. The price, effective this month, was hedged at a lower level than the present, although, Dr Mizzi said, he never mentioned the figure of $43 that Dr Portelli had referred to (quoting a section of the press, not Times of Malta). 

Dr Mizzi said Enemed was operating in a liberalised environment, and he agreed with the Opposition remarks that liberalisation needed to be more effective in the interests of consumers, more so as new players, such as Shanghai Electric and Electrogas, were also being involved in the market. Therefore, the role of the regulator would be strengthened. 

The government, Dr Mizzi said, believed in stability in prices as a means not to shock the economy, and hedging was a tool to ensure such stability. Hedging in 2014 had worked, as he had explained, and the hedging policy would be kept in constant review. 

Dr Mizzi in his overview recalled how the government had reduced electricity rates and said current rates were now within the European average.

Dr Mizzi moved an amendment to the opposition's motion, praising the government for reducing energy tariffs and stabilising fuel prices.  

The amendment was approved with 33 votes in favour and 30 against. The original motion was defeated.