A meeting between Energy Minister Konrad Mizzi and the Malta Council for Economic and Social Development on fuel prices proved to be more interesting than the parliamentary debate called by the Opposition following its searing criticism over the high prices.
Although, as the government argues, price stability is important, the fall in the price of oil on the international market has been so sharp that people can hardly be blamed for expecting a bigger reduction in the price of fuel than that decreed by the government following mounting national pressure.
Insisting that fuel prices still rank among the highest in Europe, the Opposition is right in reminding the Prime Minister that only four years ago he had led street protests over fuel prices. If, as the Opposition rightly said, Joseph Muscat had insisted that the high prices then were undermining competitiveness, the same argument could be put today.
Dr Muscat may well argue that the situation is different now in that the government is reducing energy tariffs and that, in any case, prices at the pump in Europe are rising again.
The argument is valid only up to a point. First, people in a number of countries have been enjoying reduced prices for some time since the dramatic fall in the price of oil and, second, the reduction in energy tariffs was originally supposed to come about from lower production costs resulting from the setting of a new gas-fired power station. Also to be considered in the equation is the sharp difference between the living standard in Malta and that of advanced EU countries.
The new power station was scheduled to be operational by next month. However, the target date had to be extended by 15 months as the government said it wanted to makeway for the financial involvement of Shanghai Electric in Enemalta.
At the MCESD meeting, Dr Mizzi announced that Enemed, the company that has taken over responsibility from Enemalta for the purchase of fuel, sealed “an advantageous hedging agreement” with BP. He said this would secure the cheapest fuel prices for the coming months, even if oil prices start to rise as had been the case since then.
However, what would have been generally regarded as good news was blunted by the fact that Enemed is planning to stagger the reduction in fuel prices.
What raised eyebrows was the reason given for this – cash flow problems. Because of this, said the minister, the government had opted for a gradual readjustment of prices, which is planned to take place over the next month and in April. Surely, the company could have come to some sort of an arrangement with the banks to avoid such a predicament once the new hedging agreement was in the bag.
In the parliamentary debate, the Prime Minister forecast that there would come a time when fuel prices in Malta would be among the lowest in Europe. No doubt, people will hold him to his word, although other factors can come into play in the meantime that would enable him to free himself from that pledge in the same way as he freed himself from his commitment to step down unless the new power station was completed on time.
Meanwhile, the competition authority is taking too much time in pronouncing itself on the case of the Rabat petrol station owner who claimed he was not allowed to reduce the price of diesel by the supplier. This is unacceptable.