Opposition leader Simon Busuttil appeared to take a leap in the dark when he pledged in Parliament that a future Nationalist government would purchase electricity from the cheapest source and not limit itself to the 18-year power purchase agreement the government has entered into with energy provider Electrogas. He does not know the content of that deal because it is shrouded in mystery.
There are reports, however, that through the power purchase agreement – the purpose of which is to instil investor confidence by ensuring a fixed financial return – Electrogas would still continue to receive regular payments from the State even if the energy was bought from elsewhere. The contract is under investigation by the European Commission.
Dr Busuttil has argued he cannot be bound by an agreement the government keeps secret. It is a reasoned political argument but it is unclear how it would hold up in a court of law.
The Energy Minister in his most recent attempt to deflect calls to make contracts public, said it would be up to Enemalta to decide if it should publish contracts, once these are approved by Brussels.
In the run-up to the 2016 Budget, constituted bodies had appealed for cuts in energy and fuel tariffs in a way that would reflect international oil prices. The Nationalist Party had added its voice to those calls but the government stuck to its policy of ‘stable’ fuel prices, albeit conceding a cut in January.
It is rather ironic that the same government, which has effectively liberalised the energy generation sector by creating space for three suppliers – Electrogas, the BWSC plant and the interconnector – concurrently keeps a tight hold on consumer prices. The whole purpose of liberalising a market is for consumers, not the government, to benefit from price competition. As the situation stands, it shall be Enemalta, as distributor, that shall control consumer prices and not the free market. This means that consumer prices will remain a tool in government control, ostensibly to ensure price stability, although political exigencies will always come into play.
In its pre-Budget submissions, the Malta Chamber of Commerce, Enterprise and Industry had said it appreciated that a degree of stability in fuel prices was important for businesses and industry but added that such stability must not hold the country’s competitiveness to ransom. It had also said that a reduction in the price of fuels and utility rates,coupled with the falling value of the euro, would have had a windfall effect on Malta’s competitiveness.
The Prime Minister’s reaction to the Opposition leader’s pledge to go after the cheapest source was rather condescending. He said: “I believed we had reached a certain political maturity in this country; that we had moved beyond dishonouring agreements. Isn’t that what people voted for?”
It is doubtful that people voted for such secrecy in government agreements, and this applies not just to the energy sector. Political maturity, to use the Prime Minister’s own words, would have seen the government bring before Parliament the agreements it reached with the energy suppliers, with Henley & Partners over the sale of Maltese citizenship and with Autobuses de Leon on public transport, among other contracts.
If, for the Prime Minister, it is politically immature to dishonour agreements his government signs, how much more immature is it to keep secret agreements that bind future administrations on acrucial sector like energy?