Fuel hedging would be retained in order to keep prices at the petrol station stable, the government said yesterday.

In view of the fall in the international price of oil, observers questioned whether the government should change its hedging policy, which had backfired over the past months.

However, Energy Minister Konrad Mizzi insisted yesterday that, rather than backfiring, the policy had given the desired results. “We hedged to keep stability. Pump prices in Malta are still lower than the EU average,” he said.

When Times of Malta pointed out that the cost of petrol could still go down further due to increasingly lower prices on the international market, Dr Mizzi said the government was primarily after stability.

Pump prices in Malta are still lower than EU average

“We are now hedging for a three-month period, which is a short time frame, where the risk is very low,” Dr Mizzi said.

“If the international situation changes, we will hedge for longer periods,” he added.

He ruled out stopping hedging.

Since the change of government in March of last year, Enemalta adopted a policy of buying fuels – petrol and diesel – via a hedging system, whereby it purchases its future fuel supply through a fixed rate, locked in over a time period.

The price remains unchanged, irrespective of any fluctuations in international prices.

The recent steady drop in the international price of oil meant that the prices agreed to under the hedging deal are higher than those quoted on the international market at present.

Fuel prices at petrol stations include hefty excise duties.

Asked whether he thought such duties could be cut to compensate for the drop in oil prices, Dr Mizzi said the government had just announced a 2c drop in the price of petrol and 1c in the case of diesel.