How is it possible for Malta to assume the European Union presidency in January when at the same time it will be infringing the EU competition rules in the fuel sector, particularly petrol and diesel?
On October 13, 2006, the European Commission said it had opened an infringement procedure against Malta for maintaining an import monopoly on petroleum products. The commission sent a formal request to Malta concerning the failure to abolish the monopoly for importation, storage and wholesale of petrol-eum products.
According to the commission, under the Accession Treaty, Malta was required to comply with Article 31 EC Treaty, which forbids discrimination between member states’ nationals with regard to commercial state monopolies.
The European Commission reported on June 28, 2007, that it issued a formal request to Malta to adjust its monopoly for the importation, storage and wholesale of petroleum products.
Strangely, on December 18, 2007, the European Commission announced that it closed the infringement procedure simply because Malta enacted subsidiary legislation to create a framework for a new licensing procedure to allow other companies to apply for a licence.
The European Commission should have waited to see how this legislation was going to be implemented.
The latest list of importers published by the Regulator for Energy and Water Services (REWS) is meaningless. First of all the majority of these importers are interested in bunkering and not in the inland market. Secondly none of them own storage facilities.
In practice, the situation in Malta today is not much different from that of 10 years ago when the commission opened the infringement procedure.
Enemed, instead of Enemalta, is still the only importer of petrol in Malta. So the monopoly in the case of petrol is still there.
In the case of diesel, there are two minor importers in addition to Enemed, but the price of diesel for the consumers is exactly the same all over Malta. So what has changed? Maltese citizens are still being discriminated against when compared with other EU citizens.
Article 37 of the Treaty on the Functioning of the European Union (TFEU) is still being breached.
On October 2, the Prime Minister said that over the past three and a half years, the government reduced the prices of petrol or diesel 11 times. What further proof does the European Commission need to realise that we do not have a free market for petrol and diesel?
In which EU member state does the government decide at what price petrol and diesel are to be sold?
The government of Malta has no control on the international price of oil. It can only retain an abnormal margin of profit at the expense of consumers when the international price of oil goes down.
How is it possible for a minor importer of diesel, such as the Falzon Group, to offer diesel to filling stations at lower prices than those of Enemed, on condition that they sell it at the same price of the diesel sold by Enemed?
In which EU member states do consumers not have a clue what brand of petrol or diesel they are purchasing?
Is it not obvious that Enemed is abusing its dominant position in the local market in contravention of the TFEU? How much abnormal profit did Enemed accumulate over the past three years?
According to the Budget speech, Enemed is investing €50 million in new storage facilities at Ħas-Saptan. What happened to the government’s ‘pro-business’ policy? Why did the government not issue a call for expressions of interest for the new facilities to private companies and the local representatives of foreign oil companies that might be interested in importing petrol and diesel?
In which EU member states does the government own practically all the storage facilities for petrol and diesel? Is this not a monopoly infringing Article 37 of the TFEU? Why is the European Commission allowing such a situation in Malta?
In which EU member states do consumers not have a clue what brand of petrol or diesel they are purchasing? In which members states are filling stations allowed to sell petrol or diesel without indicating the brand?
The price of petrol in 16 member states is lower than in Malta, according to the European Commission’s Weekly Oil Bulletin, which publishes the consumer prices of petroleum products inclusive of duties and taxes.
These countries are: Austria, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Luxembourg, Poland, Romania, Slovakia, Slovenia, Spain and the United Kingdom. Until a week ago, the price of petrol in Belgium was also lower than in Malta.
In Bulgaria, the price of petrol is 99.5 cents per litre, 27.5 cents cheaper than in Malta, or 21.6 per cent lower. In Cyprus, the price of petrol is €1.17 per litre, 10 cents lower than in Malta. There is no reason why petrol in Malta should be more expensive than in Cyprus. But in Cyprus the market is free.
There are 15 EU member states where the price of diesel is lower than in Malta. These are the same countries where the price of petrol is lower than in Malta with the exception of Cyprus, Hungary and the United Kingdom, but including Germany and Greece.
In Bulgaria, Lithuania and Luxembourg, the price of diesel is below €1. In Bulgaria the price of diesel is 96.7 cents per litre, that is 17.3 cents lower than in Malta, or 15.2 per cent lower.
What is keeping Enemed from publishing its tenders for the supply of petrol and diesel on the European Union’s TED – tenders electronic daily, as other companies in the EU do?
It is worth recalling that seven years ago, the price of petrol in Malta was €1.18, while the price of diesel was 96 cents. It is not true therefore, that we have the cheapest prices of petrol and diesel at present. There were times when the price of petrol in Malta was nine cents lower than it is now, while the price of diesel was 18 cents lower.
In addition to the abnormal margin of profit that Enemed is accumulating, the government is collecting more than €140 million in duties and taxes on petrol and diesel during this year. This amount includes the duties and taxes that the government is collecting from the sale of petrol and diesel by Enemed alone, and it does not include the amount of duties and taxes collected from the sale of diesel by the two minor importers.
It is clear that the government does not need to keep Enemed in a dominant position in the local market. It is collecting enough money from duties and taxes. The importation, storage and sale of petrol and diesel should not remain in government hands, but should be transferred to the local representatives of the foreign oil companies, who should be allowed to compete among themselves on a level playing field.
Finally, it should be recalled that in Malta, consumers have no protection against price fixing as we have seen from the Rabat case of January last year. The Malta Competition and Consumer Affairs Authority (MCCAA) has taken no action against the Falzon Group or the Rabat filling station, with the excuse that it is not a court. It is evident that the MCCAA is looking after the interests of the state-owned companies, and not Maltese consumers.
Unfortunately, Malta’s consumers have been rendered second-class citizens of the EU because neither the European Commission nor the MCCAA have taken any steps to make sure that they are not discriminated against when compared with other EU citizens when it comes to the purchase of petrol and diesel.
However, the Malta Automobile Club is going to continue to write to the European Commission and the European Parliament to take action to truly liberalise the fuel market in Malta.
Malta should not be allowed to continue to infringe the EU competition rules in the petroleum sector, particularly during the time when it assumes the EU presidency.
Alfred Farrugia is president of the Malta Automobile Club.