Petrol price is plummeting in the EU. Photo: Jason Borg

Pressure is increasing on the government to explain why fuel prices here remain high despite a continuing free-fall in the rest of the European continent.

Joe Falzon, who used to head Enemalta’s fuel procurement advisory committee until 2005, told Times of Malta that, although hedging was an important tool used by many fuel buyers, one had to be as flexible as possible, particularly when prices on the international markets were as volatile as they were now.

“I am not against hedging because this is an important tool if used properly. However, one has to be on the lookout and not be so tied up to one rigid policy,” he said.

Noting he did not know why Enemalta was not explaining the situation with regard to fuel purchases, he said it made more sense to be flexible so that, while keeping the option of hedging open, one could easily switch to the spot market (daily situation) when international prices were falling.

Asked whether the prevailing situation was backfiring and proving that hedging was not working, Prof. Falzon would not comment adding it was something Enemalta should go into.

“We were not given any information and so it is only the government that knows how and at what price it is locking its fuel purchases.”

Despite various calls, particularly by the Opposition, to publish fuel procurement contracts, the Energy Ministry has so far refused to give any such information citing commercial reasons.

Over the past eight months, the price of fuel sold at pumps in Malta were cut twice.

At the end of April, Prime Minister Joseph Muscat announced during a press conference the government had managed to lock the price of unleaded petrol and diesel until the end of 2014 at €1.44 and €1.36 a litre respectively.

Later, during the Budget speech, the government announced another cut in prices, reducing them by a further 2c for unleaded and 1c for diesel from the beginning of 2015.

However, a new exercise by Times of Malta shows that the situation in Malta is a far cry from what is happening in the rest of the EU.

Since Dr Muscat’s announcement last April (see table), the average price of unleaded petrol in the EU fell by 32c a litre against 4c in Malta.

In the same eight-month period, the average price of diesel in the EU fell by 22c a litre and 1c in Malta.

In a statement yesterday, the Nationalist Party again insisted the government was keeping fuel prices high to make significant profits.

While accusing the government of “blatant robbery” at the expense of drivers, the party in Opposition called for a significant downward revision of fuel prices.