The Chamber of Commerce and Industry this morning pleaded to the prime minister to reduce energy tariffs, warning that in view of the sharp drop in international oil prices, the tariffs in Malta risk making the island uncompetitive, particularly for manufacturing industry.
The appeal was made directly to the prime minister by Anton Borg, chamber president during a meeting at the chamber.
"We empathise with your reasoning that people and businesses want stability in prices, but on the other hand the current tariffs are based on oil prices of over $100. This Tuesday, as you know, oil prices briefly fell below the $30 per barrel level and are predicted to continue to fall even lower.
"Consequently in our view, the term 'stability in prices' needs to be redefined. there needs to be a structure of bands whereby energy prices are reflective of material changes in the price of oil but without necessitating change in energy prices with a change of a few dollars in oil prices.
"While we are aware of Enemalta's financial situation, we fell that further reductions are justified to protect Malta's export competitiveness position particularly in price-sensitive sectors such as manufacturing, given that electricity typically represents around four percent of turnover or 12% of overhead costs.
"We fear that further erosion of Malta's limited cost advantages together with the high significance of energy in production costs could lead to investment decisions which are detrimental to our country and favourable to alternative lower cost locations.
Replying, Dr Muscat said that for his sins, he had learnt in theory classes in economy as well as in practice that one should not base one's predictions on what happened within a span of a few months, or even a couple of years sometimes.
One had to look at history or risk being doomed to failure.
"I want to take the economy out of the boom and bust scenario. It is very easy not to hedge any longer and to make hay while the sub shines, but then when the prices go up again, we will find ourself in a bust scenario again.
"Our model is one which produces stability. Household (energy) prices are mong the cheapest in Europe and that of businesses is well within European levels.
"I believe more can be done, not to help businesses get out of a rut, but to help them achieve further success. And we also have to factor in 25 years of unpaid Enemalta debts which have to be paid back.".