Energy costs are wiping out revenue gains made by hoteliers, to the extent that the sustainability of the hotel industry is being put in doubt, the Malta Council for Economic and Social Development was told at a special meeting today.
The meeting was held at the request of of the Malta Hotels and Restaurants Association (MHRA) to discuss Enemalta and the impact of the energy rates
on the hotel and restaurant sector.
Tony Zahra President of MHRA gave a presentation to the council, pointing out that tourism represents 30 per cent of Malta's GDP, employs thousands of people and impacts practically every person in Malta.
In the last three years, he said, the hotel industry had seen increased arrivals,
increased bed nights and increased room rates leading to increased revenue, however all of this increased revenue had been eaten up by increased costs. The sustainability of the hotel industry was now in question.
He said that one of the major contributors to these increased costs was Enemalta, and the MHRA was concerned that inefficiencies at Enemalta were seriously impacting the industry.
Mr Zahra said hotels and restaurants in Malta were subject to the highest
electricity prices across the EU. Whilst locally established medium-sized enterprises paied the highest prices in the EU, households faced the second highest prices.
"Without any doubt, such a swift increase in energy prices is negatively affecting the profitability of businesses which in turn dents the competitive edge of Foreign Exchange earners such as the industry of hotels and restaurants," he said.
He said that after many years of under-investment, Enemalta's electricity generation efficiency rate currently stood at a low 31.5%. In simple terms, for every €1 of oil that was used, the extent of electricity produced stands at €0.31, 5.
Moreover, at present, electricity revenue was some 25%. While average power efficiency in Europe stood at 72%, that for power thermal plants (similar to
Malta's generation plants) was circa 50%. If Enemalta were to increase its energy efficiency transformation rate to 50% and reduce its workforce by 25%, utility bills of hotels and restaurants would drop by €9 million a year or €0.04,2 per kWh.
Enemalta made a presentation to MCESD about the impact of Geo political issues on the price of oil and its impact on Enemalta costs.
Officials said that by July the Delimara extension would be commissioned and it would have 47% efficiency. Enemalta, also confirmed that by October 2013 the interconnector would be in place.
Consequently the generating capacity efficiency in Malta would go up to 40% this year against the present 31.5% and when the interconnector came on stream, this would further improve efficiency. Enemalta expects the efficiency gains to be passed on to the consumers.