The drastic reduction in international prices of refined oil since the end of October means that the water and electricity surcharge should fall to 61 per cent, according to a report tabled by the Labour Party.

MLP leader Joseph Muscat yesterday insisted that the government was in effect increasing the surcharge to 194 per cent through its new water and electricity tariffs.

He pointed out that while between September and October the energy index in the eurozone was down from 15 per cent to 12 per cent, in Malta it increased from 18 per cent to 24 per cent because the surcharge was at 95 per cent.

Dr Muscat told unions during a meeting at the MLP headquarters that the new water and electricity tariffs were based on skewed figures and should be revised immediately following thorough consultation. He said the government should "go back to the drawing board."

Dr Muscat said the Labour party was publishing its workings because it had nothing to hide.

He added that a trade union council should be set up to facilitate social dialogue and present a common front on important issues. In a statement later, the government rebutted Labour's latest calculation and said they were based on the wrong premise.

Infrastructure Minister Austin Gatt insisted that if the new water and electricity tariffs were applied as surcharge, this would have led to a 130 per cent increase in bills - not 195 per cent as the MLP was claiming.

He said the government was not hiding Enemalta's inefficiencies and had brought in experts, KPMG, to make sure that the inefficiencies were excluded from the calculations. The ministry said the surcharge was not calculated on the fluctuating oil price of the day but on the rate between July and September, when it had reached record levels.

As the two parties refuted each other's claims, the unions insisted on a revision of the tariffs and a proper consultation process. They warned that this situation could lead to a vicious cycle affecting all aspects of Malta's economy.