The Infrastructure Ministry said today in reaction to comments by PL leader Joseph Muscat that it had nothing to hide about the oil purchasing process and the procurement process had already been explained.

The ministry said that every so often, usually a year or 18 months, Enemalta issued an international call for tender to buy oil. Several international oil companies normally applied, and the current supplier of fuel oil and gas oil was Italian company Totsa.

In view of price volatility, the tenders were not based on lowest prices, but on margins. In the case of fuel oil and gas oil, Enemalta's purchases were based on the PLATTS average monthly benchmark .

This was an open, transparent process open to international competition and prices were determined by the market, the ministry said.

The ministry said this process did not involve hedging costs. There were periods when hedging was made or could not be made, For example, the 2010 electricity tariffs were based solely on the oil prices quoted for 2010 delivery. Hedging had nothing to do with direct oil purchases but was a financial instrument. Hedging was made with the banks, not the oil companies. And most deals were made on crude oil and not the type of oil used by Enemalta.The ministry pointed out that the Opposition refused to sit on the Fuel Procurement Committee when it was set up in 2005.

As a result of the committee's recommendations, Enemalta had also set up a committee on Financial Risk Management and hedging headed by Enemalta officials including the chairman, his deputy and the CEO which worked in consultation with the Central Bank and leading international intermediaries.