Petrol and diesel prices will drop in the coming weeks as fuel hedges negotiated by Enemed expire, the Energy Minister said.
Konrad Mizzi would not elaborate but defended the government’s policy to seek stability by hedging long term.
The government has come under fire over the price of petrol and diesel after the international price of oil dropped to almost $40 per barrel.
“We have some hedges that will expire in the coming weeks and as we did in the past, we will announce a reduction in the price of petrol and diesel,” Dr Mizzi said yesterday.
He acknowledged the direct link between the price of oil and the price of petrol and diesel but said the policy to hedge has ensured price stability and a gradual reduction over the past two years.
“There is a time-lag between movements in international oil prices and fuel pump prices but they are linked, unlike the price of electricity where other factors come into play,” he said.
Reacting to a call by business organisations for a further 30 per cent reduction in electricity tariffs as a result of the drop in oil prices, Dr Mizzi said oil was only one component in the equation.
“Oil is only one factor that determines tariffs; the interconnector is another and the investments Enemalta has made and the return on those investments are another factor,” Dr Mizzi said.
He insisted that last year when average electricity rates abroad were increasing because of the price of oil, Enemalta was reducing them by an average of 25 per cent. Electricity rates for households were reduced in March last year and a similar reduction took place this year for businesses.
The Chamber for Small and Medium Enterprises, GRTU, and the Chamber for Commerce, Industry and Enterprise have called for a further reduction in the wake of falling oil prices.
The Nationalist Party has backed their call.
Finance Minister Edward Scicluna shot down the argument, insisting Enemalta was still paying for the Delimara power station built in the early 1990s.
Shielding the government from criticism it lacked pricing transparency in the energy sector, Dr Mizzi said Enemalta will give a presentation at the Malta Council for Economic and Social Development on the matter.
“I will be proposing a meeting of the MCESD and we will adopt an open book policy with the constituted bodies on Enemalta’s financials,” he said.
Asked whether the pricing strategy will be made public, Dr Mizzi said that Enemalta became a public liability company last year and its accounts will be filed with the Malta Financial Services Authority for public scrutiny. “It is important to have low tariffs and we will strive to keep them so but we also have to ensure Enemalta has a strong infrastructure and over the next three years it will invest more than €60 million in the distribution network,” Dr Mizzi said.