Update 2 - Enemalta subsidies to be retained, power tariffs will not be raised - Fenech

Updated - Adds PL, Konrad Mizzi reactions -

Finance Minister Tonio Fenech said this morning that Labour was trying to deceive the people in the promises it is making to reduce energy tariffs.

The Labour Party, in a reaction, stood by its promises and noted that the government did not know how much electricity imported from the undersea cable would cost.

Speaking at a press conference this morning, Mr Fenech said the PL's 'energy spokesman', Konrad Mizzi, was making conflicting and misleading statements.

He noted that Mr Mizzi had said that a Labour government would not raise the subsidy given to Enemalta - currently €30m. This implied that in order to implement its promise, Labour would have to raise taxes, Mr Fenech said.

He said the subsidies were keeping tariffs stable and the government had decided that they would be retained in the Budget and tariffs would thus not be raised.

The minister noted that Mr Mizzi had also said that Labour would employ cheaper technologies and he had mentioned two. The first was the Sargas proposal for a floating power station about which there were many questions relating to its feasibility, the environmental implications and the fact that it would take five to seven years to commission.

The second option was to use more environment-friendly power generation plants. The government, Mr Fenech said, had carried out studies on using natural gas. However just installing a gas pipeline from Sicily would cost €334m, twice as much as the electricity cable from Sicily. This would put upward pressure on the electricity tariffs even though production of electricity through gas was fractionally cheaper. Furthermore, no one knew how gas prices would fluctuate in the future, particularly in five years' time, the minimum time required for such a project to be commissioned. By that time it was likely that gas prices would be higher than today.

The possibility of building an offshore terminal on Hurd's Bank was being investigated, but the costs would not be much lower than a gas pipeline.

Other options was to use liquefied natural gas, which would require an investment of €275 million to build huge gas tanks in Delimara, ruining the environment. Another option was  to use Compressed Natural Gas which would require the purchase of at least three specialised ships and make Malta reliant on them, despite the ravages of the weather and other considerations.This was too risky for security of supply.

Mr Fenech said the government was considering the possibility of a gas pipeline, but only if substantial EU funding was available, thus ensuring that the financial burden was not transferred to the tariffs.

All considered, Mr Fenech said, it was clear that to reduce the tariffs for consumers, a Labour government would have to raise taxes for everyone. The people, he said, should not be deceived.


In a reaction, the Labour Party said Mr Fenech knew nothing about the energy sector.

It said the government had no credible energy policy and Mr Fenech was responsible for the procurement of the €157m BWSC power station which uses heavy fuel oil and does not work yet.

It would be better for the minister to await the PL electoral programme, it added.

The party also reiterated its claim that according to the EU’s Autumn Economic Forecast, the government would raise the tariffs again after the election.

In his more detailed reaction, Dr Mizzi said Malta’s electricity tariffs were much higher than those of other EU countries and European Union counterparts and this was putting a lot of pressure on both households and industry.

The Prime Minister had the opportunity to invest in a clean gas power station which would have resulted in lower tariffs and a  significant improvement in  health and well-being. Howeve, Malta had commissioned a power station fueled by heavy fuel oil after changing the country's environmental legislation. 

He said the plans for the undersea cable were a positive development, but the government did not have a robust commercial plan to procure electricity from Europe.
"Government has invested €200 million and does not have an indicative price for buying electricity over the cable," Dr Mizzi said.
Dr Mizzi said that the minister had also admitted, on TV, that  wind energy, which accounted to 40% of Malta's clean energy target, was failing.
Dr Mizzi said the PL would reduce the cost of electricity generation which, in turn, would reduce the need for Government subsidies to Enemalta.
"We are saddened that Tonio Fenech has given up on making Enemalta competitive and his only response to our energy challenges is to provide subsidies to Enemalta which only alleviate a small proportion of the pain the tariffs are causing to our economy. This does not address the core problem which is the cost of electricity generation," Dr Mizzi said.

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