A further reduction in electricity tariffs could harm Enemalta’s recovery process as it seeks to reach break-even next year, Konrad Mizzi has warned.

The sliding price of oil has prompted calls from the business community for another reduction in electricity tariffs over and above the 25 per cent cut that came into effect in April.

But the Energy Minister insisted power tariffs were reduced for the first time last year for households when electricity prices in the EU were rising 

He said Enemalta had cut costs and improved revenue collection but it was still expected to make a loss this year despite the falling price of oil.

“The target is to reach break-even next year and start turning a profit in 2017 when the gas power station and infrastructure would have been functioning for a full year,” he said.

Dr Mizzi also noted that it was often the case over the past decade that a drop in oil prices was muted by a stronger dollar. 

The minister said tariff reductions were based on a seven-year business plan that anticipated the savings Enemalta would make as a result of the changeover to gas from heavy fuel oil. Some of the savings were being redirected to improve the distribution network. 

The Opposition has often said the reductions were also possible as a result of greater efficiency from the oil-fired BWSC plant and the interconnector, along with lower oil prices. But Dr Mizzi insisted savings derived from the BWSC were closer to €18 million per year rather than the often-quoted €50 million. 

He acknowledged the price of electricity from the interconnector varied between 4c per unit to 18c. But he insisted the characteristics of electricity demand in Sicily where similar to those in Malta and most of the time the cheaper prices were available when least needed.

“In reality the price of electricity produced by the new gas power station alone would average at 6c9 he said.

Full story in The Sunday Times of Malta.