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Kurt Sansone
The instability in Nigeria’s oil-producing Niger basin and loss of oil production in the Gulf of Mexico because of hurricanes has reached the fuel stations in Malta with motorists on Friday, seeing the price of fuel jump for the second time running.
The heftiest increase was that in the price of diesel which is now selling at 34c4 per litre, an increase of 2c9. Unleaded petrol and Lead Replacement Petrol increased marginally by 0c2 per litre and are now selling at 38c8 per litre and 41c8 per litre respectively.
But the increase in fuel prices is only one aspect of the international instability caused by unstoppable oil prices that this week breached the USD50 a barrel threshold.
It is estimated that the oil prices will have an adverse impact on Enemalta’s fuel bill for this year to the tune of Lm4 million. Government’s decision, for now, is that Enemalta will absorb the additional burden and not pass it on to the consumer for this year.
World markets have been rocked by higher oil costs and Malta is no exception with Parliamentary Secretary Tonio Fenech appealing this week for people to be prudent about energy use.
In comments he gave sister publication The Malta Financial and Business Times, Fenech said government was monitoring the situation, but it was too early to say whether any decisions would have to be taken in the forthcoming budget as a result of higher oil prices.
Asked by MaltaToday, a spokesman for the Central Bank said it was too early for the Bank to comment in a definite manner on the impact of higher oil prices on the Maltese economy.
“The Bank has already indicated that the higher cost of oil has had an impact on the country's external reserves and the Governor has commented on the importance of containing domestically generated price pressures to countervail the impact of higher energy prices,” the Central Bank told this newspaper.
Fears of higher inflation are not far off people’s minds. Rising fuel prices since 2002 have had a creeping impact on the cost of living and the recent international unrest could very much have an impact on utility prices in the near future.
Dependence on oil for energy generation leaves Malta in a vulnerable position. With the first results of the Malta Resources Authority’s strategy for renewable energy sources still six to nine months away, it will be years before Malta can hope to see a portion of its energy generated by the wind or sun.
Asked by MaltaToday about the development of a national strategy to encourage renewable energy sources, MRA Chief Executive Antoine Riolo said the authority was working on a strategy that “deals with legislative, administrative, economic and marketing aspects for the orderly introduction and exploitation of renewable sources of energy.”
Riolo said: “The strategy will seek the establishment of the appropriate receptive business environment that would facilitate the implementation of the feasible technical measures while taking into account existing constraints and limitations in Malta.”
The first results of the work being carried out are expected in six to nine months time, which means that a plan may be published sometime next year.
But the country’s energy needs do not seem to be of a high priority. Riolo admitted to MaltaToday that the MRA does not yet have a finalised document outlining a national energy policy. The draft document is at an “advanced stage,” Riolo told this newspaper but it has not been published for public consultation “in view of other more pressing priorities undertaken.”
The energy policy is expected to be in line with the White Paper on an Energy Policy for the EU and other EU directives. It seeks to integrate three main issues namely: overall competitiveness, security of energy supplies and environmental protection.
Asked about the current status of investors who would want to go for renewable energy and whether they could hook up to Enemalta’s grid, Riolo said that transitory arrangements have been drawn up with Enemalta for supporting electricity generation from small scale RES including photovoltaic panels on domestic and commercial premises.
But while international oil prices continue to shoot up, oil exploration continues to yield negative results and Malta’s energy bill continues to rise, the MRA asks potential RES investors to “defer” their investment.
“Conscious of the environmental benefits, the contribution towards change in fuel mix and the impact on security of supply from RES projects, the MRA encourages such investment in RES. At the same time however investors are being requested to defer their investment for the short-term, until the appropriate regulatory framework is established,” the MRA CEO told this newspaper.
kurt@newsworksltd.com
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