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From Emanwel Abela
Director of Information
I refer to the article written by Mr. Kurt Sansone entitled “Surcharge Sham: How the rising price of crude oil was confused with the stable price of fuel oil” published in the Maltatoday of November 28, 2004.
The Ministry for Investment, Industry and Information Technology refers to the uninformed commentaries and unfair reporting that this newspaper has used since the budget speech in an attempt to cast doubt on the Government’s grounds for the introduction of a fuel surcharge.
The Government published the report by PricewaterhouseCoopers (PWC) of 15 November 2004 on the effect of fuel input costs on the results of Enemalta’s Electricity Division.. This report provides ample, factual information to counter the doubts created by the cynical use of irrelevant numbers featured in this newspaper.
Mr Sansone has not sought to argue that it is not true that the cost of fuel for Enemalta has increased. We would like to point out that the conclusion that Enemalta will next year need to recover an additional Lm16.1 million was not reached by us nor by Enemalta but by PricewaterhouseCoopers and based on Future Prices as of this month.
The PWC study was explained at length by PWC representatives at the MCESD. It was later repeated – in a shortened form – at a press conference held by this Ministry on Friday 26 November. Your paper was not present at the press conference even though you were invited.
Just in case MaltaToday also doubts the competence of PWC, the Ministry is publishing the average monthly prices PLATTS Mediterranean (the reference price used by Enemalta for its purchases) for 2003 and 2004 of Gas Oil, Light Sulphur Fuel Oil and High Sulphur Fuel Oil.
In order to make the right comparisons, one should note that Gas Oil is mostly used in summer and accounts for some 10 percent of consumption whilst High Sulphur Fuel Oil was phased out completely – for environmental reasons – in February 2004.
• Gas Oil and Low Sulphur Fuel Oil (the only two fuels now used by Enemalta) have registered a higher price each month since March 04 compared to the same month last year, except for two blips for LSFO in July and August;
• November 2004 prices compared to January 2004, show that Gas Oil is now 57 percent higher than it was in January whilst Light Sulphur Fuel Oil is 15 percent higher;
• Last year’s average price for High Sulphur Fuel Oil (which was the main fuel utilised) was $139. This year’s average price for Light Sulphur Fuel Oil (to which we have switched to achieve EU Clean Air norms) is $168 – on a monthly basis the variance is some 30 percent higher – we could, of course, have continued to burn High Sulphur (and the increase would have been less) but is then almost certain that the Government would be criticised on health and environmental considerations;
• In simple words - the price Enemalta pays for fuel is more expensive this year than it was last year or any other year for that matter.
In support of its allegation, you publish data derived from the Rotterdam Quotations-Barges FOB which is absolutely of no relevance to Malta because:
• Enemalta does not buy at Rotterdam prices but at PLATTS Mediterranean which are the prices available in this region;
• The prices shown by MaltaToday are daily spot prices and not monthly averages which is the system used by a consumer the size of Enemalta;
• The source figures are averge prices on a particular day of all European countries whilst what concerns us is the specific position of Enemalta – averaging out averages is a sure way to get confused results!;
• Simple logic dictates that if crude goes up (be it Brent, Texas, Russian, Iran, Libya, OPEC or whatever the source and there are different prices for each) so will the refined product – MaltaToday seems to want to square a circle by stating that whilst crude has gone up the refined product has remained stable
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