|
Kurt Sansone
MaltaToday is providing more evidence that the surcharge introduced in the last budget has nothing to do with oil prices. The proof lies with the very same figures issued earlier this week by the Investments Ministry, which conveniently published the prices of gas oil and fuel oil in dollars and not in Maltese liri utilised by Enemalta to fire up the power stations. The same official figures prove that fuel purchased and used by Enemalta at the power station in 2004 was cheaper than in 2003.
A surcharge of 17 per cent on utility bills, expected to rake in Lm7.7 million next year is the price consumers are being asked to pay for what is in effect a fictitious price hike in fuel oil prices.
The 17 per cent surcharge appears to have more to do with accumulated losses Enemalta has been absorbing since 1999 when the Nationalist administration had reduced the exorbitant tariffs introduced by the previous Labour government.
MaltaToday converted the prices quoted by the ministry into Maltese Liri taking into account the monthly average exchange rate of the dollar to the Lira as issued by the Central Bank. The analysis also took into account the fact that Enemalta uses up to 90 per cent fuel oil and 10 per cent gas oil to generate electricity.
The end result shows the average price Enemalta will be paying in 2004 (Lm64.90) for the oil used to generate electricity is cheaper than what the Corporation paid in 2003 (Lm67.21).
This revelation comes in the wake of insistence on the part of the Prime Minister and the Minister for Investments that their ‘figures’ justify the introduction of a surcharge.
The Lm16 million in ‘additional’ losses that Enemalta is said to suffer and which was quoted by Prime Minister Lawrence Gonzi in the budget speech is the adverse impact the corporation will have to shoulder in 2005 when compared to 1999 when the last adjustment of utility tariffs took place.
In 2005 alone Enemalta will not be losing Lm16 million because of fluctuating fuel prices but Lm6 million as quoted in a report compiled by PricewaterhouseCoopers (PWHC) for the Investments Ministry.
The Lm6 million was arrived at by PWHC after analysing data provided by the Ministry and Enemalta. But in a very telling disclaimer at the end of the report, PWHC state that none of the information provided by the Ministry or Enemalta for the purpose of the study was audited or checked for historical or prospective correctness.
The PWHC report analyses the Electricity Division’s expense on fuel oil since 1999 and compares losses and costs over a five year period. It states that the “fuel-input cost increases, compared to 1999, cost the Electricity Division of Enemalta a total of Lm10.3m in 2004 alone.”
The report goes on to quantify the “adverse price variance arising since 1999” which the Corporation will have to face in 2005. This is calculated at Lm22.7m and then revised down by Lm6.5m to reach the Lm16.2m quoted by Gonzi in Parliament.
In every instance the PWHC report quotes fuel expenditure in relation to 1999, leaving no doubt that the surcharge was introduced to recoup accumulated losses since then.
Social partners misled
The report’s conclusions were used to convince the social partners of the need to introduce a surcharge on electricity and water consumption based on the mistaken premise that the price hike was required because of the price increase in crude oil over the last three months.
After the publication of MaltaToday’s initial front page article last Sunday and a second investigative report in sister publication The Malta Financial and Business Times on Wednesday, the social partners have now called on the Malta Council for Economic and Social Development chairman to convene a meeting on this issue.
The Times yesterday quoted the secretary generals of the largest two unions saying they were always under the impression that the surcharge was being introduced because of the increases in the price of crude oil.
It seems that during the presentation made at the MCESD by the Investments Ministry no differentiation was ever made between crude oil (which Enemalta does not import) and fuel oil (the price of which has remained stable).
Fuel oil cheaper in 2004
Research undertaken by MaltaToday shows that the average price of fuel oil (the oil Enemalta uses to produce electricity) between January and October 2004 according to Platt’s Mediterranean (the international index used by Enemalta to buy its oil requirements) was lower than the average price for the same period in 2003.
These findings are further confirmed by the figures issued by the Investments Ministry for prices actually paid by Enemalta for its fuel oil requirements in 2003 and 2004.
Even the PWHC report shows that Enemalta’s Electricity Division will be paying Lm2.5 million less in 2004 for its fuel oil when compared to 2003.
With the dollar at one of its weakest points against the Euro and the Maltese Lira, the exchange rate mechanism over the past year and a half has had a positive impact on Enemalta’s oil purchase bill. Any rise in the international price of fuel oil would have been smoothed by the favourable exchange rate of the dollar.
It is for this reason that the Ministry for Investment’s press statement earlier in the week to rebut last Sunday’s story in this newspaper was misleading. The tables published by the ministry quoted prices in dollars and completely ignored the positive impact the Maltese currency exchange rate had on the price Enemalta eventually paid. The figures published today in this newspaper take into consideration the exchange rate mechanism.
Oil experts told MaltaToday that it is no surprise that fuel oil did not fluctuate at the same levels of crude oil, which was the oft-quoted price prior the budget to justify possible hikes in electricity bills. Due to lower international demand for fuel oil the price of the refined product does not fluctuate on the same lines as that of crude oil.
Meanwhile, questions (see box) about the surcharge and related issues sent to Investments Minister Austin Gatt on Monday and Thursday remained unanswered. In a very unorthodox fashion, MaltaToday was informed that the minister would only answer questions if he was given a written assurance that his reply would be given equal prominence in this newspaper.
kurt@newsworksltd.com
|
