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It is noted with regret that in the MaltaToday issue of the 5 December, you failed to publish this Department’s reply sent to you in terms of the Press Act, with the same prominence as required by law. Furthermore, the layout was such as to confuse readers as to who wrote what. Placing the said reply in the letters’ page is obviously both deliberate and unjustified.
It is not true, as you state on page 1, of the aforesaid issue of MaltaToday “that the surcharge … has nothing to do with oil prices” (repeated in the editorial). Paragraph 33 of the PWC report states “the cost escalation projected for 2005, when compared to 2004, would be… Lm6 million” (to which PWC suggest that a further Lm5 million is added to make good for the change to LSFO). You have this report, yet you start on page 1 with a clearly misleading statement.
It therefore follows as well that your statement that the surcharge is to make good “for a fictitious price hike in fuel oil prices” is also not true since the surcharge is meant to cover the expected price hike for 2005 which is estimated by PWC at Lm6 million (closer to Lm8 according to Enemalta). You eventually admitted as much in a press release you issued on Sunday afternoon. Even, you now seem to admit there is no basis for your claim that the price or its basis were fictitious.
You also state twice in two different paragraphs “figures prove that fuel purchased by Enemalta at the power station in 2004 was cheaper than in 2003”.
Who ever said otherwise? Who ever said that in 2004 Enemalta would pay more, in Lira terms, than in 2003? Certainly not the Ministry of Investment, Industry and Information Technology. You even had the cheek to call this a “revelation” when in fact in January 2004 (11 months ago) Enemalta estimates were laid on the Table of the House (and subsequently debated) showing, that in 2004 we were expecting to spend Lm4 million less than in 2003 (actually the difference turned out to be Lm2m circa).
Your so called ‘revelation’ has been public knowledge for 11 months and, to boot, the figures were once again published by the Ministry on the Internet and subsequently in hard copy format.
I earnestly hope that now we will not be faced with the argument “but that is the impression you gave us”! Minister Austin Gatt certainly never said anything of the sort in the press conference he gave post-Budget speech and Mr John Zarb of PWC certainly did not give this impression to the MCESD partners when he presented the relative report.
In both these events the said Ministry always used Maltese Liri and not dollars, never referred to spot or average prices, but always to yearly figures in Maltese Liri that would be paid by Enemalta and never referred to crude oil but only to the oils imported by Enemalta. There are documents (including the PWC you already have) that show this.
Obviously it is difficult for you to appreciate this, since yours was the only paper which failed to turn up for the press conference the Minister held two days after the budget speech, during which a detailed presentation with all the facts was handed out to the members of the press who attended. You then have the cheek to state that we “deceived” and that “none of the minutes (sic) of details were at any stage made known to the public …” People in glasshouses (or the press that does not attend press conferences) should not throw stones.
The Ministry of Investment, Industry and Information Technology had no interest in trying to hide the fact (as you imply) simply because the 2004 fuel bill has nothing to do with the surcharge. The surcharge has been put in for 2005 and not for 2004 - no one is paying a penny more for consumption in 2004!
The surcharge does not work backwards but is a forward projection of future costs. As the PWC report clearly states, the surcharge is meant to cover projected additional fuel cost for 2005 when compared to 2004.
PWC conclude as well that if you compare 2004 to 1999 (the year tariffs were last revised downwards) Enemalta will have absorbed, in 2004, some Lm10 million in increased fuel costs - a sum it will again incur in 2005.
In fact the projected losses for the Electricity Division for the financial year ending September 2005 stands at Lm15.7 million, which - as you conveniently ignore - will be entirely absorbed by Enemalta after the fuel surcharge revenue is accounted for, which confirms how misleading you are when you say that the Corporation’s inefficiencies are being loaded onto the consumers.
You also fail to quote what perhaps is the most telling remark in the PWC report: “it would take an extraordinary set of circumstances for the Corporation to recover lost ground without effecting tariff increases or tackling the issue in whole or in part through other measures” (paragraph 39 and 40, page 11).
It seems, therefore, that the opinion of PWC and the opinion of MaltaToday as to what Enemalta should do to recover its additional fuel costs in 2005 are at loggerheads. The Ministry of Investment, Industry and Information Technology prefers to rely on PWC.
We may, however, all be wrong since all we have is an educated guess - which is why the surcharge has not been cast in stone and will be reviewed up or down on a six monthly basis. Should the projected fuel costs for Enemalta drop to the baseline of Lm31.6 million (as calculated by PWC, paragraph 36, page 11) the fuel surcharge would be removed. 52 per cent of any incremental fuel cost above that baseline will be absorbed by Enemalta. The other 48 per cent will be recovered through the fuel surcharge.
On Sunday 5 December, three different newspapers published extracts from the PWC report. The most telling point is that the three papers published completely different quotes! Can I suggest that the whole report is published and readers left to decide on their own.
It should also be noted that contrary to what you report in your newspaper (the PWC report “was kept under wraps”), the PWC report has been available on the Ministry’s website (www.miti.gov.mt) far earlier than MaltaToday pronounced itself as an authority in the fuel industry. If MaltaToday does not visit Ministry websites apart from not attending press conferences, then once again it’s your problem.
It is noted with pleasure that you seem to have abandoned your previous stance that the international price of LSFO and Gas Oil has remained relatively stable (MaltaToday 28 November 2004 page 1, paragraph 1). Similarly your assertion, in the same issue that “(fuel oil)… has not experienced any significant fluctuations in the international market” seems also to have been thrown overboard following our publication of detailed tables showing actual international market prices.
A similar fate, now that you have bothered to look at the PWC report, seems to have met your statement “The high price of crude oil is Government’s justification” Since the PWC report (as well as this Ministry’s presentation to the Press and to MCESD) were always in Maltese Lira and never mentioned crude oil once, it is hardly reasonable to expect you to keep it up.
In the face of irrefutable evidence your paper has now abandoned its previous statements that fuel oils used by Enemalta have not increased in price in dollar terms. Even more satisfying is that you seem to have abandoned the crazy graph you published two Sunday’s ago, probably realising (finally) it has nothing to do with Malta’s pricing.
I could of course go on and on picking one misleading statement after another but since you will probably include this answer in the letters page I do want to leave space for other correspondents.
Emanuel Abela
Director of Information
Editor’s note: It is surprising how the tone of this letter contrasts completely with the statement made by Investments Minister Austin Gatt on Radio 101 last Sunday when he thanked this newspaper for publishing his full reply including the tables of oil prices quoted in dollars.
Without delving into each and every point raised by Mr Abela it is pertinent to note that this newspaper has not abandoned the graph that it published two Sundays ago. Indeed the information in that graph depicting average prices according to the Rotterdam index, which showed how the price of fuel oil in 2004 was on par with that in 2003, was confirmed by subsequent information published by this newspaper indicating the price according to the Mediterranean index.
Whatever index one chooses to quote from, fuel oil has not experienced any significant fluctuations. As for Enemalta’s fuel oil purchases in 2005, the Ministry has a lot of explaining to do. Losses have been calculated using 1999 as a benchmark, something, which was never talked about until before MaltaToday revealed that the surcharge had nothing to do with crude oil prices.
It is Minister Gatt and not MaltaToday, who insisted on quoting the price of crude oil prior to the budget to justify any change in utility bills even if the Minister knew full well that crude oil fluctuations had nothing to do with Enemalta’s oil purchases.
After all it is the social partners who are requesting further clarification from Government after admitting that they were never informed of the difference between crude oil and fuel oil.
But, what Mr Abela’s reply fails to talk about is the Investments Minister’s apparent refusal to answer the 10 questions sent to him by this newspaper last week. Up until the time of going to print, MaltaToday has not received answers from Austin Gatt despite a fresh reminder sent this Thursday.
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