Infrastructure Minister Austin Gatt yesterday announced that a revised financial forecast for Enemalta has brought to light that, over the next six month period, the total expenditure of Malta’s sole electricity provider will be almost 17 per cent less than expected. Last October, the same Minister announced a controversial price hike in electricity rates based on estimated accounts and the hefty prices with which Enemalta was purchasing its fuel.
This revised forecast came about shortly after Enemalta published its audited accounts for 2006-7, and some time after the price of oil plummeted to the region of US$50 per barrel.
In view of such developments, the Infrastructure Ministry has recommended the Malta Resources Authority (which regulates Enemalta) to apply a 21 to 26 per cent discount “to those bands requiring it most”. The discount is based on the period between March and September, after which a second six-month review will take place.
Gatt however, said that this discount will only be applicable to the domestic sector, therefore excluding the possibility of allowing businesses to benefit from any reduction in the price of oil.
Meanwhile, operators in the tourism sector – particularly bars and restaurants, are shocked at the last electricity bills they received over the last four weeks – the first after the price hike was announced. For the period between February and November 2009, a small-sized bar with neither cooking facilities nor air-conditioning, received a bill amounting to almost €2,500; while a medium sized snack bar – with barely 60 covers, received a bill of between €7,000 and €7,500. A medium sized nightclub received a bill of between €15,000 and €20,000; whereas a high-consumption nightclub received a bill of more than €50,000.
Asked whether he considers such tourism operators as among those “needing the discount most”, especially now that tourism forecasts for 2009 are bleak, Gatt said that bars and restaurants “are not tourism operators” - even though they are subjected to substantial charges for MTA permits, under which such businesses are regulated.
“Businesses may not receive government subsidy, this is the law,” Gatt said in reply to our questions.
Enemalta Chairman Alex Tranter told members of the press that informal talks with the MRA over the Ministry’s recommendations were held and there was “no disagreement on MRA’s behalf with regard to the principles outlined.”
Contacted for his reaction, President of the GRTU tourism, hospitality and leisure division told this newspaper that since the last Enemalta bills were issued, he “has been inundated with calls from establishment owners over the last three or four weeks”.
“I received calls from operators of all sizes, all in the tourism-catering and entertainment industry,” he said. “Some more than others, were shocked at the bills they received – especially when taking into account the slowdown being felt in the industry over the last six months.”
Fenech said that some complainants told him that even if “their establishments were busy, the new bills would not even be affordable.”
“It is obvious that any reduction in oil prices should be reflected in our pricing,” Fenech said. “It wouldn’t make sense for domestic rates to go down without commercial ones following suit.”
Malta Hotels and Restaurants Association (MHRA) President Kevin De Cesare said he was surprised at the news.
“The price of oil has gone down for everyone and we are experiencing a slowdown in tourism. We’re not asking for favors now – this is our right.”
De Cesare said that a detailed position will be published by the MHRA once the issue is discussed internally.
Throughout the controversy which followed the announcement of increased electricity rates last October, an MHRA newsletter sent to its members had carried the news that as a result of efforts made by its president in negotiations with government, smaller bars, hotels and restaurants will be made to pay lower rates on utilities – with some discounts ranging between 10 to 20 per cent on previous rates. Larger establishments however, would pay increased amounts in the region of 5 to 10 per cent.
When Gatt was reminded about this news, he did not acknowledge this agreement and acted as though he did not know what we were talking about.
Meanwhile, Enemalta is faced with a directive issued to members of eleven trade unions so that electricity bills are not paid until the issue is resolved. But Gatt denied that this directive has had any affect whatsoever on Enemalta’s cash flow.
“There are issues with Enemalta’s cash flow, but in no way is this due to the unions’ directive,” he said. “I will not be as cruel to say that this directive was self-serving, and was issued so that they don’t pay their own bills.”
GRTU Director-General and PN EP candidate Vince Farrugia, who had come out with the idea to issue the directive first, told this newspaper that he does not think this comment was directed towards him or GRTU.
Farrugia said he was hoping that the MRA, which received GRTU’s recommendations on the matter, would listen to all parties concerned.
Asked whether he is confident that the authority (which falls under the wing of Resources Minister George Pullicino) would listen to GRTU and not the government, Farrugia said: “My trust in the MRA has been dented, this is no secret, but perhaps this could be a good opportunity for the authority to redeem itself.”