Reductions in energy tariffs will lead to 0.5% GDP growth - Scicluna

The energy tariffs reduction, which were introduced on 31 March, will increase consumption by €42 million, finance minister Edward Scicluna said in a press conference in Republic Street, Valletta.

Insisting that the reduction proved that Labour's electoral pledge was not a gimmick, Scicluna said that the proposal was costed and based on realistic plans to reduce the cost of energy generation.

"When we were elected it was evident that the plans of the previous administration were to increase and not reduce energy tariffs," Scicluna said.

He explained that the government is expecting the reductions to have a positive effect on the country's economy, especially thanks to the €30 million advance payment by Electrogas, the company constructing the power plant in Delimara.

"One of the first effects will be that of a 0.5% growth in the country's GDP" he said, adding that this would effectively mean a €42 million increase in the peoples spending power.

Noting that the reductions were of a progressive nature, the minister said that lower income families would enjoy greater reductions when compared to higher income families.

"Although the reduction will have a positive effect on the economy, we are very satisfied that the lower income families will benefit the most."
Asked whether Electrogas had made the front payment of €30 million, Scicluna said that the question should be posed to Enemalta and the energy minister Konrad Mizzi.

However, he explained that the contractors had entered into an agreement to make the front payment which was only possible due to the long term contract signed by government with Electrogas and the cash injection by the Chinese government owned company.

Scicluna also said that if the power plant will not be completed by March 2015, Enemalta will be in a position to guarantee the subsidies to further reduce energy bills instead of Electrogas.

"If there is delay in the commissioning of the new power plant then Enemalta, which we believe will soon be in a much stronger position than it is in now, will guarantee the subsidies to further reduce bills for businesses as of next year," he said, adding that the delay would be of a few months at most.