MHRA concerned over Enemalta’s ‘inefficiencies’

A request by the Malta Hotels and Restaurants Association was today upheld when the MCESD met to discuss Enemalta and the impact of energy rates on hotels and restaurants.

During his presentation, MHRA president Tony Zahra, said that tourism represents 30% of Malta's GDP, employs thousands of people and impacts "practically every person" in Malta.

"The Hotels and Restaurants are key components to the long term sustainability of the tourism industry," Zahra said.

He said that in the past three years the hotel industry has seen increased arrivals, increased bed nights and increased room rates leading to increased revenue.

"But all of this increased revenue has been eaten up by increased costs. The sustainability of the hotel Industry is now in question. One of the major contributors to these increased costs is Enemalta," Zahra said.

"We are concerned that inefficiencies at Enemalta are seriously impacting the industry through the cost recovery system leading to very high energy costs."

Zahra said Enemalta has a permanent derogation making it a permanent monopolist in the supply of energy.

He went on to explain that Hotels and Restaurants in Malta are subject to the highest electricity prices across the EU. While locally established medium-sized enterprises pay the highest prices in the EU, households face the second highest prices.

"Such a swift increase in energy prices is negatively affecting the profitability of businesses which in turn dents the competitive edge of Foreign Exchange earners such as the industry of hotels and restaurants," Zahra said.

He said that while Enemalta's ever-increasing inefficiencies were for some time absorbed by government, since 2006 the burden of higher oil prices has been shifted towards the consumer.

"After many years of under-investment, Enemalta's electricity generation efficiency rate currently stands at a very low 31.5%. In simple terms, for every €1 of oil that is burnt, the extent of electricity produced stands at €0.31, 5," Zahra said.

"Moreover electricity revenue is circa 25% due to high distribution losses some of which can be explained and others can only be put down to non charged output."

Zahra also said that while average power efficiency in Europe stands at 72%, that for power thermal plants (similar to Malta's generation plants) is circa 50%.

"If Enemalta were to increase its energy efficiency transformation rate to 50% and reduce its workforce by 25%, utility bills of hotels and restaurants would drop by €9.0 million a year or €0.04,2 per kWh," he said.

In a reaction, Enemalta gave a presentation about the impact of geo-political issues on the price of oil and their impact on the company's costs.

Enemalta said that by July 2012 ,the Delimara extension will be commissioned and that it will have 47% efficiency.

Enemalta, also confirmed that by October 2013 the interconnector will be in place.

This, Enemalta said, would increase efficiency up to 40% by 2012 against the present 31.5%.

"When the interconnector will be in place this will impact further the efficiency," Enemalta said. "We expect that all the efficiency gains will be passed on to the consumers."