Ministry denies pump prices reflecting higher profit margins

The energy ministry has insisted that oil market changes that saw the international price of Brent crude fall below the $50 mark was a “surprising event” and that fuel pump prices reflect hedged prices.

The government is under pressure by the Opposition over a new campaign to bring to the public’s attention the high price of fuel at Maltese pumps, the highest across the EU in recent months.

The Nationalist Party has suggested that the high prices at the pump could be masking profits being made by Enemed Fuels, the government company now handling fuel distribution previously in the hands of Enemalta Corporation.

But energy minister Konrad Mizzi has denied that pump prices reflect higher profit margins than usual.

“The oil market changes on the last month or two were a surprising event for many international analysts. However, it is important to emphasize that while oil prices, and with a delayed effect fuel prices, were declining in US dollars, the Euro was going the other way and weakening,” Mizzi said.

“The profit margin made by Enemed has been consistent for the last four years and remains unchanged. This can be confirmed with the regulator. Prices at the pump reflect hedged prices and taxes. Enemed adjusts its short-term hedges regularly and this subsequently translated into revised fuel prices.”

The energy minister also told MaltaToday that Enemed Fuels was placing short-term hedges to enable price stability.

Malta has enough fuel storage space to last three months, an indication on the limits of hedging quantities.

Enemalta sold off its petroleum division for around €83 million in a government-to-government deal, to two subsidiaries of Malta Government Investments – Petromal Company Ltd and Enemed Company Ltd. The two companies have taken a bank loan to finance this transaction. Enemalta transferred the €83 million it received to the government’s coffers to settle part of the €150 million it owes the authorities in excise duties.

Effectively, this meant that a bank loan taken out by the MGI subsidiaries was used to pay the Enemalta excise dues to the government.