Updated | Fuel prices set to decrease as new agreements come into force - Energy Minister

The price of fuel decreased six times under the Labour administration while fuel prices and utility  bills increased twice in 2008 when the international price of oil fell by 51%, Prime Minister Joseph Muscat said.

Addressing parliament during the debate on a 33% share acquisition by Shanghai Electric Power at Enemalta, Muscat said that before parliament used to debate how to decrease fuel prices: "Today we are debating whether the decrease in prices is enough."

He also lambasted Busuttil for having dubbed the oil scandal "a smokescreen".

Muscat reiterated that the energy investment was required to turn around Enemalta which had become an albatross round the country's neck. Arguing that the Opposition had delayed the debate in parliament, Muscat also said that a request by the PN to have the debate delayed was turned down "to remain consistent with how debates are conducted in parliament".

In his intervention, Muscat said that credit rating agencies had repeatedly flagged the risks Enemalta's debt and its financial woes played on Malta's economy.

"We now have an economy which is growing faster than that of the eurozone. And now the people are feeling this investment in their pockets. Not only were workplaces safeguarded, but Enemalta will now become a strategic energy hub in the Mediterranean," he said.

Reacting to criticism by the Opposition benches on Malta's investment with Azerbaijan - who will be providing the gas to Malta - Muscat said all major European countries were investing with Azerbaijan.

"But it is ironic that this debate is being held at a time when we continue learning of more back room dealings that went on in the procurement of oil under the previous administrations. It is irresponsible of the Opposition leader to call this scandal a 'smokescreen' and he will have to shoulder responsibility over this declaration."

According to Muscat, a "calculator" launched by the PN calculating fuel prices was riddled with mistakes. He said that the PN had claimed that the cheapest prices ever were in 2009. 

The calculator compares today's price of oil with that of March 2009: "Right now oil is ever cheaper than its lowest in March 2009 when Maltese citizens used to pay €0.94 for diesel and €0.97 for petrol. Notwithstanding this, today's prices in Malta are €1.35 for diesel and €1.42 for petrol."

Muscat however pointed out that the lowest had been in 2008.

The current cheapest price across the euro area is enjoyed by Luxembourg at €1.08 for petrol and 98c for diesel. But the Opposition has argued that consumers should be paying 94c for diesel and 97c for petrol.

"He is mistaken because the cheapest price was in December 2008. Why did he leave it out? Because when you analyse the analogy, his argument falls. The price of oil started falling in  June 2008, but during those months, in July 2008, the previous administration had increased utility bills. During a second decrease the government had increased utility bills a second time in October 2008 and fuel prices a month later."

Muscat also said that by end 2008, the international oil price was 51% cheaper than the previous year: "In Malta the prices of electricity, water and fuel were 20% higher and consumers were paying 71% more than they should have."

According to the Prime Minister, the price of petrol under the Labour government decreased six times "even before the international price of oil started going down".

"We will continue passing on these decreases to the consumers. I now challenge the Opposition leader to name one EU country which is selling petrol at 97c and diesel at 94c, quoting official EU sources," the PM said.

According to the Opposition, consumers were paying far more for fuel, arguing that motorists should be buying petrol at 97c and diesel at 94c.

Muscat argued that Busuttil had ignored the fact that the exchange rate between the euro and the dollar was collapsing, impacting the prices in Malta.

"While this collapse has positively impacted our exports, we purchase oil in dollars. There are predictions that the exchange rate could continue falling until the currencies reach parity," he said.

He went on to accuse the Opposition of having tackled the energy issue "in an amateurish way", reiterating that the government's work had led to a decrease and stabilization of the prices. 

'Fuel prices set to decrease' - Mizzi

Replying to questions raised by the Opposition, Energy Minister Konrad Mizzi said that the necessary forms for the 33% share transfer have been submitted to the authorities following the capital injection by Shanghai Electric Power in December.

"The shares were transferred and the Form H was submitted yesterday afternoon," Mizzi told Mario de Marco.

The energy minister reiterated that the government had kept the country informed every step of the way leading to the energy deal as he recounted the dire situation Enemalta had been in: "It was a Shipyards in the making."

Mizzi said a responsible decision was taken to address "a legacy of debt" and the situation was addressed in a matter of months. He said that Enemalta has become a commercial company and its directors have direct responsibility over the company. 

As part of the MEPA demerger, Mizzi said there would be a specialised focus on energy and water and the energy regulator will be given more power.

The government is retaining the majority shareholding in Enemalta. Enemalta has retained a 10% shareholding in the D3 Power Generation Ltd, a company set up between SEP and Enemalta controlling the Delimara 3 plant - more commonly known as the BWSC plant. 

The agreement reached with SEP also means that the Chinese cannot sell energy provided through the D3 to third parties without Enemalta's consent.

All dispatch rights to be retained by Enemalta.

The energy minister said that while constituted bodies and credit raising agencies all praised the energy deal, "not one positive word was uttered by the Oppsoition". He said that €250 million have already been injected in Enemalta.

"The Opposition also chose to ignore the fact that there are sensitive commercial terms which cannot be published," he said, replying to the Opposition's criticism of "a debate in the dark" following government's refusal to table the contracts in parliament.

He said that, contrary to the Arriva saga, the changeover in the energy sector did not result in the well-known fiasco.

"Everyone knows that fuel prices will soon be reduced, but let's face it ... this is not because of the Opposition leader's efforts but because new agreements are set to come into force,"  Mizzi said.

He added that there will be "some delayed action" due to hedging.

'Major investment in Malta should result in further cuts for consumers'

Taking the floor, backbencher Marlene Farrugia compared the government and opposition to Punch and Judy, and said the debate should not be about "the pot calling the kettle black."

"People have questions about this contract because, for the first time, energy is no longer in the citizens' hands. The energy minister should explain when we are switching to gas because there are several ramifications tied to this contract," she said.

Noting that Labour's electoral programme did not refer to developing Malta as a "regional operator", the Labour MP said the energy minister should explain the implications of becoming a regional operator, including the impacts on health, the environment, and jobs.

Farrugia also encouraged the government to rekindle the debate on the living wage and an increase in minimum wage "if this energy investment was leaving so much return".

Farrugia called on Mizzi to explain how utility bills decreased by just 25% while the international price of oil fell by 50%. 

Economy Minister Chris Cardona said the country was still in the dark over the opposition's energy policy.

"All they do is criticise us for not publishing the contracts but what the opposition leader doesn't say is that they voted wholeheartedly against the reduction of tariffs," Cardona said.

He reiterated that Enemalta's turnaround meant saving places of work and addressing Enemalta's €800 million debt.

"This government gave Enemalta a new direction," he said, adding that energy prices and the public transport service were two major sectors which had hindered Malta's attractiveness and competitiveness.

Finance Minister Edward Scicluna recounted how, during his first days, he had been warned that, without increasing utility tariffs, the country's coffers would suffer. He said that the same warning was sounded by the European Commission, the International Monetary Fund and credit rating agencies. 

He said that he had read a report passed on to his predecessor which had urged parliament to approve the special purpose vehicle or Enemalta would "be declared bankrupt by end 2012".

The finance minister said that Enemalta had a €99 million debt which should have been paid in 2011. He went on to explain how the investment by SEP has drastically reduced the energy company's debt.

"The agreement will see government's contingent liabilities reduced automatically with the 33% share acquired by SEP. Enemalta's financial improvement will result on an improvement in the public finances and improved rating by credit rating agencies," the minister said.