The government took an important decision last week: ener­gy tariffs are to re­main unchanged for families, businesses and industry, despite increases in the price of oil.

Reducing utility tariffs is the only tangible proposal so far unearthed by Joseph Muscat. Yet this whole concept was taken apart by Standard and Poor’s- Tonio Fenech

Standard and Poor’s last week decided to downgrade Enemalta Corporation because of the corporation’s inability to increase tariffs to compensate for the increasing price of oil. Yes, the government has told Enemalta that further tariff rises in the current economic climate cannot be contemplated.

If we were the heartless government the opposition depicts us to be, Standard and Poor’s provided us with a quick-fix solution: increase the tariffs and blame it on the credit rating agency, which has recently become the opposition’s darling, being quoted left, right and centre in ways suiting its political needs. But politics is no game.

The government listened, it cared. We understand and feel the pain of families and businesses that have been hit hard by tariff increa­ses that took place a couple of years ago. We never tried to belittle the impact of the tariffs, but proactively explained that the removal of subsidies allowed the government to support families in need and business owners in expanding further so as to safeguard jobs. These were decisions Maltese families have ultimately benefited from.

Today, we find ourselves in a different situation. The International Monetary Fund in January describ­ed the international economic scenario for 2012 as one that will experience “considerable turbulence”.

The European Commission has revised downwards its EU-wide projections and forecasts for 2012. Different reasons, emanating from the international financial, economic and sovereign crisis, have unfortunately deteriorated economic prospects. In this context, and in support of all our efforts to protect and create jobs, the government feels it should not add undue pressure on families and industry by increasing tariffs further.

We need other solutions. Increasing tariffs but jeopardising jobs would certainly not have been the right solution. In these difficult four years we have strived hard to protect jobs and families. We cannot allow an international spike in fuel prices resulting particularly from the situation in Iran and other international factors ruin all that we have managed to sustain with sacrifice.

Our current tariff rates are work­ed at a fuel cost of $81.8 per barrel. The opening of the Delimara power station extension later this year would have helped us cushion the increase in oil prices through efficiency gains. At the $95 per barrel mark that we managed to lock for this year we could have made it, but not at $120 to $125 which oil prices shot up to last week.

Facing these realities there is no other solution than to intervene, and to do so in a structural manner. This is why last Wednesday I announced that government will support the corporation from the national Budget to avoid a new tariff rise in water and electricity rates.

This has to be done within EU state aid rules, while ensuring we still maintain our deficit targets in terms of public finances.

The government will be shouldering the environmental and so­cial responsibilities that to date the corporation has been carrying by taking over the financing responsibilities of the feed-in-tariffs, that is, what is paid to acquire green energy from households – we have a natio­nal obligation to reach 10 per cent renewable energy target by 2020 – and the eco-reduction mechanism in favour of those families that support Malta’s efforts to conserve ener­gy. In this way, we will be in a position to leave tariff levels un­changed, despite the dizzy heights oil is unfortunately reaching.

At the same time, we are continuing our investment programme related to energy distribution and generation, ranging from the new extension at Delimara, to the interconnector with Sicily, which will reduce dependency on such a vola­tile and expensive resource as oil.

Moreover, the government’s intention is to switch energy generation to gas, once a viable connection to the international grid be­comes available – a reality which is becoming closer to happening following the EU’s decision to consider appropriate funding in the next financial programming period to ensure that no EU member state is left in isolation.

An important question is raised on Labour’s efforts at achieving power at all costs. So far, it seems that reducing utility tariffs is the only tangible proposal to have been unearthed by Joseph Muscat.

Yet this whole concept was taken apart by Standard and Poor’s, which is indicating that even the current tariffs are not high enough. This proves the fallacy of the opposition’s arguments. One therefore is not surprised that it did not rush to announce a press conference highlighting the credit rating agency’s conclusion, contrary to what it usually does whenever it perceives every scrap of negative comment directed at our country.

This is a government that strives to achieve a delicate balance bet­ween its economic and financial needs and its social responsibilities. This is why tariffs will remain unchanged.

Tonio Fenech is the Minister of Finance.