Consumers will not be able to immediately reap maximum dividends from the slump in oil prices, as the government opted to stagger the reduction in fuel prices to avoid “cash flow” problems, the Energy Minister said yesterday.

Konrad Mizzi was speaking during a presentation to social partners who met to discuss the latest developments in the fuel and energy sectors.

The Malta Council of Economic and Social Development was summoned on the request of the Chamber of Small and Medium Enterprises (GRTU) and the Malta Hotels and Restaurants Association.

In a detailed presentation, Dr Mizzi said Enemed – the government entity responsible for purchasing fuel – last month made an “advantageous” hedging agreement with BP. He added this would secure the cheapest fuel prices for the coming months, even if oil prices start increasing, as has been the case since then.

However, he argued that reducing prices “at one go” was not possible, saying that such thing would not be viable for Enemed due to “cash flow” problems.

Nothing prevents other operators from reducing fuel prices

As a result, the government had opted for a “gradual readjustment”, which would take place over next month and April, he said.

The Energy Minister said Enemed was not intent on making “abnormal profits” as it was pegging its prices according to the lowest threshold established by the regulator.

During his presentation he said that last year average prices at fuel pumps in Malta remained below the EU average until the last few weeks when local prices at the pumps were higher in comparison. He said that last month the government instructed Enemed to negotiate new hedging agreements to avert this situation.

Dr Mizzi said he was not willing to publish present hedging agreements, due to commercially sensitive information. However, there would be no such objections for “expired” agreements.

Meanwhile the minister rejected claims that the fuel market was not liberalised, arguing that Enemed had competition from five other companies that were licensed to import fuels. “Nothing prevents other operators from reducing fuel prices,” he said.

Last month, a Rabat petrol station scrapped plans to cut its diesel price by 2c, less than 24 hours after unveiling the reduction. Subsequently, the petrol station owner said the fuel supplier had pressured him against such move.

Following this development the consumer watchdog had started an investigation into claims of a cartel in fuel prices.