Editorial: Energy mirage – a delusion of control

You can say that the sun rises in the west two, three or even four times. You can shout it, or you can whisper it. It still does not make it true.

The same applies for the situation faced by Malta when it comes to the provision of gas for our power plants, which also applies to how much it costs and, in turn, how much the government can subsidise to avoid passing the cost onto consumers.

You cannot help but feel for Robert Abela’s government clapping its collective hands over its ears to close out the sounds of uncertainty that the rest of the world is hearing.

We insist that tourism will not be affected by the Iran war, that the increased cost of shipping and logistics will not affect the prices of imported goods, and – ultimately – that Malta will be able to avoid any impact thanks to the long-term vision of the government.

For weeks now, the government has insisted that there was no problem with supplies or prices of gas and not just once.

This prompted many head shakes as it was pointed out that the agreement for gas purchase prices was to expire in August, leaving Malta open to the possibility of having to pay more (assuming that there is enough gas to buy, given the claims by suppliers of force majeure).

A fifth of the world’s gas used to pass through the Strait of Hormuz and several of the world’s largest energy companies have scrapped their hedging agreements following attacks on key energy infrastructure.

Abela even assured the Malta Council for Economic and Social Development that all was fine.

Except that it may not be. Energy Minister Miriam Dalli is now saying that Malta is looking at a short-term deal “amid uncertainty” but insists that there is nothing to worry about as “by the end of 2027 the LNG market is expected to be more favourable”.

The minister does not have any magic solution for a problem that is facing so many countries. But, she says, the government “will enter into a short-term gas purchasing agreement” which will take us up to the end of 2027.

So, an agreement for over a year, then with no indication of how much Enemalta will be paying. Hardly negotiating from a position of power.

So far, the government’s current purchase contract is pegged to oil prices and not gas. But there is no crystal ball to tell us what will happen in the future.

Dalli herself admitted the contract would depend on “what suppliers are offering”.

The flip side is that the government insists it will continue to subsidise consumer prices to the full, even though, a few years ago, the European Commission and the International Monetary Fund had both said energy subsidies should be phased out.

At that time, the subsidies – on which the government has spent nearly a billion euros so far – were only forecast to last till 2026. While our economy remains strong, we simply have no guarantee it will remain this way. Both Dalli and the PN finance spokesperson, Adrian Delia point to renewable energy as the solution but this does not come free: it may make long-term sense but it requires a huge outlay at the outset.

The government is trying to push this, most notably through solar panel grants and even a second interconnector cable from Sicily, not to mention an offshore wind farm.

However, the reality of war and prices and supplies is not going to wait, not even for a national election.

The government may insist that the sun rises in the west, over and over again, but it might be better to face up to the harsh reality that the electorate hears already from so many directions.