The government has nothing to hide on the fuel deal with Azerbaijan's State oil company Socar, Prime Minister Joseph Muscat insisted tonight.

He said the ministerial direction given by Energy Minister Konrad Mizzi to Enemalta last year to explore hedging arrangements with Socar ensured consumers benefited from a 2c reduction in the petrol price rather than a 2c increase.

"Our duty as a government is to defend the people and businesses," he said to a standing ovation.

The deal was criticised in an audit of hedging arrangements by the Auditor General published on Monday.

Dr Muscat was speaking in Marsa as part of the Labour Party's campaign for the local council elections.

He defended the Auditor General's work but insisted the easiest thing for the government was to do nothing.

Dr Muscat explained that when Enemalta informed Dr Mizzi that it would have to raise fuel prices because of unfavourable bids, the minister had approached the Azerbaijani government and subsequently urged Enemalta to negotiate with Socar.

"The difference between us and the previous [PN] administration is that they used to be criticised for doing nothing while we are being criticised for doing things," Dr Muscat said.

Addressing Marsa residents, Dr Muscat said the closure of the power station was a milestone and it was now the time "to dream" on how the area could be transformed into one that created jobs, attracted investment and served as a place of enjoyment.

"This government has done for the south more than any government has done in the past 25 years," he said to applause.

Dr Muscat said cleaner air in the south was an important development as he quipped about environmentalists. "The environment does not belong only to those few who write in newspapers. It belongs to all of us."

Sitting behind Dr Muscat during the event was Labour candidate Frank Zammit, a former aide to Nationalist minister John Dalli, who was once the Nationalist mayor of Marsa.

Mr Zammit has crossed to Labour and his candidacy for the local election is his first formal engagement with the Labour Party.