Likely delay in oil imports liberalisation

The liberalisation of fuel imports and distribution is expected to be postponed by a number of weeks despite a government pledge to the European Union to eliminate Enemalta's monopoly in the sector by January 1, 2006.

A consultation document is to be published in January, six months after the government was meant to issue a call for expressions of interest, sources told The Times.

Asked about the matter, a spokesman for the Resources and Infrastructure Ministry did not deny that the process of liberalisation would be postponed by a number of weeks. He would not give further comments. Questions sent to the Malta Resources Authority, which regulates the market, remained unanswered, though sources said an official statement could be released today justifying the delay and mapping the way forward.

In line with EU law, in its accession treaty Malta committed itself to adjust the market for the importation, stocking and wholesale marketing of petroleum products by December 31, 2005. The government had negotiated such an extension in the liberalisation date way back in 2000 in order to allow sufficient time for adaptation.

Enemalta enjoys a monopoly in the importation of fuel but with full liberalisation, other companies will be able to compete.

However, practically no information about the liberalisation process has been made available, leaving potential suppliers in limbo.

Experts in the industry said there was no justifiable reason why liberalisation should be postponed, even for a few weeks, when ultimately the consumer and industry stands to benefit. Some said that, as a result, the government could appear somewhat reluctant of letting go of such a sensitive monopoly.

An increase in the price of thin fuel oil announced early last month angered industrialists and fuelled their eagerness for the liberalisation of fuel oil imports and distribution on January 1.

Importing energy products needed preparation and prospective importers had to provide storage facilities and make other logistical arrangements.

Operators believe the availability of storage would be the first hurdle to overcome, with the decommissioning of the March 31 installation in Birzebbuga.

However, as was confirmed during the budget speech, storage capacity will be limited. Moreover, having adequate storage capacity would require substantial investment.

Importing and distributing fuel will require a licence from the MRA meaning that the market will still be regulated even though the current monopoly will be abolished.

A number of new licensing conditions for prospective importers would be introduced. Owners of service stations will be able to import petrol, LRP and diesel but they must be in possession of both a petrol station and wholesaler licences.

Operators augured that the regulations would be spared any ambiguities, to avoid creating a vacuum in the process.

"Despite the delay, it's wise to issue a consultative document because the knowledge of the sector is outside the government's remit," one source said.

The Federation of Industry's director general, Wilfred Kenely, expressed concern that the liberalisation process has been postponed at the 11th hour, especially since this was something the FOI has been harping on for months.

"The industry stands to benefit from liberalisation and this delay shows insensitivity to its needs. Someone has to tell us what went wrong," Mr Kenely added.