Never too late to reconsider utility rates - Chamber

It is never too late for the government to reconsider the new hefty water and electricity rates which came into force on New Year's Day, Malta Chamber of Commerce, Enterprise and Industry president Helga Ellul insisted yesterday. She warned Malta's business attractiveness had been hit and any singular expansion plans by firms doing better than others could now be at risk.

Reconsiderations on a matter of such sensitivity to the country's competitiveness are justified because the new rates had not been discussed at the Malta Council for Economic and Social Development in the light of the economic impact assessment report, Mrs Ellul told The Times Business.

"While the Chamber recognises the sustainability problem that Enemalta faces, enterprise cannot be burdened by this sudden increase, in part resulting from the lack of careful and long-term planning of Malta electricity generation over the past three decades," Mrs Ellul said.

"When companies do not plan well and address their problems, they end up out of business, as they cannot pass on their deficiencies to their customers. However, Enemalta and the government expect that all the past problems of Enemalta can be abruptly passed onto the industrial consumer without careful assessment of the likely impact that this may cause to the economy."

There are various options available to the government: The curbing of abuse can result in better efficiency in tax collection and in the payment of social benefits, the president pointed out.

Mrs Ellul said the Chamber had been contacted by various member firms fearing for their future as they could not absorb the rising costs, besides struggling to preserve their competitiveness in the current economic climate.

"This is, of course, coupled with the shock of an unprecedented cost of living adjustment increase which already exerted substantial direct and indirect effects on employers. In the current circumstances, the combined effects of these measures have diminished the attractiveness of Malta for the purposes of investment in terms of foreign direct investment, both new and existing.

"Similarly, the measures may throw in the balance any expansion plans that may be under consideration on the part of companies that are less affected by the international slump."

In September, a study by the Malta Employers' Association found that one in five of its members would cut jobs if €5 to €7 COLA were given - COLA was subsequently set at €5.82.

Asked how realistic it was to believe that the utility rates, coupled with the COLA increase, will force industry to shed jobs, Mrs Ellul was blunt: "Malta must realise once and for all that nobody owes the country a living. If we out-price ourselves, we lose business. And if we lose business we lose jobs. It is that simple.

"Malta has always suffered from serious market failures in the generation and distribution of energy. Therefore, it is imperative that users are compensated accordingly until such time that these market failures are addressed by connections to the European power grid. A completion date for this meaningful step must be set and announced as early as possible with a time frame of measures aimed at ensuring competitive utility prices in the interim."