Revised fuel tariffs shocking, Sant says

Opposition Leader Alfred Sant has described the revised fuel tariffs as "shocking" given the magnitude of the upsurge and the manner in which the government had suddenly raised the surcharge on electricity bills.

Speaking at the Malta Labour Party headquarters in Hamrun yesterday evening, Dr Sant said the government had done nothing about a "predictable" problem of an increase in oil prices for the past months and was passing the burden onto consumers through a last-minute hotchpotch.

Earlier, Prime Minister Lawrence Gonzi announced an increase in the electricity surcharge from 17 per cent to 55 per cent and a 3c excise tax on leaded and unleaded petrol.

Reacting to the decision, Dr Sant said households receiving a Lm100 bill last year - which was later increased to Lm117 due to the surcharge introduced in January 2005 - will now start paying Lm155 because of this latest increase.

He said the decision would plunge the country into further economic uncertainty and instability as consumers' purchasing power is eroded. The aftershocks of this measure would further destabilise the prospects of households and business, especially if there are further increases in the future.

"There is lack of transparency in the way the government has come up with the Lm50 million hole. It is also unclear whether the figure is based on a real increase in international oil prices or whether this is an excuse to cover up Enemalta's inefficiencies," Dr Sant said.

When in office between 1996 and 1998, Labour had had strong indications that the price of oil would increase over a 15 to 20-year span and it had gone for a hedging agreement, Dr Sant said.

The increasing demand for oil from Asia had been seen in the 1990s and was not a new phenomenon, he said. Therefore, a hedging agreement - with which the country could have purchased oil at a fixed price to reduce shocks in case of a drastic increase in oil prices - would have alleviated the financial burden the country was now facing.

Dr Sant said that last March, when the government had considered re-instating hedging, oil prices had been much lower than they are now.

"People are being asked to pay for a lack of planning and foresight," he said.

The government was also to blame for not introducing energy saving measures and for failing to implement an alternative energy policy.

"We had started reforming Enemalta in a bid to reduce the company's inefficiencies but this was stopped by the Nationalist government," he said.

Asked how he justified his criticism when he had introduced a tax on electricity metres as Prime Minister, when the price of oil was just $12 a barrel, Dr Sant replied that Enemalta at the time had been losing Lm25 million a year.

"At the time, the Labour government had the guts, unlike Dr Gonzi, to address the problem. At a time when the Nationalists were saying 'money no problem', we had started tackling the problem seriously," Dr Sant said.

In this sense, he added, time had proved him right and, with hindsight, people could see that the Labour government had been forward looking.

Asked whether he thought the government should opt for a hedging agreement now, Dr Sant said a hedging deal would have been beneficial in March this year. "Now it's too late," Dr Sant said.

Call for immediate compensation

The General Workers' Union will be insisting on an immediate compensation both for yesterday's fuel and utility bill hikes and also for October's fuel price adjustment, the union's general secretary, Tony Zarb, said.

When asked whether he acknowledged that such compensation would bear negatively on competitiveness and in turn make the situation worse, Mr Zarb said the government would have been in a position to carry the burden if it had not burnt the country's resources capriciously.

"This situation is not the workers' doing and therefore they should not be made to pay for it," he insisted.

The union will be closely following the situation to determine whether the Lm33 million which the government said it will be shouldering through Enemalta will be followed through.

"We hope that the burden for those Lm33 million will not be passed onto the people in the budget," he added.

Problem is still not solved

The Union Haddiema Maghqudin deems positive the fact that the government will take into consideration the newly announced increases in fuel prices for the purposes of the Retail Price Index.

UHM general secretary Gejtu Vella explained that usually work on the index for the year closes in September but the union had suggested that increases in electricity and fuel prices would be taken into account.

"This is a very important feature," he said.

Mr Vella said the country should not harbour the impression that the problem is now solved.

About the fact that the government will be shouldering part of the burden, Mr Vella said that it would be the people who would be carrying the burden.

"Our appeal is for the government to get value for money in all its spending. The government administers a lot of money and should use it well so that when we face such jolts, we would have something to cushion them with," he said.

One must see the bigger picture

The measures need to be seen within the scenario of what will be unveiled in the budget on Monday, the president of the Chamber of Commerce, Louis Apap Bologna, said yesterday.

One needed to see how the government was going to support that part of the burden it had decided to carry instead of passing it completely onto the consumer, he said.

Mr Apap Bologna said the country cannot afford to pay more taxes, adding that if taxes had to be increased this would be "an imposition".

One also had to see how the whole issue would affect the country's competitiveness.

Moreover, he stressed the importance of ensuring that Enemalta becomes more efficient and cuts down on abuse.

Mr Apap Bologna said the country needed to prepare itself to be able to confront its problems.

A blow to people's spending power

The president of the Confederation of Malta Trade Unions, John Bencini, said one needed to wait until next week's budget to see whether the burden being absorbed by the government was being passed on to the people and how.

He asked: "Does this mean there will be other taxes?"

Mr Bencini asked whether the government had at first intentionally said that the surcharge on electricity could be as high as 102 per cent and then reduced it to 55 per cent in a bid to console consumers.

However, he said, a surcharge of 55 per cent was still a major burden and the CMTU would continue to appeal for a social conscience by the government.

"We are worried because a surcharge of 55 per cent is very high and certain sections of the middle and lower classes are likely to be the ones that will suffer the brunt of this burden," he said.

Moreover, he continued, the increase in the surcharge was a blow to the people's spending power, which did not offer good prospects for the economy.