Granting additional licences to gas distributors will come at a hefty price for taxpayers, as more loss-making vendors will be eligible for compensation from the State.
So far this year the regulator for electricity and water services has issued 11 new licences – six for fixed-point vendors and five for door-to-door distributors.
Sources told The Sunday Times of Malta that the situation may become “worse” as up to 10 more licences could be in the pipeline in the coming months.
Under a 15-year agreement signed in May last year, taxpayers are subsidising 31 gas distributors who enjoy territorial exclusivity by 13c per kilo for any loss of sales below 2013 levels. This translates into a subsidy of €1.30 on 10kg cylinders, €1.60 on 12kg and €1.99 on 15kg.
The first payments under this mechanism, known as Public Service Obligation, were effected last March and varied from between €3,000 to more than €20,000 to each distributor.
These amounts only covered the period from May to December 2014.
The Energy Ministry has repeatedly refused to give a breakdown of the compensation paid out so far. The ministry justified this State aid agreement, saying it would ensure that people living in remote areas would have access to the door-to-door service, even if this was not commercially viable. However, this justification has been questioned as Liquigas already provides a similar service free of charge.
Distributors who spoke with this newspaper, but preferred to remain anonymous, questioned the rationale behind this PSO.
“It seems the government is shooting itself in the foot as its decision to issue more licences is having a direct impact on its coffers, as subsidies will keep increasing,” they said.
“Though we will be eventually compensated, this business model does not make sense at all. It would have been much better for us to be allowed operate in a truly liberalised marked with no regional exclusivity.”
Questions sent to the Energy Ministry have not been answered.
The PSO agreement was signed in May last year, but it only came to light in the Government Gazette last March, two weeks after gas distributors affiliated to the Malta Chamber of Small and Medium Enterprises (GRTU) went on strike.
Industrial action was taken in protest against granting a number of licences, and was lifted when the government had promised to publish its policy for the sector.