Tariffs: Company-by-company approach 'not effective' for SMEs

The Chamber of Commerce and Industry warned today that the government's intention to undertake interventions on a company-by-company basis with regard to the utility tariffs may not necessarily be effective with SMEs.

The Chamber in a statement said that in talks it is holding with the government on ways to ease the impact of the tariffs, is is suggesting, among other things, that night metering needs to be extended and that the eligibility threshold should be lowered.

Furthermore, it stressed, the new full cost recovery strategy for Enemalta could not be introduced within a short time frame.

"A staggered approach must instead be adopted to ensure that economic shocks are avoided affording business the necessary time to adapt. This has to be seen within the context that Malta has always suffered from serious market failures in the generation and distribution of energy due to critical mass as well as monopoly considerations."

It was imperative, it added, that the process of connecting Malta to the European power grid was hastened. A completion date should be set and interim measures launched with the aim of ensuring competitive utility prices

The Chamber said it was urging the government to open up a holistic dialogue on the sustainability of energy generation in Malta.

It reiterated that the current utility tariffs shall impact negatively on competitiveness and fuel inflation resulting, in turn, in high requests for cost of living adjustments at the next Budget.

"Utility rates are a threat to business competitiveness, irrespective of sector and size. Naturally, the country can neither afford to erode its competitiveness nor stimulate higher inflation."

MHRA CALLS FOR REVIEW

The Malta Hotels and restaurants Association in a separate statement said it was once again appealing to the ggovernment to review the utility.

“The staggering increase in the utility tariffs has come at a time when tourism is at its weakest point ever. 2009 was one of the worst years and the tourism industry needs support and time until it recovers. The increases as announced are simply unsustainable even at the best of times, let alone at a time when many hotels and restaurants are battling to keep their heads above water.”

It said the new tariffs are not just the result of the hike in the price of fuel, but the result of years of mismanagement and inefficiency in one of the most important institutions of our country, Enemalta Corporation.

“The industry is now expected to foot the bill for this mismanagement and inefficiency at the worst possible time,” the MHRA said.

It said that it recognised that the government was making every effort to secure an increase in the number of visitors to Malta this year. But, although there was a general expectation that the negative trends would begin to reverse in 2010, it was folly to believe that normality will be achieved before 2011.

“The market remains incredibly price sensitive and it will take time to achieve revenues similar to that registered pre-2009. Returning to normality is not enough; hotels must also recoup losses registered in 2009 and 2010.”