Subsidies on energy and fuel are set to continue next year, at a cost of €320 million. 

Finance Minister Clyde Caruana said in the Budget speech that without these energy subsidies, the average family would be paying double what they are paying now. 

He said thanks to the subsidy on petrol prices, people are paying €1.34 per litre, while drivers in Italy face prices of €1.94 per litre. 

Caruana contrasted these subsidies with how past PN administrations raised electricity tariffs, blaming rising oil prices. 

According to an assessment by the Fiscal Advisory Council, the estimated cost of the government subsidies on electricity and petrol prices this year was slashed from €595 million to €262 million.

Thanks to the subsidy, electricity unit prices have remained among the cheapest in the European Union.

However, the generous subsidy has not gone unnoticed in Brussels.

The European Commission in May advised the government to wind down the subsidies and instead focus on reducing its spending deficit.

Speaking to journalists before the Budget speech, Caruana said that in his view the energy subsidies should be retained until Malta diversified its sources of energy and brought down the unit cost of electricity.

It was for this purpose, he said, that Malta was working on having a second interconnector with mainland Europe within two years, and an offshore wind farm.

Works for greater residence of the national grid will also involve investment in mass storage of electricity in batteries.  The first such project, costing €35m funded by the EU, will be sited at Delimara power station. The second will be at  ‘A’ power station in Marsa, costing €12 million financed by the EU's Recovery and Resilience Fund.