12 October 2005

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Business Today

Increase in fuel surcharge on government’s agenda

James Debono

In the wake of Parliamentary Secretary Tony Abela’s declaration that the increase in the fuel surcharge is imminent, a spokesperson for Minister Austin Gatt yesterday told Business Today that a decision on revising the surcharge will be taken following meetings in the Malta Council for Social and Economic Development.
The first of these meetings was held yesterday and another meeting is expected to take place on Monday.
During yesterday’s meeting trade unions and constituted bodies were presented with a dire scenario of increased fuel costs and informed of government’s intention to ensure that Enemalta “breaks even” despite these increases.
According to informed sources, constituted bodies and trade unions were asked to present concrete proposals on redressing the increase in fuel costs by next Monday.
The impact of rising fuel costs will be the theme of a press conference addressed by Minister Austin Gatt today.
It is clear that an increase of the surcharge is on government’s agenda.
“In some way the country needs to cover the shortfall created as a result of the rise in fuel costs which have gone up far beyond what Government, or anyone else in the world, was expecting 12-18 months ago,” Gatt’s spokesperson told Business Today.

According to the same spokesperson if Enemalta does not increase its pricing models, through a fuel surcharge, “the government would have to finance that shortfall through its own revenue.”
This latter option was excluded in yesterday’s meeting.
Writing in his weekly column in In-Nazzjon, Parliamentary Secretary Tony Abela, assuming the role of harbinger of bad news, warned that in order not to jeopardise budget projections the government has no other option but to partially increase the surcharge.
But according to Gatt’s spokesperson, the government will only be taking a decision on the revision of the surcharge following discussions in the Malta Council for Social and Economic Development.
“Now that the government has a clear picture of the situation, it will be making its presentations to the MCESD, following which a decision will be taken accordingly”.
Gatt’s spokesperson also explained why the expected fuel surcharge revision did not take place in August as was indicated in last years budget.
“A revision has not taken place as yet because the fuel cost increase is way above what was being expected,” the Ministry’s spokesperson explained.
In last year’s budget the government had committed itself to revise the fuel surcharge every six months.
The surcharge is government’s attempt to recoup fuel costs above the benchmark of Lm31.6 million, which represents Enemalta’s annual fuel cost for 1999.
Enemalta, which is completely owned by the government has taken upon itself a commitment to absorb 52 percent of the increase in fuel costs.
But the remaining 48 per cent of any increase was to be recouped from the fuel surcharge.
In his article Tony Abela justified an increase in the surcharge by claiming that oil prices have gone up by 250 per cent in the last 18 months.
It is not clear whether in his article Abela was referring to the increase in the price of fuel oil used by Enemalta or whether he was referring to the price of crude oil.
Almost 90 per cent of fuel used to generate electricity in Malta is light sulphur fuel oil (LSFO) – the processed oil derived from crude oil, not to be confused with the latter. The other 10 per cent of fuel burnt in power stations is gasoil, which has also experienced hefty price increases since the beginning of the year.

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