26 October 2005

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Business Today

Take a hike: government’s energy hole

Government’s new measures are based on increases in the price of fuel and gas oil between January and September 2005, which increased from Lm59.92 per metric ton to Lm117.62 for fuel oil, and Lm133.32 to Lm215.87 for gas oil.
It introduced a 17 per cent surcharge rate which had been calculated on the premise that oil prices for Enemalta would have stayed around the prices registered back in November 2004.
International prices did however increase exponentially.
The result of the higher prices was that, whilst the 17 per cent surcharge recouped some Lm7.7 million, it left a gaping hole of Lm6.8 million. With greater increases in September, partly due to the impact of Hurricane Katrina, government says the October 2005 increase is expected to be around Lm2.5 million.
The sum is in addition to the Lm8.4 million Enemalta had already absorbed when the surcharge was introduced last year, which will once again be taken on by the energy company for the next year.
Enemalta will now be taking out a loan of Lm9.3 million to finance the budget shortfalls, whilst it will also finance the sum of Lm8.4 million from its cash flow as it did last year.
The revision for the surcharge will be made every two months, the first revision applying from 1 November 2005 to December 2005. A week before the start of each two-month period, Enemalta will publicly announce the surcharge rate for the following two-month period. This will mean the surcharge rate, like motor fuel prices, follow the international market on the price of fuels and may go up or down every two months.
Enemalta will take on added lending of Lm11.3 million, whilst the 55 per cent surcharge will be stepped up over the next two years at 1.21 per cent monthly increments in the surcharge rate. The total financing to be covered by Enemalta will be of Lm20.6 million and Lm8.4 million finance through its cash flow. None of this, Minister Austin Gatt said, would be met through any increase in taxation.
Another measure will see government, as from 1 January 2006, include in the retail price index adjustment the inflationary effect of the increase from 17 per cent to 55 per cent in the surcharge. The cap for industries will be increase to Lm21,000 which sets the maximum increase of the utility prices for industries at Lm16,000.
Enemalta has also decided to cut its profit margin on thin fuel oil from the present Lm15 per metric ton to Lm5 per metric ton.
A new diesel substitute, called gasoil 0.2%, which will retail at the same price of diesel, will carry a refund limited to the manufacturing industry, farmers and hotels of 6.3 cents per litre.
Government yesterday also said the Malta Resources Authority will be preparing a wide-ranging study on the energy generation options available to government.

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