MediaToday
News | Wednesday, 16 December 2009

Employers warn revised utility tariffs could ‘dent national competitiveness’

Charlot Zahra

Two of the major employers organisations have warned that the utilities tariffs that have been approved by the MRA with effect from Jan 1, 2010 could dent Malta’s national c at the mercy of the provider ompetitiveness.
Commenting to Business Today, Malta Chamber of Commerce, Enterprise and Industry (MCCEI) President Helga Ellul warned that the utility tariffs “pose a significant threat to national competitiveness”.
“This is especially important for Malta given that local operators are disadvantaged by twin market failures,” Ellul said in a not-so-subtle remark at EneMalta and WSC.
“This arises from the fact that the country relies almost exclusively on fossil fuels and the distribution of utilities is governed by an inefficient monopoly,” the MCCEI President told Business Today.
Users of water and electricity therefore remained “at the mercy of the provider and are price takers as much as the country is at the international level,” she explained.
There were “very few options” available to business except to purchase water and electricity from the designated supplier and “no indication has been given as to when the interconnectivity cable with Sicily will be in operation, and indeed if similar operations are to be open to liberalisation,” Ellul told Business Today.
She explained that the announced increases came “on top of one of the largest Cost of Living increases ever given”.
The MCCEI said it believed in the need for “a more forthcoming” regulatory Authority.
The Malta Chamber questioned “the whole process” of how the rates were finally issued. “Government announced its intention to increase the tariffs two months ago, and now, on the eve of Christmas they are finally published,” the MCCEI President complained.
“Worse still, published without the necessary impact assessment,” Ellul claimed.
The Malta Chamber warned that arrangements reached with Government in 2008 on a gradual introduction of the new rates for industry “must continue to be respected”.
The MCCEI has been contacted by various members, expressing their their “serious concern” on the revised tariffs.
The Malta Chamber said it was “currently evaluating” the new water and electricity rates announced on Monday and their impact on business.
Likewise, in exclusive comments to Business Today, the Malta Employers’ Association (MEA) has lambasted the timing of the launch of new utilities’ tariffs in the festive season.
“I think that the timing for these revisions is wrong and reflects very badly on the MRA,” MEA Director-General Joe Farrugia told Business Today.
The MEA Director-General warned that these rates would also fuel “further inflation and will be a burden for businesses in addition to the COLA increases, which may lead many to postpone investment decisions and to lay off employees.”
This might further affect Malta’s competitiveness “at a critical stage” and might delay an economic recovery during 2010.
“Government cannot continue to take businesses for granted, as ultimately, economic recovery can only come about through increased business activity,” Farrugia told Business Today.
There were still “some ambiguities” about the revised rates which needed to be clarified and “one expects the MRA to address these issues, possibly during an upcoming MCESD meeting which will be devoted to the subject,” the MEA Director-General told this paper.
On the positive side, Farrugia told BT that the night rates “can offer an opportunity for some businesses to save on the utility bills. The fact that the rates will be stabilised for 2010 also means that businesses will be in a better position to plan ahead,” he concluded.

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16 December 2009
ISSUE NO. 612

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Malta Today

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