Motorists brace themselves for fuel-price liberalisation

The Malta Financial and Business Times publishes the second comparative fuel price list for European countries

Maltese motorists are immune to international oil price fluctuations because fuel prices are fixed by the state monopoly Enemalta, however, this is expected to change in the next budget when the finance minister will announce the liberalisation of fuel prices.

In last year’s budget speech it was announced that the price of fuel from January 2002 would be liberalised so that Enemalta could charge motorists according to international market prices. The fluctuations could effect electricity consumption rates.

Current fuel prices carry a hefty government duty apart from VAT. Duty on unleaded petrol amounts to 35% while that on diesel totals 50%. Price liberalisation means that motorists can suffer from higher fuel prices or else benefit from lower prices depending on the international price of oil.

However, if Enemalta retains its monopoly in the sector, the fear among motorists is that the company will opt to increase its profit margins at the expense of consumers irrespective of whether the international price goes down.

The price of fuel in Malta has had an upward movement over recent years due to government taxes rather then market fluctuations. In 1999 duty on unleaded petrol was increased to bring the price on par to that of petrol at 32 cents per litre. This move abolished the distinction that was in force before between unleaded and leaded petrol. The following year motorists had to contend with an increase due to VAT, which was levied on all fuel products. As a result the price of unleaded and leaded petrol stood at 37 cents per litre while that of diesel reached 20 cents per litre.

An analysis carried out by The Malta Financial and Business Times reveals that most European fuel prices have gone up since April when this newspaper made a similar price comparison.

On 9 May this newspaper had published a comparative list of fuel prices in a number of European countries and the US, for the month of April. The chart showed that Malta had the cheapest diesel rate in Europe and an average unleaded petrol rate.

Today we are publishing the list of average fuel prices for the month of August along with an indicator showing how the price shifted since April. The 11 September tragedy and the subsequent repercussions are not reflected in these prices.

Driving an unleaded petrol car is most expensive in Finland with petrol costing 51 cents per litre. Since April the price of unleaded in Finland has shot up by 7 cents, putting it at the top of the list above the UK, which saw a decrease of one cent.

Another Nordic country making a giant leap forward is Norway, which saw the price of unleaded increase by 4 cents. A similar hike was registered in Greece, which however remains one of the cheapest places to buy fuel.

All EU countries and Switzerland registered a minimal increase of one cent accept for Germany, Sweden and Luxembourg, which registered a decrease of one cent. The price of unleaded petrol in France remained constant.

Luxembourg had the cheapest unleaded petrol rate in Europe at 32 cents per litre. However, the US retained the bottom rung with unleaded petrol at 16 cents per litre, which is 3 cents less than the April figure.

Malta with a rate of 37 cents per litre is less expensive than EU giants Germany, France, the UK and Italy among others, while on par with Austria and Portugal.

On the other hand, for diesel car owners Malta remains the cheapest place to drive their car with diesel costing 20 cents per litre, only 3 cents higher than the US price.

The UK remained the most expensive diesel price standing at 49 cents per litre, despite a decrease of one cent since April.

Norway came in second with diesel standing at 42 cents per litre, an increase of 7 cents over the April price. The Nordic countries, Sweden and Denmark with high environmental standards continued to charge among the highest prices for diesel at 38 cents per litre and 39 cents per litre respectively.

A significant price hike was registered in the Netherlands with diesel going up by 3 cents since April.

As is the case for unleaded petrol, diesel in almost all EU countries saw an increase of one cent per litre on the April price. The only countries registering a decrease were Germany, the UK and the US. The August price in Sweden, Italy, Greece and Portugal remained the same as that for April.

European statistics made available by Eurostat reveal that there are large variations between EU member states and an analysis of fuel prices between 1990 and 1998 showed no overall trend.

In most countries the fuel prices in the eight-year period remained very stable with the Netherlands and UK being the exceptions registering a constant increase.

Diesel prices also registered decreases in several countries during the same period.

The most recent transport statistics for the Maltese islands, released by the National Statistics Office, show that at the end of June 2001, there were more than 250,000 licensed motor vehicles on the roads.

Just over 185,000 or 73.9 per cent were private vehicles, while commercial vehicles totalled just over 43,000 or 17.3 per cent. This is more or less the same proportional representation recorded throughout the first quarter of 2001.

The second quarter of 2001 saw a constant increase of licensed motor cycles, which added up to 12,307. This was an increase of 369 or 3.1 per cent over the same quarter last year.