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Enemalta protected against oil
price hikes – Bonnici
The international price of oil has been on something of
a rollercoaster ride since the outbreak of war in Iraq. Oil indices
fell sharply at the conflict’s inception, only to be rising again
recently while the prospect of a short-lived campaign in Iraq quickly
dissipates as resistance to coalition forces mounts in Iraq.
But speaking to The Malta Financial and Business Times in today’s
interview, Economic Services Minister Josef Bonnici, responsible for
both Enemalta and Air Malta, explains that recently adopted strategies
for the purchase of oil are to safeguard the price at which Enemalta
purchases its fuel requirements.
He explains how some three months ago the talk of conflict in the Gulf
region had prompted the Ministry to adopt a type of ‘insurance
scheme’ through which the price at which Enemalta purchases its
fuel requirements was maintained on an even keel.
He explains, "We adopted a system in which there is a small premium
paid but which protects Enemalta if the price goes beyond a certain
level. This is not open ended in the sense that we know how much is
being paid. That can be factored in and it provides a type of protection,
especially if there are spikes in prices."
The Minister also explains
that while Air Malta employs a similar scheme for the purchase of its
oil requirements, the airline’s short-term prospects depend largely
on how the tourism sector’s consumers respond to the developments
in Iraq.
The manufacturing sector is also susceptible to downturns as a result
of the Iraq conflict, if international consumer spending were to slump
and demand for products manufactured in Malta were to subsequently suffer.
He explains, "Today the Maltese economy is so integrated with the
rest of the world that any fall in world economic activity will be felt
very quickly here.
"Remember that Malta exports almost 100 per cent of its GDP so
demand for most of our production comes from international markets.
As such, any economic instability in Singapore, the US, Japan or in
Europe affects us."
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