Employers unite in ‘no comment’ on reduction of fuel surcharge
Charlot Zahra
Employers’ organisations have made an unusual united front in refusing to reply to Business Today’s questions about the Government’s position on not reducing the fuel surcharge despite the fact that the price of crude oil in the international markets had come down by 30 per cent since the surcharge was last revised in July.
This despite the fact that that entrepreneurs and self-employed people, particularly those SMEs which do not benefit from the energy capping reserved for large industries and tourism, are bearing the full brunt of the heavy surcharge rate.
After various reminders via e-mail, a spokesperson for the Malta Federation of Industry (FOI) told Business Today that “the FOI is not in a position to comment on this issue.”
Likewise, a spokesperson for the Chamber of Commerce and Enterprise (COC) told Business Today that “at this stage, the Chamber would not like to comment on this subject.”
Even the Malta Hotels and Restaurants’ Association preferred not to comment about the matter.
The Malta Employers Association (MEA) and the General Retailers’ and Traders’ Union (GRTU) did not even return our e-mails about the matter.
We asked, among other things, the employers’ opinions as to whether the electricity surcharge should be reduced from 95 per cent in view of the reduction in the international price of crude oil by 30 per cent that there has been in the past three months; whether they agreed with the Government’s position that it is not advisable to reduce the electricity surcharge at this point in view of the hedging agreements that Enemalta had already undertaken for the purchase of oils; their views on how the Government should alleviate the impact of the fuel surcharge on the country and the economy, especially on workers to compensate for the high surcharge rate and whether it should consider increasing the number of families which fall under the energy benefit; and whether there had been a lack of foresight by the Government or Enemalta in the handling of the fuel surcharge issue, especially with regards to the hedging agreement.
On his part, General Workers’ Union GWU chief Tony Zarb (GWU) told Business Today that when the Government had announced an increase in the surcharge to 95 per cent, “the GWU immediately stated that that excessive increase was going to drastically reduce the purchasing power of the Maltese families.
“Consequently, the GWU requested an urgent meeting of the Malta Council for Economic and Social Development (MCESD) so that the social partners discuss the negative impact that such an increase was going to have on the pockets of the people.
“Now, that the international price of oil has gone down by more than 30 per cent the GWU reiterates that the surcharge should be reduced with immediate effect so to alleviate the burdens the families are carrying,” Zarb insisted.
Asked whether the Union agreed with the Government’s position that was not advisable to reduce the electricity surcharge in view of the hedging arrangements that Enemalta had already undertaken in this respect, Zarb said:
“The GWU does not agree with the reasoning that it is not advisable that the surcharge be reduced. The GWU believes that a reduction in surcharge would not only ease the burdens on the families but it will also help by leaving more money in their people’s pockets that will enable them to cope with rise in the cost of living.
Asked for the GWU’s views on how the Government should alleviate the impact of the fuel surcharge on the country and the economy, especially on workers and low-income earners, the GWU chief said: “It is true that Enemalta is purchasing fuel through a hedging agreement although no one knows the prices Enemalta is paying.
“However this should not be the reason why the Government shouldn’t reduce the surcharge gradually until it reaches a level that reflects the real price of oil. Certainly the Government should assist all those families who are moving closer to the poverty line,” he told Business Today.
Finally, on the crucial issue of whether there had been a lack of foresight by the Government or Enemalta in the handling of the fuel surcharge issue, especially with regards to the hedging agreement, Zarb stated: “The truth is that the Government had decided unilaterally to increase the surcharge to 95 per cent.
“If the Government had discussed the issue with the social partners prior to arriving to its decision to drastically increase the surcharge, the GWU is sure that the social partners would have arrived to a solution to minimize the negative impact on the families and also to avoid certain grave consequences that the surcharge had on the national economy.”
On his part, Union Haddiema Maghqudin (UHM) Secretary-General Gejtu Vella said that much has been said about the fuel sky-high prices and the introduction of the fuel surcharge.
“The negative effects and the serious implications on the standard of living of consumers and the harmful impact on competitiveness of certain sectors of our economy that depend highly on such utilities have all been brought to the fore in various quarters,” Vella explained.
“The UHM strongly opposes the statement that fuel surcharge should be equated to arithmetic computations. It goes far beyond. Its effects’ on consumers and as such the impact of the surcharge should be quantified and assessed,” he insisted.
Vella said the water and electricity surcharge introduced some time back in the light of the international sky-high prices of fuels “is influencing the lifestyle and the standard of living of various families in our society.
“Consumers on low incomes are treading on thin ice and though some may qualify to be financially supported, the hardship remains.”
These utilities have affected consumers on two counts: one directly related to water and electricity consumption the other through higher prices of various commodities.
“The introduction of the surcharge on consumers’ bills has raised eyebrows and led people to feel the squeeze into their pockets. Presently consumers have to dig deep into their pockets to pay their water and electricity bills which carry a hefty surcharge,” Vella said.
“The UHM feels that this issue of water and electricity prices needs to be discussed seriously and an in-depth analysis should be commissioned to ensure whether the surcharge should be completely abolished while ensuring to assist consumers in the lower income brackets,” he insisted.
Vella called on Government to introduce tariffs “that encourage consumers to use wisely and properly” water and electricity.
The UHM said it did not favour the notion that Government should carry financially the hefty international prices of fuels. “Government will only shift these financial tokens into a new tax to collect the monies to buy fuels and make ends meet,” Vella told Business Today.
Moreover, various initiatives to educate, inform and help the consumers on how to make saving has become a must. “Alternative energy and more environmental friendly devices should be encouraged and used by the consumers’ as tax rebates should also be looked into seriously,” he said.
On his part, Medical Association of Malta (MAM) President Martin V Balzan said: “If the government subsidises fuel it means it is being paid out of our taxes.”
“Hedging is for 6 months and does carry the risk that if the price goes down one is lumped with the purchase price range for that period.”
Questioned about the association’s views on how the Government should alleviate the impact of the fuel surcharge on the country and the economy, especially on workers and low-income earners, Balzan said:
“MAM agrees with Government policy not to subsidise greatly fuel costs, but to reduce taxes. This will create business activity to offset the effect of the price of oil.”
Finally, on the crucial issue of whether there had been a lack of foresight by the Government or Enemalta in the handling of the fuel surcharge issue, especially with regards to the hedging agreement or not, Balzan told Business Today: “A revision of the tariff system is necessary so as to protect the vulnerable, but also to discourage waste and most importantly to encourage clean sources such as solar energy.”
On 26 August, speaking to Business Today, a spokesperson for the Ministry for Transport, Infrastructure and Communications (MITC), which is politically responsible for Enemalta and WSC, ruled out a reduction in the electricity surcharge rates from the current 95 per cent as “unrealistic”.
He said that the actual surcharge would depend significantly on actual deliveries and crude prices for the whole period July to September, not the spot price on one day.
“In addition, it is based on fuel oil and gas oil purchases not crude prices. It is however to be stated that crude prices influence hedges as Enemalta hedge against crude oil,” he said.
“One may also note that Enemalta is practically 100 per cent hedged till year end up to 50 per cent hedged for 2009, including a number of hedges that are still below the current market levels.”
