FOI changes tack on fuel surcharge, presents position paper to MCESD
Charlot Zahra
After this newspaper sought in vein the comments of the employers’ organisations on their position on fuel surcharge, the Malta Federation of Industry (FOI) sent Business Today a copy of a discussion document that the Federation sent to the Malta Council for Social and Economic Development (MCESD) about the increase in energy costs.
Originally, an FOI spokesperson, in synch with the other employers’ organisations at the time – the Chamber of Commerce and Enterprise (COC), the Malta Employers’ Association (MEA), the Chamber of Small and Medium-Sized Enterprises (GRTU), and the Malta Hotels’ and Restaurants Association (MHRA) – had told Business Today last week that “the FOI is not in a position to comment on this issue.”
However, the Federation has now changed its stance after this newspaper went ahead and published the story last Wednesday despite the employers’ collective silence.
In its discussion document submitted to the MCESD, the FOI said that in view of the sustained high price of fuels and corresponding electricity prices, “a workable national energy policy framework is urgently needed,” whose implementation is divided in short to medium-term actions spanning a number of years as well as longer term projects.
“The overriding objective of this policy framework should be the investigation as to how Malta can sustain its economic and social development within the current and prospective energy trends, but without creating unnecessary shocks,” the FOI said in their report.
However, the Federation said that the development of such policy framework should not be an excuse for further delay in the identification and implementation of effective and necessary measures.
The FOI is calling for maintaining of the current capping system of utility charges for large enterprises, as this “safeguards direct and indirect employment of thousands of jobs and any sudden changes to the system should be avoided so as not to create economic shocks”.
“However, as in the case of the surcharge exemption for the low income earners, the FOI acknowledges the capping system, as operated at present, does not provide sufficient incentive towards the optimization of energy efficiency,” the Federation acknowledged.
To this effect, the FOI was recommending that enterprises benefiting from the capping system should submit an energy performance plan, spread over a number of years and monitored every year, to commit, “in cases which are financially feasible”, to a reduction in energy use arising from efficiency measures and to an increase in energy generated from sources other than fossil fuels.
The FOI insisted that the effects of the increase in energy and water bills must not be exacerbated by inflationary pressures emanating from labour costs.
“This would surely result in significant serious spiralling effects as employers will then be influenced by the combination of higher energy costs, higher labour costs and a potential reduction in the aggregate demand,” it said.
Government, the Federation said, should also avoid a repetition of enhancing the COLA with an additional expense to employers. “The FOI reiterates that the automatic COLA should be limited to minimum wage earners and that wage bargaining should be effected at the enterprise level,” it insisted.
The FOI called for a new utility tariff system which would include charges based on the time-of-use (TOU) “which would disincentivise consumers from using electricity at system peak hours.
“A new tariff structure should encourage consumers, whether domestic,commercial and/or industrial to move their electricity consumption, when possible, from established peak to shoulder or off-peak hours.
This contributes to a more efficient use of electricity-generating equipment. “This may also provide the opportunity to encourage R&D for storing energy during the off-peak hours (such as freezing of storage tanks during the night to be used for cooling in the morning) to be used during peak hours,” it insisted.
At the same time, the FOI called for a reduction in the amount of energy that the country consumes, which would lead to the reduction of carbon emissions and a reduction of the need for additional energy supplies and hence costs.
“Saving energy can also reduce the amount of renewable energy needed to meet our targets by reducing the overall energy consumption. This is cheaper than investing in new generation plant and this may lead to an absolute reduction in energy demand in the longer term,” the FOI said.
The Federation called on Government to invest in short-to-medium term renewable energy projects, which show promise of reasonable returns.
“Where possible, investment should be made in Government buildings, such as local Councils, Civil Service departments, Ministries, schools, hospitals and MIP leased factories,” it said.
In this respect, private enterprise should be encouraged to invest in photo-voltaic cells and solar thermal or cooling through investment aid incentives, while domestic users should be actively encouraged to invest in solar thermal through enhanced incentives in the capital outlay.
“Additionally, realistic adjustments in the ‘feed-in’ tariff to reduce the payback period of photovoltaic investments should be made,” the FOI insisted.
