Comment | Wednesday, 18 November 2009

Eight bells and all’s well

Harry Vassallo

The budget can be criticized for a lack of boldness, good ideas, small schemes which are well designed but are too small to address the magnitude of the crisis. There are good grounds to fear that a year down the road we will have a report such as that filed by the Auditor General on 30 September damning the government’s lack of vision on energy matters and its inability to dedicate sufficient resources to the schemes it proposed in favour of energy saving and renewable energy.
It was already too late for the Government to change course and despite the fanfares about wind energy blasted loudly for a number of years, not a single kilowatt will be produced in 2010 as a result of Government initiative.
In a crisis budget it would have been legitimate to expect more a wider breadth of vision. Granted that mega energy projects will take years to get off the ground because of environmental impact studies and what not, there could be no such obstacles for micro projects, domestic and commercial ones. The obstacles there are simply the rate at which Enemalta and WSC are prepared to buy energy or recycled water.
The narrow accounting view that water and electricity should be bought at the price they are sold does not factor in the fact that both are produced on imported oil. The contribution to GDP of locally produced, own resource energy has to be greater than that produced on imported oil.
If Enemalta had been an importer of potatoes competing with local farmers selling at the same price but able to make a slightly larger profit because it can source cheaper potatoes it would still not make economic sense to eliminate the local farmers. Their contribution to the country’s GDP is much larger than that of any Fruit & Veg importer simply because the domestic value added to their product is much higher. It comes to them for free as sunshine.
It works in exactly the same way in the energy field but with many more benefits. Families which can eliminate their electricity bills are so many wage earners who are not forced to demand a raise. Businesses that can cover some of their overheads by employing the idle roofs of their premises can cope better with their challenges. Rather than grant subsidies to a limited number the Government could raise costs for those with an available roof which remains unused while underwriting soft loans granted by the banks. Repayments can be made from customer accounts at Enemalta in a small addition to customers with a debit or a subtraction from those who manage to have a credit. The key is the rate at which Enemalta buys electricity. How on earth could feed in tarrifs be higher everywhere they exist than they are in Malta?
This was the time to go for such a venture. That was one huge public private project to go for. In the medium term a significant proportion of the energy demand of the country would be covered from renewables locally acquired.
This would require a long term plan, long enough to give the very many new energy operators the confidence that they will not be let down. As the Auditor General pointed out we still do not have a National Energy Policy. A country 100% dependent on imported oil for its energy needs has not found the time to finalise its national Energy Policy even though oil reached 140 USD a barrel just months ago and is already heading back that way.
In a year in which anybody would expect the government to stimulate the domestic economy in view of the sluggishness of the world economy, we have a project for a €20M Biotechnology Park, a project for €70M for the renewal of electricity meters and a scheme for the renewal of commercial fleets which can be expected to cost the economy more than the other two put together.
All of these projects are easily defensible as innovative, an investment in the future promising future earnings or a better quality of life. Was this the year we should go for them? Were they not the first items to postpone in the face of the crisis?
Rather than necessitating the scrapping of old commercial vehicles and the purchase of new ones would it not have made sense to require a higher standard of emissions from old vehicles? This would have imported the labour required to reform our fleet. We have no business providing employment to the motor vehicle industry in other countries when we could have kept some of the work for ourselves.
The biotechnology Park sounds stunning. Could it not have waited another year? Would those €20m not gone much further if spread around in our services industries? What will the multiplier effect of this new building in San Gwann be in 2010? What if we had spread it around in our catatonic building industry to provoke its reform into a restoration industry? The idea was mooted as far back as 1988 by then Minister Michael Falzon. This was finally the year in which to go for it. The budget should persuade the walls that it will never get done.



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18 November 2009


Malta Today


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