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Kurt Sansone
The price of fuel oil purchased by Enemalta to run its power stations has increased dramatically since the year’s beginning after a spell of dry weather in the Mediterranean hit energy supplies from hydroelectric power plants in neighbouring countries.
The increased demand for fuel oil has raised its price and the news is bad for Enemalta’s bottom line. And not only, as consumers will be expected to foot the bill through a higher surcharge on utility bills.
Government is currently reviewing the surcharge and a final decision will be taken by the end of the month. A spokesperson for the Investments Ministry told this newspaper that the estimates presented by Enemalta for its fuel costs for the financial year 2005 have been exceeded.
Parliamentary Secretary Tonio Fenech has already stated in an interview with sister newspaper The Malta Financial and Business Times that in current circumstances, the surcharge cannot go down.
In last year’s budget it was stated that the fuel surcharge, currently at 17 per cent, will be adjusted on a half-yearly basis. In August of every year the surcharge will be reviewed for the September to February period while in February the surcharge will be reviewed for the March to August period.
The surcharge is government’s attempt to recoup fuel costs above the benchmark of Lm31.6 million, which represents Enemalta’s annual fuel cost for 1999.
Almost 90 per cent of fuel used to generate electricity in Malta is light sulphur fuel oil (LSFO) – the processed oil derived from crude oil, not to be confused with the latter. The other 10 per cent of fuel burnt in power stations is gasoil, which has also experienced hefty price increases since the beginning of the year.
In its oil market report of 13 July, the International Energy Agency put the monthly average price of LSFO in the Mediterranean region at USD39.85 per barrel in June, up from USD29.83 in January.
The weakening of the Maltese lira against the dollar over recent months has not helped, making fuel oil importation more expensive.
Taking into consideration the average monthly exchange rate issued by the Central Bank, LSFO would have cost Enemalta Lm14.06 per barrel in June, up from Lm9.82 in January. The increase represents a jump of 43 per cent.
Gasoil has seen similar exorbitant increases, from Lm17.06 per barrel in January to Lm23.89 in June, equivalent to a 40 per cent increase.
Both LSFO and gasoil have also experienced year-on-year increases of 45 per cent and 60 per cent respectively.
kurt@newsworksltd.com
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