Protecting the best energy policy for our country

In energy, Joseph Muscat has made a real difference. In 2012, Lawrence Gonzi’s last act was to set up a Special Purpose Vehicle to raise a €319 million loan as no banks wanted to lend to Enemalta.

In 2012, the IMF had admonished us, saying “Bold policy actions are necessary to reduce contingent liabilities arising from the public corporations… 60 percent of which is accounted for by Enemalta... Staff indicated… tariff increases if the company is to avoid losses or government assistance.”

Fitch Ratings downgraded Malta because of Enemalta’s loans. In its Country Report, the Commission said “The difficult financial situation of the state-owned power utility Enemalta continues to pose a challenge for the security of energy supply and for the public finances… Standard and Poor’s downgraded the company’s credit rating two years in a row on account of its high costs and poor profitability… These factors suggest that the company’s viability based on the current situation is not sustainable”.

Eurostat confirms that, between 2008 and 2012, electricity prices in Malta rose by 68%, as against 26% in the EU. Besides, it was impacting negatively our health. European Environment Agency data shows that, in the decade to 2012, our energy sector’s emissions rose by 8%, against a 13% fall in the EU. Malta was the EU country with the worst record.

We have changed this. Our electricity prices are down by 25%, as against a 7% rise in the EU. From having the fifteenth highest prices, we now have the fourth cheapest bills in the EU. Compared to 2012, the average family today spends €750 less on electricity and on fuel. That means €120 million more in Maltese families’ pockets.

Some weeks ago, Eurostat confirmed that in 2016 Malta reduced emissions by 18.2%, the largest decrease in the EU for the second consecutive year. Our emissions are now at the lowest point since 1990.

Last February for the fifth time in four years, Standards and Poor’s lauded Enemalta saying that “we believe that the profitability of Enemalta’s performance has greatly improved and that the swing to profitability is now consolidated.” The Commission’s Country Report, issued this February, praises us for diversifying our energy sources and “upgrading the energy infrastructure to improve security, lower costs, and reduce carbon and non-carbon emissions”.

Gone are the warnings about “security of energy supply” and “the company’s viability”. Gone are the pressures to raise prices. Report after report confirms that the energy projects have revitalised our economy.

Simon Busuttil claimed this was Alice in Wonderland. Today he claims the projects were late. Let us remember one project he opened in 2012. In 2000, work started on the Cirkewwa ferry terminal for it to open by 2003. The terminal opened in 2012, after 12 years. Good to remember that the ancient Romans took 8 years to build the Colosseum!

Simon Busuttil has two energy proposals. The first is to return pricing to the formula of the previous administration. This formula would mean that our electricity prices would have gone up three times as much as in the EU, and fuel prices dropped by half as much. Instead of having €120 million more to spend, households would have had €14 million less.

The second proposal is to rescind the Electrogas agreement and return to complete dependence on Enemalta. If this happens, there will be irreparable damage to our credentials. It would signal to foreign investors that Maltese do not respect contracts. The impact on our economy would be devastating. Our ratings would plummet, and firms would lose access for finance. Foreign banks which provided credit for the deal would spread the message globally that Malta cannot be trusted. We are talking of HSBC (UK), Societe Generale of France and the German Government’s KFW. At one go we will anger the UK, French and German governments who will protect their interests. 

Last February Standard and Poor’s sounded the alarm, stating “in our opinion, the next elections in Malta… will test Enemalta’s resilience to its exposure to potentially adverse energy policy decisions.”

Having secured energy supply, lowered prices and halved emissions, we face a choice between a tested energy policy and leaping in the dark. A choice between having low electricity bills and embarking on a fight with Europe’s largest banks. A choice between remaining an attractive foreign investment destination and becoming a Third World country where an incoming administration rips to pieces deals with foreign companies. 

On the 3rd June we have to vote for a better tomorrow and stop those who endanger our future.

Gavin Gulia is a Labour candidate for the 6th and 7th districts