Low energy taxes keep electricity prices in Malta among cheapest in EU

Low energy taxes in Malta meant that households paid the fourth cheapest price for electricity in the EU last year, figures out today show.

The average price of electricity in Malta stood at €13.10 per 100kWh in the second half of 2019, according to Eurostat. The price is inclusive of taxes.

Only households in Bulgaria, Hungary and Lithuania had cheaper electricity.

Malta’s consumer price was far below the euro area and EU averages.

Eurostat also showed that 6% of the household electricity price in Malta was made up of taxes and levies, by far the lowest across the EU. Ireland with a tax portion of 16% was second after Malta.

However, if taxes were to be removed from the equation, the average price of electricity in Malta would go from the fourth cheapest to 15th. On the contrary, Bulgaria, Hungary and Lithuania, retain their top spots even without taxes.

This means that it is only the generous tax rate that keeps electricity prices in Malta among the cheapest in the EU.

However, even in this instance, the price in Malta is still below the euro area and EU averages.

Malta’s State energy company Enemalta buys electricity from two power stations at Delimara run by private firms Electrogas and Shanghai Electric Power, and from the European grid through the interconnector to Sicily. It also purchases electricity produced by photovoltaic panels installed on private residences and commercial outlets.

Enemalta has been accused of paying a hefty price for electricity as a result of the 18-year arrangement government reached with Electrogas when it was awarded the tender to build and operate the new gas power station.

The tender was mired in corruption and one of the Electrogas shareholders, Yorgen Fenech, now stands charged with masterminding the murder of Daphne Caruana Galizia.

A cache of documents from the Electrogas servers had been leaked to the journalist before her murder, including the contract with government. An analysis of the arrangement carried out by international journalists with the help of energy industry experts revealed how Enemalta was paying a higher price for electricity as a result of the fixed agreement when the price of liquefied natural gas (LNG) used to fuel the power station was dropping.

Government has always defended the deal, insisting the fixed price was still lower than what Enemalta used to pay when it ran its power stations on heavy fuel oil. It also contends that the agreement enabled the country to make the shift to much cleaner gas.

Household electricity rates were lowered by 25% in 2014 as part of the shift to gas power undertaken by the Labour government. A year later, electricity rates were cut by 25% for commercial establishments.