The government yesterday presented the last set of revised electricity tariffs which cost €60 million less due to the oil price decline, meaning most families will pay between 65c and €1.85 extra per person per week under the new rates.

However, during a joint news conference, Communications Minister Austin Gatt and Finance Minister Tonio Fenech, warned that there was no escaping the situation and that the tariffs have to, and will, be introduced.

The ministers presented the last set of tariffs (Tables 1 and 2) that were discussed during yesterday's meeting of the Malta Council for Economic and Social Development (MCESD). Dr Gatt made it very clear that this was the last time the tariffs were discussed in MCESD and tomorrow's meeting will focus on the budget.

Dr Gatt said that there are three factors left until a final decision is taken on the electricity tariffs: working out the costing of a proposal made by the Union Haddiema Maghqudin, working out the tariffs of the Water Services Corporation and if, when introduced, the tariffs will be backdated to 1 October.

“It makes no difference to us if we backdate the tariffs to 1 October or whether these will come into effect on 1 November. However, we will have to make good for e7 million for every month that the tariffs are not paid, which means a slower and higher recovery rate," said Dr Gatt.

The government has to make good for the extra e55 million paid last year for oil and the solution is either introducing the tariffs, or taxes, he said.

Without mincing his words, Minister Gatt said the time for subsidies is over and now people have to start paying for what they consume. "It was wrong that the industry was subsidising households and that we had a subsidy system that led people to waste electricity instead of practising energy saving habits.”

More incentives need to be introduced to promote less consumption. “The government will focus on investment and not on subsidising consumption – something everyone agreed upon this morning,” said Dr Gatt.

Although the original cost of recovery for Enemalta was e365 million, the government revised its estimates and reduced the recovery cost to €305 million, mainly because the cheaper price of oil .

A new, and final, set of tariffs (Table 1, Tariff 6), was discussed during the meeting. Dr Gatt explained that if the price of oil remains stable, then the new set of tariffs will recover the €305 million. “These tariffs will decrease only if the price of oil continues to fall.”

Furthermore, there will be an eco-reduction of 20 per cent on 1,000 units and an eco-reduction of 10 per cent on 500 units.

Dr Gatt explained that the capping burden was removed on households and was distributed on industry. Furthermore, if approved, these tariffs will be reviewed every six months or each time there is a 15 per cent spike in the price of oil.

The capping system will be phased out over three years until 1 January 2012. Dr Gatt said that households will not be paying extra to cover the overlay of the capping which instead will be paid for by commercial enterprises.

Under the recently proposed tariffs (Table 2), 36,874 non-residential entities which consume less than 20,000 units a year will pay an extra €5.50 a week.

Dr Gatt said that the GRTU, Chamber for Small and Medium Enterprises, opposed this proposal vehemently especially since the majority of its members fall in this category.

Finance Minister Tonio Fenech said that the government will look for solutions to solve the energy problem and not keep measures that promote wastage.

“Subsidies are just a painkiller – they are not the solution. The true solution is investment and the government is looking into a package of incentives that will lead to people being more careful,” he said.

In fact, he added that the government is considering allocating around e20 million in the upcoming budget for eco-friendly and energy saving measures.

Furthermore, the 30,000 households which are exempt from the surcharge will not be forgotten and will be protected with energy benefits announced in the budget speech.

Mr Fenech admitted that families’ bills will rise but called on everyone, especially the social partners, to look at the situation in a wider perspective and be more realistic.

“International forecasts show that there will be less demand for products and, as a result, less expenditure. However, it is not the time to increase the cost of living allowance now as it will only add more pressure to industry,” he said.

However, Mr Fenech did say that there will be an increase to the cost of living allowance in budget – but not before.

“A clear balance has to be found between addressing these challenges and help the economy grow,” he said.

Referring to the 84 workers laid off at Toly, Mr Fenech said that Trelleborg took the decision because it registered a drop in orders, affected by the drop in car sales in Europe, and had nothing to do with the proposed tariffs.

When asked about the statement made by the GRTU, after yesterday’s meeting, about directives ordering its members to pay bills on the old system, Dr Gatt said that the chamber was exaggerating. “The GRTU was the only social partner that called for the immediate removal of the capping because its members don’t fall under it and it stood alone on this proposal.”