The former chairman of fuel procurement advisory committee Roderick Chalmers has said he was not involved in advice given to Enemalta on operating procedures but pointed out that those engaging in hedging have to have the self discipline of documenting hedging policy expected achievements.

“And public entities, especially, should have properly documented procedures,” he said.

Mr Chalmers was replying to questions made by Justice Minister Owen Bonnici, who is a member of the PAC. PAC is scrutinising the Auditor General’s report on fuel procurement by Enemalta.

When the PAC last met to discuss the AG report on 14 July, Mr Chalmers said Enemalta was not equipped with proper management infrastructure to focus on hedging. He was reacting to criticism raised by a former FPAC chairman, Joe Falzon, who said Enemalta could have saved €2 million in costs if Enemalta made use of hedging.

Mr Chalmers was appointed chairman of the FPAC by then Infrastructure Minister Austin Gatt in 2005. Mr Chalmers was in favour of a ‘user pay policy’, and while the price of the commodity shot up by 250% for the buyer (Enemalta) the consumer only absorbed 17% of the cost.

According to Chalmers, the Auditor General’s report “fell into the trap of looking back” when it came to its criticism regarding Enemalta’s reluctance of adopting a hedging policy.

Mr Chalmers had given advice to Enemalta to implement hedging.

He pointed out that jet fuel needn't be touched at the time since it had a good hedging policy in place but a radical change was needed in terms of guaranteeing stable energy product prices.

“As long as it is done in a well regulated environment with a policy in place, the use of hedging is fine,” Mr Chalmers explained.

Citing the price of fuel oil which rose to 300 per cent during a period of time, Mr Chalmers  said that the consumer absorbed only 17 per cent of Enemalta’s purchase price, which is nothing but a road to bankruptcy.

PAC has adjourned to after the summer holidays.