Dr Gatt said he was quite puzzled at the reaction of the GRTU because the price rise was due to a knock-on effect from other increases of petroleum products on the international market.

Dr Gatt said that as from 1 January 2002, government began to implement price rises regulated by a formula to reflect international market conditions.

“Up till then, as the GRTU knows full well, diesel was heavily subsidised by petrol. This gave rise to a situation where petrol users were subsidising diesel users,” said Dr Gatt.

He explained that Government’s plan was, and still is, to have that subsidy phased out over a three-year period so as to have realistic price range by the end of 2004 to reflect the realities of the international market.

The formula, he said, allowed for Enemalta to recoup moneys it spent to actually import fuels and also to phase out the diesel subsidy. “We also made sure that the change would be gradual so as not to have a huge price hike on diesel at one go,” he said.

Dr Gatt said he would also not be surprised that the GRTU – an organisation he said promoted the concept of free trade and the abolition of protectionism – would soon turn around and ask government to subsidise oil if prices went up on the international market. He also said he would not put it past the GRTU to request that petrol consumers continue to subsidise diesel users. Dr Gatt said the GRTU knew for a fact that price adjustments to diesel, petrol and gas were an everyday thing in all countries that follow a free trade policy.

Dr Gatt said: “It would be a mistake to subsidise diesel if international prices went up because if government was to absorb the costs it would mean more taxes for everyone anyway.” He also said that unleaded petrol had risen in price from $199 per ton in October 2001 to $329 today. Meanwhile diesel had gone from $215 in 2001 to $281 per ton today.

Meanwhile, in a statement, Opposition MP Joe Mizzi said that since the introduction of the formula, diesel had gone up by 33 per cent. “In less than a year-and-a-half, diesel has gone up three times to 29 cents a litre,” he said. He said the price increase will only serve to push up the cost of living and this did not augur well for any plans to kick-start a job creation drive.

Mr Mizzi said that the government should have adopted a hedging system by buying at favourable prices to try to keep the overall cost down.