The Malta Hotels and Restaurants Association (MHRA) has criticised the government for failing to take on board the recommendation that the association had made on the need for a hedging agreement.

In a statement, the association said that even a small increase in the prices for the most essential energy oils had a negative impact on operational costs and hence, a negative impact on the tourist industry operators’ performance.

The MHRA said it was still waiting for the outcome of its request at MCESD on 6 March for an independent audit on the workings of the electricity surcharges.

Association president Justin Zammit Tabona said that “while it is appreciated that the price of oil on the international markets has kept increasing dramatically, the government has ignored the recommendations given last year to have a hedging mechanism in place to smoothen the upward spiral of oil prices.”

He said that all hikes in electricity and oils since November 2005 have had to be borne by the hoteliers because no tour operator would consider any changes to the prices contracted over 18 months ago.

“85 per cent of the business of most of the four and three star hotels is derived from tour operators and therefore these had no way for making up for the increase in costs by asking for increase in their room rates.”

The MHRA’s concerns stem also from the fact that there is no apparent national discussion taking place to sample and evaluate alternative sources of energy.

In a counter-statement, the government criticised the MHRA and accused its leadership of “refusing to face up to real-world realities”.

“Its complaints about the revision of fuel prices imply that these revisions are unique to Malta and that the impact of the international prices of oil is exclusive to the local tourism industry and not to its competitors anywhere else in the world.”

The Industry, Investment and IT Ministry said that this was not the case and that of all the economic sectors, the tourism industry was cushioned from the increases thanks to a capping on the increases in fuel costs.

“The MHRA may need to be reminded that the savings it is making from the real market cost of the electricity it consumes is being paid by the remainder of the Maltese society. If bills paid by hotels reflected the true cost of their consumption, bills paid by private households and families would be considerably cheaper than they are,” the ministry said.

The government said that the association was also incorrect to say that the government or Enemalta were refusing to introduce hedging.

“Enemalta is engaged in a hedging agreement and consistently assesses the feasibility of risking any further hedges. Enemalta, on the advice of the Fuel Procurement Advisory Committee, entered into a hedge last year and is in a hedge this year.

“The fact that the electricity surcharge went down in April and May against the international price of oil which was going up at this time is simply a result of the rates fetched by Enemalta on the market,” the ministry said.

It warned however, that with hedging in place, the fundamental trends of increased cost of energy will not be reversed simply by wishful thinking since hedging does not have the miraculous properties the MHRA seems to have allowed itself to be led to believe.

The ministry said that Enemalta had indeed taken up the challenge to have the workings of the surcharge formula audited by an independent body and the corporation was waiting for the results.

In a similar vein, the ministry also criticised the Labour Party’s deputy leader Charles Mangion and MP Joe Mizzi for “repeating what they know is incorrect”, adding that their criticism of the surcharge “had no basis”.

The ministry said that the Labour Party never offered a solution or alternative to the problem.

In a statement issued in reply to comments made by the MLP during a press conference, the government said the Labour Party’s document on industry showed that a Labour government would retain the surcharge on water and electricity.

“While Dr Mangion argued that the price of petrol had gone up by 52 per cent over the past eight years, it was not said that the price in the Mediterranean had gone up by 250 per cent in the same period,” the statement said.

The ministry also criticised the Labour MPs for insisting that hedging was some “divine intervention”.