For months, the party in government has been laughing its head off at Labour’s claim that it can and will cut electricity rates.

“Impossible”, thundered the likes of Austin Gatt and Tonio Fenech.

But now I can confirm that a committee has been set up by MTA, MHRA and the Ministry of Finance to look into the issue and suggest changes.

This development arose from a recent meeting of the MCESD where, on the insistence of MHRA (twice delayed), the government was pressured by the social partners to do something other than express impotence about electricity prices.

One could possibly come to the same conclusion if one starts from industry’s point of view. And, of course, one could equally arrive at the same conclusion starting from the point of view of consumers. But let’s start from the hotel owners and entrepreneurs’ point of view.

Despite the international crisis, the past two years have been very successful ones for our tourism industry. Mainly, this has been brought about by the arrival of low cost airlines, which have greatly increased the availability of seats, the accessibility of holidays in Malta. There is a direct correlation between the seats that are accessible and the number of people who come to Malta.

Also, tourist patterns are changing: there is no longer the dependence on tour operators for hotel accomodation: an increasing number of tourists today prefer to book individually on the Internet.

Malta is becoming increasingly attractive to tourists: they no longer see Malta as a sun and sand destination, but as an island with a great history.

More: Malta is safe, especially when compared to most destinations around it, certainly when compared to North Africa and Egypt.

(It is true, however, that much more needs to be done on the tourist product: a businessman boarding a plane was recently heard complaining on his mobile phone that Malta was dirty and scruffy. When questioned, he said he had lodged at one of the best hotels, and it was OK, but when he went for a small walk in the environs of the hotel, he found it scruffy and unappealing. However, it turned out that he had no heard about Valletta, or Mdina: no one had told him about them.)

It should not be too difficult to ensure that the roads are up to standard, but they are not; to ensure that road markings are legible, but they never are; to ensure that waste bins in the most popular locations are emptied at least once a day, if not more, but they seldom are.

So this new surge of tourists has filled beds in most hotels. The hotel owners, freed from the shackles of tour operators, are finding ways to increase room rates and still remain competitive. With some exceptions, this has greatly improved the hotels’ turnover.

But it is not enough. Two good years, even if followed by more, cannot make up for lost years when the hotels saw dwindling numbers or when VAT was increased by two per cent last year.

Hotels need to upgrade regularly and they cannot do so on the basis of annual turnover, especially when costs keep going up as much, perhaps even more, than revenue.

But their mayor beef is about energy costs and other government-induced costs such as COLA. Let’s look at energy costs. This is the focus of this as yet unannounced MCESD sub-committee looking into energy costs.

First of all, the study must examine the comparative cost of energy in Malta and energy in competing countries. There is a tax component in energy prices so one must examine to see the real comparison of prices shorn of taxes imposed on them.

So far, Malta gets all its energy from costly oil-burning plants, whereas other countries get theirs cheaper from hydro-electricity, some from nuclear plants (renewables are costlier). Oil has to be transported here and so far Malta is not connected to the grid, which should make electricity cheaper.

But a more immediate focus of this MCESD study regards a subject on which Labour has been insisting all along: the huge inefficiency at Enemalta.

There is simply no insistence for Enemalta to be efficient, hotel owners tell you.

There is inefficiency of distribution: for every 31c that is pumped into the network, 25c are recovered as sales. The remaining 6c disappears.

It has also been found, hotel owners tell you, that for every megawatt produced by Enemalta, the corporation employs six times as many employees as are used in other countries.

People who have tried to understand the financial innards of Enemalta say there is no real management there, no business structure. It is incredible how the corporation can ever hope to succeed as a business.

The government is now understood to be about to launch another Special Purpose Vehicle (SPV) with regard to Enemalta. SPV has become the flavour of the month. But the hoteliers are up in arms: this will only reinforce the existing inefficiencies and will not serve to propel Enemalta into becoming more efficient. Enemalta is not geared to become efficient and its inefficiencies are making the rest of industry, including the hotel industry, inefficient and uncompetitive.

There is also a regulator but he seems to be incapable of tackling Enemalta and getting it to justify its prices. It would seem that the line used is that the prices to consumers are correlated to the Brent oil prices and that is that.

When the new plant at Delimara was ordered, it was claimed the BWSC plant would increase power generation efficiency by 40 per cent. “We want that efficiency to be passed on to us,” the hoteliers say.

Over the past year, the industry has had to absorb the two per cent increase in VAT. This, on its own, has eaten away most of the benefits that the increased numbers of tourists have brought to the industry. Increased energy costs will further undermine any gains the industry manages to make.

The last point they make is a more general one. A minister is understood to have admitted to an MCESD meeting that the government has some 6,000 people on its books that are unemployable elsewhere. The rest of the country is having to carry this burden as well but no industry would survive if it carries such dead wood.

The coming pre-election period is already seeing a plethora of give-aways being handed over here and there. Once the election is over, the country will have to tot up the cost of these give-aways.

I do not know if this is related, but in yesterday’s TMID there were two pages of Mepa applications and five-and-a-half pages of Mepa decisions and they were all ‘Grant” with perhaps only one ‘Refuse’ per page.

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