Fabian Demicoli

Diesel Price Increases putting heavy pressure on Distributors, Wholesalers.

 Diesel Price Increases Putting Heavy Pressure on Distributors, Wholesalers, Waste Carriers, Construc. – Increased prices of diesel fuel and fuel oils continue to place increasing pressure on the business community. The price of diesel has increased by a staggering 15c per litre within the last month. The price today stands at Euro 1.12 per litre against a price of Euro .97 per litre in January 01, 2010. It appears that government is not realizing the tremendous pressure this increase is causing on all transporters and distributors and all fixed equipment operators depending on fuels to operate their equipment.

"GRTU has been striving for direct support to small enterprise owners and self employed in these sectors, especially those related to the food chain, waste carriage and construction as these operators find it extremely hard to pass on extra costs to their clients as very few of these operators have a fuel price escalation clause in their contract with Local Councils, developers and other trade users of their services.  Most buyers of their services, including government and public service authorities, find it hard to accept to change contracts with the result that operators will have to suffer increases of fuel prices themselves. Where the cost is passed on the impact on the general level of prices suffered by consumers is relatively very hard. GRTU finds it very difficult to comprehend why during a stage of economic development when most small operators are still suffering from a depressed market, the Minister of Finance, who is also responsible for the Economy and for Small Businesses, inflicts such an additional burden on the distribution and transport sector."states GRTU Director General Vincent Farrugia.

Increase in the excise duty on fuels is illogical at this particular time and Government this time round cannot blame this excise duty increase on the EU as happened when excise duty was last increased. The additional increase of diesel and fuel oil prices by Enemata is once again not sufficiently explained by Malta Resources Authority which The exists to safeguard users' interest. The system adopted by MRA to approve increases of energy prices by looking at primarily at the cost of the suppliers of energy products and ensuring a decent mark-up for these monopolies to cover their own economic viability, including a lucrative return on capital, irrespective of the impact on the viability of all other business who heavily depend on the prices imposed by the state monopoly or, in the case of liquid gas, by the private dominant firm, is simply not acceptable to GRTU.

The combination of excise duty increase and the steady staggering increase in fuel prices is being felt in all sectors. GRTU is not satisfied that Government and the Public Regulator are doing enought to make sure that purchasing procedures by the suppliers are acceptable and convincing. The Malta Resources Authority should make sure that the price increases being put in place are only effective after making sure that procedures have been adhered to for the interest of the consumer and end user of this important fuel.

The distribution sector is being effected immensely and  in spite of GRTU pressure to cause operators in the sectors to make sure that an indexation formula is put in place where the use of services that highly depend on fuels are involved, the continued depressed state of the economy does not provide the right context for such contractual clauses to be implemented. "GRTU expects government to relieve pressures on small independent operators in transport and distribution and not to proceed heedless of the impact on small businesses.  Surveys by GRTU among its members in these sectors show that levels of earnings have fallen sharply and the level of  indebtedness of many of these operators with petrol stations  and other suppliers is very high and increasing and take home pay has fallen sharply. It is simply not correct that this sector continues to be singled out of continuous punishment" comments Vince Farrugia Director General GRTU.

In a sector where GRTU is heavily involved and where GRTU carries the representation of 95% of operator as in the case of waste carriers and skip loaders, GRTU is pleased to note that in the new contracts include an indexation formula for increases in the price of fuel (diesel), but regretfully GRTU notes that there are still a good number of Local Councils who have to date not finalised the new contracts of service. On this issue GRTU will be discussing with the Director of Local Government to make sure that a deadline for all Local Councils is set in order to make sure that new contracts are concluded in those Localities where a current contract for waste collection has expired.

"For many operators who use heavy transport this week's fuel increases represent loses of between Euro 30 to Euro 45 per week. The take-home pay of small operators in this sector is too much. GRTU seeks government support to ensure that fuel costs are indexed for distribution enterprises. The prices of fuels are too volatile not to have this item in service contracts not subject to an indexation clause. Without State intervention the acute competition in the distribution and some unfortunately seek means that are illicit to survive against contractors of their services who insist on prices that are below the cost of production of a genuine up-to-standards service. Unfortunately no Public Regulator is willing to safeguard the interests of the small operator in these sectors even though competition rules safeguard these operators from the malfunctioning of the market. It is high time that government seriously realizes that competition is not merely a question of prices only but also of standards and quality of service and that small operators need safeguards to ensure that standards and quality, including take-home pay of operators and their employees, need protection" insists Vince Farrugia.

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