SME Chamber

GRTU brings forward its case on the Tariffs to the MRA

 The GRTU delegation, directed by Director General Vincent Farrugia, has met yesterday with the Chairman of the Malta Resources Authority (MRA) Ing. Carmel Ellul and with the Chief Executive Officer Antoine Riolo, whereby it once again presented GRTU's objections to Government's method of introducing the electricity and water tariffs.

GRTU has once again informed the MRA that GRTU was not satisfied with the way MRA performed its duties when it approved the new tariffs and their analyses, which according to Maltese Law it was obliged to do.

The Director General emphasized that the duties of the Malta Resources Authority are spelled out clearly in the law, and those which are not specifically mentioned in the Maltese law (Act No.XXV 2000) are found in the European Electricity Directive (2003/54/EC). These obligations are also explained in the European Commission guidelines as to how impact assessments should be performed and the consultation process in serious cases where changes in the electricity tariffs which have serious impact on the enterprises, families and the economy in general.

Mr Farrugia also explained that from the facts which resulted and from declarations made by the Minister for Infrastructure, Transport and Communication Hon. Austin Gatt, by the Chairman and the CEO of the MRA to the MCESD, from public declarations by the Prime Minister and Minister Gatt, from what has been ensued from the GRTU meetings, the Trade Unions of workers, the Chamber f Commerce and the FOI, and now even from the same chairman of the MRA, a big confusion was created and everyone is feeling uncertain. Such confusion is causing a lot of negativity and damage which is not good neither for Government, for Enemalta and nor to the experts of Enemalta (KPMG) and MRA (Deloitte) and least of all to the same MRA, which had a clear duty to prevent such confusion.

The Director General presented facts and figures showing that those who have suffered mostly out of this confusion were the small and medium enterprises. The GRTU can never agree to the removal of the surcharge mechanism, because this was bound with to the changes in the international prices of oil, taken on short periods. GRTU has however agreed that the tariffs needed adjusting. The GRTU was and still is against that the tariffs take as their basis the exaggerated prices of oil dominating in 2008. No one is to project structures of tariffs on short term changes.

GRTU sustains that the tariffs have to be based on the international average price of oil (a formula which covers the oil to the power station, a delivered price) worked out on a good number of years of not less than 10. It was the MRAs duty to check Enemalta does not invent tariffs based on prices which were temporary and exaggerated. There should have never been implemented a tariff based on the previous tariff + 95 % surcharge and other increases on top. The argument about the capital costs, the return on capital  approved by the KPMG and other payments to make up for the inefficiencies of Enemalta , had to be better taken care of by the MRA without any acceptance that such be lifted on the new tariffs. It is not enough MRA said the new tariffs were well summed up. This is a conclusion that the GRTU does not agree with.

Vincent Farrugia said that GRTU keeps insisting that the regime of tariffs that was proposed to MCESD by Minister Austin Gatt in the beginning of October 2008 are too hard on owners of small and medium enterprises. After pressure from GRTU, Minister Austin Gatt presented once again another tariff system on the 28th October 2008, and these, although also hard were better than those proposed in the beginning of October.

After the intervention of the Prime Minister Hon. Lawrence Gonzi and of the deputy Prim Minister Hon. Tonio Borg an agreement was mentioned with the workers' Trade Unions so that families could be given better rebates. Another agreement was mentioned with the Chamber of Commerce and the FOI so that tariffs of 103 large enterprises were lessened.  When on the 5th of December Legal Notices 330 (Electricity) and 331 (Water) were published it became clear who was going to pay for the changes.  The burden that was removed from a few enterprises was placed wholly on the 40,000 SMEs. For the SME not only were the exaggerated burdens proposed in October not lessened, but the tariffs were increased once more by an average of 15% on the tariffs proposed by Minister Austin Gatt on the 28th of October. For GRTU not only is this unacceptable but it is an obscenity.

It was an insult to GRTU for MRA to approve the Legal Notice and not only say that the tariff calculations were correct but also that it said that they were done "in agreement with the constituted bodies". This is surely a false statement as far as GRTU is concerned.

GRTU argued with the MRA that GRTU's requests are still pending and GRTU will keep insisting on them. GRTU explained it is presently exhausting the local judiciary process and is taking the case to the European Commission so that a full investigation on how the tariffs were calculated, how SMEs are being burdened with discriminatory tariffs and how these tariffs were approved. According to GRTU, MRA skipped completely the procedures specifically dictated by the European Commission and by the European Directives.

The Chairman of the MRA concluded that the MRA can only recognize all the points put forward and take them into consideration along with how the international market prices of oil change.  This for when MRA approves the adjustments to the existent tariff system after March 2009, at that point the MRA is able to approve revised tariffs that not only reflect the changes in international oil prices that resulted from October 2008 to March, changes which were not reflected in current tariffs. MRA also ensures that the revised tariffs make up for the extra payments that were made and that were not visible when the current tariffs were calculated and approved.

The MRA in this context gives full consideration to the complaints put forward by GRTU regarding the current tariffs and where these are found to be justified, these are reflected in the revised tariffs after March 2008.










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