Further electricity rate cuts likely
It is likely that Finance Minister Edward Scicluna will announce new and improved electricity rates when he unveils Budget 2017 tomorrow evening – rate cuts that will go over and above the already-implemented 25 per cent cut for domestic and business consumers.
Given the fact that the government has evidently been hypersensitive to the pressure mounted by the Opposition and the public’s reaction to the new presence of the massive LNG tanker that will soon become a permanent fixture in Marsaxlokk Bay, the government will be seeking to mitigate the negative public relations effect. Sources within the Labour Party claim that, “It is almost a given that tomorrow’s budget will feature further electricity rate cuts, and such a move would make sense both from a public relations as well as from a financial perspective.”
Financial analysts speaking with this newspaper point to a number of factors that have allowed the government the fiscal manoeuvrability to enact further rate cuts. These include the fact that the government has benefitted from nearrecord low prices of international crude oil since it took the helm of government in early 2013 and the use of the interconnector, an investment made by the previous administration, and the lower rates that come with it.
The new Delimara power station, meanwhile, will soon be up and running on the supposedly more cost-effective LNG. And the benefits will undoubtedly be tangible before the end of the current calendar year.
ElectroGas Commercial Director Catherine Halpin, interviewed this week on this newsroom’s new online programme ‘INDEPTH’, confirmed that the new power station will be operational just three weeks
after it is issued with a permit following a public consultation exercise.
But apart from the financial ins and outs of providing for further electricity rate cuts, the government will also be seeking to provide something of a feel-good factor from the LNG tanker, which made its first brief appearance in the Marsaxlokk Bay last Monday.
In so doing, it will be continuing in the vein of past efforts that saw the Prime Minister objecting to a further expansion of the Malta Freeport into the same bay, and heavily promoting the line that the tanker is merely a temporary fixture until a gas pipeline to Sicily is built.
Households in Marsaxlokk and Birzebbuga were also sent attractive leaflets this week that extolled the benefits of the use of natural gas, as part of the government’s ongoing public relations and damage limitation exercise.
Evidencing this is the fact that Prime Minister Joseph Muscat will hold his Sunday sermon this morning in the locality of Marsa, where he will undoubtedly drive home the government’s feat of having closed down the heavily polluting Marsa Power Station which, he will say, was made possible by the advent of the new natural gas-fired Delimara facility.
He will also undoubtedly also refer to Friday’s Standard and Poor’s upgrading of Malta’s credit rating, particularly S&P’s comment that, “Another major factor [behind the decision to upgrade Malta’s credit rating] is investment growth, mainly comprising large-scale projects in education, healthcare, tourism, and transport industries, as well as energy projects, including the conversion of power stations to cheaper energy sources and the gradual integration of Malta’s power system into the European grid. As a result, electricity prices now resemble EU averages, and new businesses have easier access to electricity.”
Meanwhile, Opposition Leader Simon Busuttil will hold his Sunday gathering in Marsaxlokk itself, with a talk themed ‘Your security threatened by corruption’, in which he will undoubtedly seek to rally the Labour Party stronghold against the project – basing his arguments on the dangers of an FSU so close to the town and on the basis that Malta does not need another power station when considering the use of the interconnector and the BWSC power station, which is being converted to gas, for the country’s electricity needs.
But while the PN has declared that it is now in election mode, so much so that the party will hold a fund-raising activity today on its media platforms, the Labour Party is gearing up for a general election that it cannot afford to lose. Reducing further electricity rates will go a long way toward securing its chances of returning to power.
On the other hand, should Prof. Scicluna not reduce electricity rates tomorrow, the government will be hard-pressed to explain why the budget has not slashed energy tariffs after having had it so good – in terms of the benefits of cheaper crude oil and interconnector rates – coupled with the incoming use of cheaper LNG in the coming budgetary year.