Fur­ther elec­tric­ity rate cuts likely

Malta Independent - - FRONT PAGE - David Lind­say

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.

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