Full liberalisation of oil prices by 2002

As a result of an adjustment that will take place in the way that excise duty on oil products is calculated, petroleum prices will start being linked to international prices as from 1 January 2002. By then, Enemalta’s subsidiary company – Mediterranean Oil Bunkering Company – will be liberalised, the sources said, thus further liberalising the energy sector in Malta.
This change will result in an increase on excise duty on products and a reduction in others, economic observers said. However, these changes will not affect Enemalta and, therefore, there will be no change in the price of any product – according to Budget 2001 made by Finance Minister John Dalli.
The current prices are based on the price of oil of about US$33 a barrel. Therefore, a system is being worked out by the government to provide for an increase in local prices when international oil prices go up and equivalently for reduction to the consumer when the international prices go down.
Over the last months – during which the international oil prices surged – a controversy erupted in Malta over whether the government should have negotiated a hedging agreement over the price of petroleum.
In order for Enemalta to retain the current prices for next year, the government will grant an exemption equivalent to Lm1.6m on excise duty payable by the corporation. At the same time, government will carry the capital cost and the consumption cost of public lighting, which have so far been absorbed by Enemalta. This will amount to Lm1.3m.
Mr Dalli said the responsibility for street lighting in non-arterial roads will be delegated to local councils and in order to meet these costs they will be provided with the necessary funds. Therefore government will be subsidising Enemalta by Lm2.9m in order not to increase prices on oil products.