Cost of electricity subsidies reaches €163 million as government ignores IMF

Government subsidies passed onto Enemalta in 2023 amounted to €168 million, an increase of almost €40 million over the previous year, new data published in parliament shows.

Energy Minister Miriam Dalli told Nationalist Party Shadow Minister Jerome Caruana Cilia that this high amount of subsidies is still required to keep the price of electricity for consumers and businesses on the low side.

However, experts told The Shift that the increase is not justified and might indicate that the government is using this scheme to subsidise the state entity’s inefficiencies, something which is not allowed by the EU.

Enemalta, which does not produce any energy itself, but relies on third parties, has been posting tens of millions of euro in losses for the past years. According to its latest published audited accounts, it lost €35 million in 2020.

Experts told The Shift that while the current subsidies are still necessary, even though the country is registering stable economic growth, their increase does not make any economic sense.

“Although we are not yet aware of the state of finances of Enemalta for the past years, we suspect that the government is also using the subsidies to shore up its own loss-making company and its gross inefficiencies,” an expert and former senior Enemalta official told The Shift.

In 2022, when the price of energy on the international market was, on average, the same as in 2023, the government spent just €123 million in subsidies for Enemalta. Notably, there were no similar increases in energy-related subsidies for fuel.

Enemed, the state company responsible for most of the imported fuel in the country, received €64 million in subsidies in 2023, drastically down from the €111 million it received in 2022.

Photo: Sippakorn Yamkasi/ Unsplash

Finance Minister Clyde Caruana has so far refused to adhere to advice from international institutions, such as the International Monetary Fund (IMF) and the European Commission, to prepare an exit strategy for these extraordinary subsidies.

Stating that the ongoing government subsidies, aimed to keep inflation artificially low, “do not help incentivise energy conservation or green transition”, the IMF, last November, called for a “gradual phase out”.

The same was reiterated by Brussels and the Central Bank Governor Edward Scicluna, himself a former Labour Finance Minister.

However, Clyde Caruana ignored all these calls indicating that the subsidies are still needed.

Instead, Caruana continues to base his annual budget on a high deficit and borrowing needs, increasing the island’s high debt levels, which are currently standing at over €10 billion.

At the same time, Caruana’s strategy does not even have the desired effect on inflation.

Despite the hundreds of millions of euro in subsidies, Malta’s inflation is still much higher than the average in the EU.

According to the latest Eurostat figures, while inflation in Malta stood at 3.7% last month, the EU average stood lower, at 3.4%. This is even though in most EU member states, there are no state subsidies on energy prices.

                           

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6 Comments
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mick
mick
1 month ago

Be a good idea to start putting money aside to pay future bills as they will go through the roof when the EU applies the deficit mechanism that was inflicted on Greece ten years ago one of the findings was,
The ability to pay its debts depends greatly on the amount of tax the government is able to collect. In Greece, tax receipts were consistently below the expected level. Data for 2012 indicated that the Greek “shadow economy” or “underground economy”, from which little or no tax was collected,”
Sound familiar, we are headed that way as the money from the EU will dry up very soon when they realise how they are trying to fiddle the books yet again

The Swallow
The Swallow
1 month ago

Maybe one should also see who is paying for all the uprooting of roads that is happening right now in a panic. If Enemalta is bankrupt who is paying? Is Infrastructure Malta being used to subsidize Enemalta another Eur 50 million or so? Are the Chinese forking out any monies for this or they are only sucking up?

makjavel
makjavel
1 month ago
Reply to  The Swallow

Its you and me who are paying. The Chinese make a profit of all the mess selling energy to EneMalta at a secret rate signed off by Muscat /Mizzi Gang.

Makjavel
Makjavel
1 month ago

The population has doubled. So has the consumption of water and electricity, therefore the subsidies had to double. The millions of Euro question is, Where are EneMalta audited accounts with nothing blacked out.

Aggie
Aggie
1 month ago
Reply to  Makjavel

Population has increased by 100,000 hardly doubled !! Drama queen much !

Aggie
Aggie
1 month ago

Time for an external Auditor to look at the whole of the government and the piggies in the trough.

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