Issue link: https://maltatoday.uberflip.com/i/1478813
CONTINUED FROM PAGE 1 The Maltese government, which adopted the interven- tionist approach early on, has so far refrained from saying what the cost of these energy subsidies is. However, writing in MaltaTo- day (see MT2, page 12), Energy Minister Miriam Dalli says that government subsidies are sav- ing the average household "a very conservative" €1,700 per year. 3% of GDP According to the 2021 Cen- sus, there are 230,000 dwell- ings in Malta. If each of these dwellings are saving €1,700, the average yearly cost of sub- sidies would shoot up to €391 million. This figure excludes the ex- pense to subsidise energy costs borne by commercial outlets and businesses, which will take the amount way beyond the €400 million mark, with some govern- ment sources indicating it could be as high as €450 million. These figures have not been confirmed officially, but Dal- li writes: "Our conscious price stability policy decision comes with a hefty cost to public cof- fers but the stark reality is that it would have been costlier for our people, for our families and our businesses to carry the financial burden upon themselves." The subsidies are indeed a massive hit on public finances. Based on last year's econom- ic data, energy subsidies are equivalent to 3% of GDP. A cushion of €200 million ear- marked in the budget last year to mitigate against inflation as a result of supply chain disrup- tions caused by the post-COV- ID recovery pales into insig- nificance when compared to gargantuan task at hand. The cushion identified by Finance Minister Clyde Caruana was before Russia invaded Ukraine. Earlier this summer, Caruana asked ministers to identify ex- penditure cuts worth €200 mil- lion across all the government to mitigate the impact of ener- gy subsidies on public finances and keep the deficit from run- ning away. The Energy Ministry has also issued guidelines to public en- tities on energy saving meas- ures that include switching off the lights on public buildings at night and regulating AC tem- peratures in offices. The guide- lines are intended to cut waste by minimising non-essential electricity consumption across the government system. Government is not impos- ing mandatory electricity cuts across the board unlike legal- ly binding decisions taken in some European countries to force shops to switch off fa- cades at night in anticipation of expected gas shortages over the winter. Europe is suffering the birth pangs of its decision to wean itself off Russian gas and oil following the Ukraine inva- sion. Russia has retaliated to EU sanctions by shutting down pipeline gas, leaving many EU countries scrambling to find alternatives. Meanwhile, the price of gas has increased sev- enfold compared to a year ago, leading to a knock-on effect on higher electricity prices. EU scrambles to find solutions The EU is trying to take col- lective decisions to respond to the crisis, including the intro- duction of a price cap on nat- ural gas and cuts in electricity demands. But an emergency summit of energy ministers last Friday appears to have gotten bogged down in the details of how the policies proposed by the Euro- pean Commission would work. According to finalised notes of the meeting obtained by Po- litico, a news portal, ministers expressed general support for capping the price of natural gas, but there was disagree- ment over whether such a cap would apply to all imports or just those from Russia as pro- posed by European Commis- sion President Ursula von der Leyen. Some countries fear that a price cap on all natural gas will drive demand elsewhere and create shortages. There was also disagreement over how to cut energy de- mand. The Commission wants that to be mandatory, but not all countries agree. Malta's energy minister has disagreed with mandatory cuts in energy demand and advo- cated for a price cap on gas used for electricity generation. In a statement on Friday, Dalli said the introduction of a price cap on gas used for electricity generation could be the most successful proposal if complemented with measures that can ensure that there will be no further gas shortages. "This is seen as a measure that can actually mitigate the wholesale price of electricity," she said. She added that any proposal suggesting a mandatory elec- tricity demand reduction that "hurts both people and Eu- ropean economies should be avoided". Dalli also advocated for more investment in renewable en- ergy, calling on the European Commission to invest in the transition to green energy as much as it did during the fi- nancial crisis, where €3.2 tril- lion were invested to inject li- quidity in European banks over an eight-year period. 5 NEWS maltatoday | SUNDAY • 11 SEPTEMBER 2022 Improved cognitive abilities Increased hand-to-eye coordination Greater multi-tasking ability Faster and more accurate decision making Poor sleep hygiene Exhaustion Obesity problems Lack of motivation THE BENEFITS OF GAMING AND THE CONSEQUENCES OF EXCESSIVENESS ALWAYS FIND THE RIGHT BALANCE SUPPORTLINE 1777 Energy subsidies equivalent to 3% of GDP Energy Minister Miriam Dalli (Left) talking with her Italian counterpart Roberto Cingolani at Friday's emergency EU summit of energy ministers