Malta’s energy subsidy bill could rise by as much as €80 million this year as electricity prices in Sicily have doubled over the past year with Malta’s Finance Minister insisting that the main priority is to keep stable energy prices for consumers.

This means that the Government could spend around €230 million on energy subsidies this year to keep electricity prices for consumers at current levels.

Responding to questions from the media Finance Minister Clyde Caruana said energy price stability, together with continued investment in the country’s energy infrastructure, remains a key priority.

“Stable energy prices are what make our economy more resilient to external shocks,” Caruana said, warning that energy costs could rise further before they eventually begin to ease.

The Government has also allocated an additional €250 million on top of the energy subsidy expenditure already provided for in the budget.

The funds were set aside in anticipation of the potential impact of the conflict in Iran and further international energy price shocks, giving the Government additional room to absorb higher costs without passing them directly on to consumers.

Malta has previously committed significant public funds to shield households and businesses from international energy price volatility. Following Russia’s invasion of Ukraine in 2022, the Government spent around €350 million to maintain stable consumer energy prices.

Data from the Malta-Sicily interconnector obtained by Times of Malta show that the cost of imported electricity has risen sharply. During some hours in August, electricity prices from Sicily reached 33 cents per kWh.

The Malta-Sicily interconnector allows Malta to import electricity at market prices.

Sicily is among the regions with the highest electricity prices in Europe. On 21st August, electricity prices in Sicily reached around 21 cents per kWh, compared with approximately 17 cents per kWh in other Italian regions.

Electricity is not the only energy market facing renewed pressure. Diesel prices have also risen sharply following a decline in global refinery processing capacity of around 6.5 million barrels per day in July.

Morgan Stanley expects European diesel stockpiles to fall to approximately 299 million barrels by November, which would make them the lowest since 2015.