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Electricity supply in Tonga, a disaster

Melbourne, Australia

Dear Editor,

My fellow Tongans.

Tonga's Electricity Supply, a Disaster. How it Was; How it Is; How it Should Be.

The Continuing Saga of the mess of the Electricity Supply in Tonga must not be allowed to continue. But we must also ensure that the govt and Shoreline do not drag us all to jump from the frypan and into the fire.

How it Was.

The privatised Tonga Electric Power Board (TEPB) commenced its operation of the management of Tonga's power system in the early 1980's perhaps just prior.

The chairman of the TEPB and a group of others, what one would consider non competent and certainly non qualified persons. (None have electrical distribution or power expertise)

The TEPB ran the operation in a shamble, resulting in loans of around 8 million Pa'anga, but in different currencies. (That figure hence is fluid depending on the value of the Pa'anga)

The TEPB was supposed to provide a dividend back to the government…but this never happened. The way it was operated was nothing short of incompetrence.

In essence, the government and Board members used the funds for their own benefit..as is usually the case throughout Tonga. The ministers used funds for overseas travel and other unnecessary expenses… and not on the power system making it unsafe through lack of maintenance. There was also a lack of proper accounting checks and control.

The maintenance and upgrading of the power and distribution system (note there is no transmission in Tonga, that is the power is not high voltage HV, either in 15 or 22 KV and reduced down to the usable 400 volt 3 phase and the 230 volt single phase) was not performed adequately - if at all…leaving the system in a very unsafe and in dire disrepair.

The loans for the TEPB were granted from the Asian Development Bank (ADB) and were for the upgrading of the generation and distribution system.

In 1997, the Crown Prince became Chairman of the Tonga Electric Power Board (TEPB)

The privatisation of some government departments into Boards and Commissions was meant to provide better services at lower costs. This included the TEPB. But the service and cost of power did not improve at all with the TEPB, especially during the time that HRH was at the helm.

Various agencies advised the TEPB to privatise the Power gen & distribution. But the focus was on private ownership bringing lower costs of power and better reliability. The issue was to take the gen and dist away from the government as they were spending money like there was no tomorrow and putting too many employees into the TEPB…making employment and overheads costs to soar out of control…putting the pressure on to increase power cost, but still no maintenance was done.

The idea was that if private enterprise operated the gen & dist, then the cost would be more palatable to the public and it would cost far less, and the funds saved from over-employment of the TEPB would be utilised in the maintenance and upgrade of the system…thus benefiting Tonga.

How It Is.

Then HRH, on the board of the TEBP - put up his hand for the generation of the power in Tonga. Promising that the tariff for electricity would be greatly reduced, he obtained the approval of the TEPB (of which he was the chairman) for his own company to generate electricity and sell it to the TEPB. He setup Shoreline Generation.

Conflict of interest here … no no, does not matter I own everything anyway. So just do it, ok.

He loaned 14 million to setup new generators, but those generators did not come into operation until late 2003. That is very very expensive in terms of a 2 MW generator and a few 400 KW generators.

I am aware of a project here in Tasmania, Australia, where they are setting up 4 x 35 MW generators that were purchased from the USA along with all the ancillary equipment and control houses. The cost of this is less than 20 million AUD. There is enough power here for 10 times the Tonga requirements.

So for Shoreline to purport that they have spent 14 million on a generation system that is only one tenth the size of this project, has been inflated out of all proportions.

It is believed that this is being used to fund Tonfon communications. (mobile phone and TV network).

In either case, HRH was also granted an exemption on imports for the 14 million dollars worth of generation equipment. This means he does not pay any import duties whatsoever on the diesel or the equipment…saving Shoreline millions of dollars.

It is the belief of many including a previous head of Tonga Communications

Corporation that Shoreline was using this exemption for its Tonfon venture…as well as Shoreline's power generation equipment…

This placed a very unfair advantage against TCC. They were paying import taxes (at around 40% of the value of the goods imported) for their comms gear, while Shoreline/Tonfon was not….not a very level playing field.

I know of a former employee who had first hand knowledge that Shoreline was abusing its exemption for illegal purposes.

But this is now insignificant as Ramanlal (Shoreline CEO) has also used the same exemption for the building of his own personal home in Tonga…which is again highly illegal…and a huge crime. The Customs Department should look into this matter to see what can be done. They got the Speaker of the House while these guys are continuing to rip the govt off in a big way.

The generation was now in the hands of Shoreline Generation. The TEPB took the loan from the ADB for the improvement of the power distribution (not generation), but funny enough the Power dist was then handed over to a new company called “Shoreline Distribution” also owned by HRH/Shoreline.

Now that (HRH) had set up his empire for generation, distribution and using the exemption- he also set up the communications as well (Tonfon) . Note- he uses the one building for all businesses.

HRH left the TEPB as a board member and appointed Mr Ramsay Dalgety QC, (a good friend of the Monarch) and a few other friends to oversee the TEPB.

None of them have any expertise in the gen or distribution of power. One of the boards members is also a Coffee grower and another a former laywer…all friends of HRH.

So each time SL wants to increase the cost of power, its just a small matter of putting in a request to the TEPB (being the power “Regulator”) for approval.

With all his friends in the board of the TEPB - he will always get approval for a price increase…of which in fact did happen…The cost of power went up from 14 cents per kilowatt/hour to the present 56 cents per kilowatt

That represents around 400 % increase in just 3 years.

These are the options that “Should have happened”

Option 1. TEPB sells the distribution assets to Shoreline. The costs should have been well into the millions as SL is buying the power poles, wires, transformers, all the TEPB's assets etc. If this was the case, then where is the money from that sale??

Option 2. TEPB retains ownership of the assets but gives the rights to operate the system to SL for a 10 year period. If this is the case, (as is the case in many parts of the world) then SL should have paid TEPB a license fee, and then pay back to the TEPB an annual commission of usually in the millions…and keeps the rest.

This would be the same as TCC, they pay the government around 5 million dollars annually and also makes a healthy profit to keep for itself.

So the issue is…what is the arrangement? No one really knows.

What is the government exactly “buying” off Shoreline?….The TEPB actually owns the distribution assets anyway…except for a few of the new SL generators (which are generation assets) that are purported to be worth 14 million dollars…but that's highly unlikely as that's enough generation power for 3 x the entire population of Tonga! Refer above.

What investment has SL done in the distribution system ???…. very little.

Also what about the agreement between the TEPB and HRH?? There is an existing agreement that prevents anyone else from generating power or distribution of power without HRH's written consent.

How does anyone get around that? The agreement must be rescinded.

A point on this is the Ha'apai outer islands electrification Project…which was funded by AusAID Aust. AusAID designed and put up the money to purchase, install and get up and running some generators and distribution system apparatus for some of the outer islands of Ha'apai, as they had no power.

Upon completion, HRH demanded that he (Shoreline) becomes the owner of those assets that were donated by Australia. The people of those islands voted against it.

In response HRH refused to allow the workers of the project to travel to Ha'apai to energise and operate the power system. Eventually he gave in.

How it Should Be.

Proposal for the operation of the generation and distribution.

1. Sack all the members of the TEPB and appoint new QUALIFIED persons

in power distribution and generation….and not stacked with friends of the

Shoreline group.

2. Rescind the sweetheart agreement between HRH and TEPB.

3. Setup a framework of agreed service levels and price set for the generation and distribution…and many other constrains and issues need to be resolved and set up here…its technical and long winded.

4. Have and develop a transparent policy for the TEPB to operate. NO

SWEETHEART/SECRET DEALS.

5. Contract out the generation and ensure that the TEPB gets good value for money.

6. Lease out the distribution system the same as TCC, that is a commission is paid back to the TEPB by the operator. The TEBP is to set the parameters of the operations of the company. It must have QA certification…and have appropriate safety qualifications.

It must have staff with a minimum of 5-10 years expertise in power gen and distribution or appropriate. The tariffs are to be set or limited to a certain criteria to prevent the same escalation of power pricing to rise as in the case of Shoreline. (note they put the power up by 500%)

Strict operational guidelines need to apply to make it beneficial for both the operator and the government. Without such, there will be no takers for the job.

The govt should not again take over the operation of the system but instead privatise it as recommended above.

There are other more drastic measures that can be taken, like nationalising Shoreline and telling them to go jump. But the trouble with that is, like I said in my previous posting here, that the chairman also owns the govt.

This is a battle to be fought but let's not forget that the WAR is about the political power and authority that is currently vested with the Monarchy, must be transferred to the people.

If this is not done, then we will continue to fight more losing battles.

I don't read Einstein, relatively speaking. Camus, Sarte, Kafka, de Beauvoir all tell me that I am human and that I exist. But can someone please tell me: Who am I and What am I doing here ???

Here's a few from me anyway.

'If you want something, you have to go and get it yourself.'

'You don't have to be smart to be successful. You just have to be prepared to work hard. And when you work hard, you will find that you work smarter.'

'The Prince does really love his country you know. It's just that he loves money more !!!'

Till next time,

Kind Regards,

Sione Tapani Mangisi