Power struggle in Tonga [1]
Friday, September 1, 2006 - 17:53. Updated on Tuesday, April 29, 2014 - 20:13.
This week's request by Shoreline Power for an electricity tariff increase to offset the rising cost of diesel fuel has brought into the limelight again the business of electricity generation and how Tonga is dealing with the complexity of a global economy where the price of a certain commodity is decided elsewhere.
The authority to set the price for electricity rested with the Tonga Electric Power Board (TEPB), a four-members board who are elected by Cabinet. The current members of the TEPB are the chairman, the Minister of Finance, Hon. Siosiua 'Utoikamanu; Ramsey Dalgety; the Minister of Civil Aviation, Hon. Paul Karalus; and 'Iuna Tupou.
In the past the setting of the price of electricity was a straight forward affair because the TEPB generated, distributed and also set the price, but the down side of that type of operation, as we witnessed toward the end of the 1990s, was that the operation was not profitable, there were regular power stoppages and Tonga was heading for a total black-out.
The take over by Shoreline Power in 1998 stabilised the power supply but it caused an upheaval as TEPB employees were dismissed and new board members were appointed.
The transferring of the TEPB assets to Shoreline Power remained a controversial issue and there was a court case claiming that the transference of the assets to Shoreline was illegal. The irony of this legal argument is that leading the charge was Clive Edwards, who was the Chairman of the Board at the time, who approved the transference of the assets to Shoreline. This case became even more controversial because it has been "settled out of court", meaning that the plaintiffs, the People's Democratic Party, has agreed to withdraw the case. So the legality of the transference of the assets remains unknown.
Outrageous
The issue of ownership is very important now because of a decision by Shoreline to sell the assets back to government. The argument here is that some people are saying that it is absurd for government to buy back its own assets, which apparently were taken over by Shoreline. The fact that the Tongan public has been left in the dark over the status of such an important national asset is outrageous.
Adding fuel to the fire was the revelation by a former Shoreline employee of excessive spending by top Shoreline executives amidst a call by Shoreline to increase the consumer tariff.
These two issues greatly tarnished the public image of Shoreline. Unfortunately so, because the electricity supply under Shoreline Power, particularly for Tongatapu had became more stable and reliable.
The drama continued with the move by Shoreline to sell its operation either back to government, to be funded with a loan of about $60 million from the Chinese government, or for the operation to be bought by a foreign company.
Tariff increases
Today's hot question is how much is the TEPB going to increase electricity tariffs by?
The recommendation by an independent assessor, Alex Sundakov, is for an increase of 5.21 seniti per kilowatt. Meanwhile, the Chairman of the Board, Hon Siosiua 'Utoikamanu is recommending a rise of 3 seniti, and there is public concern that the price of electricity will in acuality be even higher than 5.21 seniti because government will cease to pay its 11 seniti consumer subsidy this month.
For the future it is most likely that a foreign company will take over the generation and the distribution of electricity in Tonga, and most likely there will no more controversy over the price of electricity, because if the consumers are not happy with the price, the company will close down and leave us in the dark.