Tonga Power Ltd's multi-million acquisition of Tonga Gas Ltd. was marked today with a reduction in LPG price announced during a ceremony at the Touliki Terminal in Ma’ufanga.

Carl Sanft, Chairman of the Tonga Power Board, said the Government of Tonga approved the acquisition to go ahead last month for around F$3.1 million (around TOP$2.8 million pa’anga). Tonga Gas was bought from the two main shareholders Fiji Gas and Origin Gas of Australia.

The acquisition was facilitated by an ANZ Bank loan, to be repaid in its entirety by Tonga Gas with Tonga Power Ltd as guarantor.

He also said that an immediate benefit of this acquisition is a reduction in LPG price of $2 pa'anga for a cylinder (13kg).

The Minister of Public Enterprises Hon Poasi Tei said successive owners of the gas supplier had all been foreign companies but today the ownership was localised after more than 40-years.

He said while Tonga Gas only employed one person here in Tonga, the transfer of the ownership today would see the recruitment of more local staff with no jobs lost.

Tonga Power's core business is to supply and distribute electricity and the acquisition of Tonga Gas Ltd was a strategic business move for the benefit of the Tongan people, he said.

“This is also part of Tonga Power's objective to provide cleaner and cheaper energy, and the benefit for Tonga today is the voluntary reduction of LPG price of $2, with more to reductions in March or April this year,” said the Minister. “It is now a Tonga Public Enterprise, owned and operated by the people of Tonga."

Assets

Tonga Power CEO John van Brink, said Tonga Gas is not a large company, the total asset base is around $3 million compared to Tonga Power’s asset base of some $80 million.

"But the LPG business comprising of Homegas and Tonga Gas retails around 1,500 tonne of LPG throughout Tonga. That equates to over 110,000 cylinder fills per year – effectively one cylinder for every person in Tonga. Given that 70 percent of the population uses LPG for cooking makes access to LPG as important as it is for electricity."

He said this was one of the reasons why they saw the LPG business as a natural fit for their expertise and growing customers awareness. So in 2013 they got involved in the LPG market and acquired the Home Gas business.

“The acquisition of Tonga Gas will enable two parts of the supply chain to eventually merge operations and become a single government owned, supplier of gas and associated services. It took Tonga Power nearly two-years to get Home Gas to a level where we can see it operating as a sustainable commercial entity. We believe it will take a year at least to do the same with Tonga Gas,” he said.

“The future holds exciting opportunities. I see potential for automotive gas, expanded sales to outer islands, remote island LPG based generation and possible substitution of diesel fuel with liquefied natural gas (or LNG) as a stop gap towards a fully renewable electricity supply.”