Tonga is in deep trouble [1]
Sunday, February 4, 2007 - 16:30. Updated on Sunday, December 15, 2013 - 22:57.
Editor,
The day after the burning of Nuku'alofa reflects the country before the riot, with the problems magnified. Tongans living in Tonga and abroad were shocked by the ruin and squalor Nuku'alofa had been reduced to by the riot. There is plenty of blame to go around. Unfortunately the unprecedented pressure catalyzing political change and the pertinacity of government undoubtedly ignited the riot.
Even though history teaches us that any time one power predominates, a coalition forms to oppose it, the cause and effect of the riot was a faux pas parliamentarians later regretted with much bitterness. A majority of the people blame everything that has gone wrong in Tonga on the riot. I am neither a proponent nor an opponent of either the democratic movement or government as currently constituted, but Prime Minister, Dr. Feleti Sevele's prodigious lust to put the Peoples Representatives (PR) behind bars through botched arrests and perjuries by investigating officers to teach the PRs a hard lesson making them docile, but it also reveals a dishonorable motive: Shoreline - a colossal swindle.
The devastation from the riot still permeates the kingdom. Shoreline, in its tendencies for revolting theoretical drama, has taken full advantage of the riot to settle bad debts. While people are angered by the riot, Shoreline welcomes the riot for how else are they going to save themselves from their own blunders. This makes Shoreline a very hot subject. Government is dancing to Shoreline's loud pulsating tune with passionate devotion while several businesses remain in trouble and the lives which were wrecked by the riot are slipping from government's consciousness. Perhaps some of us are kidding ourselves when we say the riot is the worst that could happen to a peaceful and religious island such as Tonga. Government's deal with Shoreline is destined to have a delayed impact that may well be far worse than the tsunami of the riot.
The negotiation with Northpower fell through quite simply because Government failed to get in place the legislation that was necessary for Northpower to operate. Sevele misleads the people to believe it was the riot that caused Northpower to withdraw. But the fact of the matter is the bill had to pass before the end of the parliamentary session last year if Northpower was to take over Shoreline. That bill never happened. Northpower in their Press Release on November 28, 2006, stated they were fully aware of the challenges of such a transaction and were not proceeding with the purchase agreement as originally planned. The deal was structured so that government would buy back the business from Shoreline at the ridiculous amount of $60 million and then Northpower would buy the generation and distribution assets from government at a much lesser (but presumably more realistic) value. If my business sense is correct, the legislation that never happened would have relieved Northpower of any liabilities (incurred by Shoreline) prior to the takeover hence allowing Northpower to mitigate their risks as much as possible. If this deal had been successful, Northpower and Shoreline would have come out on top while government and consumers would suffer the adverse consequences. Northpower's action was to protect their interest as most any overseas investors would have done. For all I know, Shoreline may be a self-limiting disease with a suicidal bent.
Immediately after the riot, Shoreline rationed the power. The power was on and off on an intermittent basis for a few days before it was fully restored. Several businesses lost their produce, mutton, ice cream and all frozen goods. Most people were of the misapprehension that the power was rationed on the basis that the power lines needed to be fixed.
>From comments in Matangi Tonga (MT), it appears that Shoreline, the Tongan government and BP have made contradictory remarks blaming the supply of fuel available to Shoreline. According to Shoreline's COO, David Dunkley, the power rationing was introduced because of the lack of fuel. BP's letter in the MT emphasized their generous service extended to Shoreline in its supply of fuel. BP would have logical reasons for not supplying fuel to Shoreline and if BP did not supply fuel, it would have been on the basis of persistent failures by Shoreline to pay its debts in the prescribed time. After all, Shoreline had damaged their relationship with Shell a few years ago because Shoreline failed to pay their debts.
Paul Karalaus, in his capacity as Director of Tonga Electric Power Board (TEPB), in his editorial comment in MT stated ...
" I am very much aware of Government's role and duty in ensuring that electric power, as an essential utility, is supplied in a continuous and uninterrupted manner.... After the events of the 16th November, 2006, there was a brief period where the power supply was rationed to a few hours per day and the monthly payment for the fuel supply to the generating company was approaching (20th November, 2006)."
Is Karalus agreeing that continuous power is essential and it must be supplied in an uninterrupted manner? If that is the case why did the government allow the rationing to occur? The payment of $2 million was not due to BP until November 20th and government paid for the fuel to BP. This begs the question of why was the power rationed?
How many containers of food and how many people's refrigerated items were lost? The government admitted that the $2 million payment of fuel was due on the 20th... that was AFTER the riot... so what was the issue? Why was rationing done when it was against government policy? The payment was made and BP denies that they stopped the supply.
Karalus went on to say... "The destruction of the Shoreline building was accompanied by the need to restore the billing system and in the ensuing time Government was obliged to advance the payment of one month's fuel supply to Shoreline to maintain the power supply".
What does the billing system have to do with the supply of fuel? These are completely two different issues. The billing system or UMS if I understand correctly is either located on the server at the NOC near the palace or it was backed up at the NOC. In either case restoring the billing system does not affect the generation. The UMS is only for the power billing. All the power meter readings are entered into this database from all the consumers hence when the consumers pay, the account is taken off their bill. It is my belief that the billing system has nothing to do with the payables of fuel or wages, or any other payables. In other words what has the billing system got to do with diesel fuel running in the tank of a power generator? If Shoreline is saying that the billing system is directly linked to the generation, we may as well check out gullible.com or totalnonsense.com.
BP's fuel is supplied from Fiji and even with the coup in Fiji, BP's supply of fuel was not impacted by the coup. BP does business worldwide and has excellent reputation in the industry. Business practice dictates a guarantee is required in the event that the payer (i.e. Shoreline) is sending bounced checks to the creditor (i.e. BP), thus BP bypassed Shoreline and asked for a guarantee payment from a credible source (i.e. government).
The attempt by both government and Shoreline to connect the disruption of fuel to Shoreline because of the riot just does not add up. Therefore the public has an inalienable right to ask questions directly to Shoreline, Government of Tonga and perhaps BP whether the riot on November 16th had anything to do with BP not supplying fuel to Shoreline or were there any other factors that are not related to the riots that prevented BP from supplying fuel to Shoreline.
No news is good news. It becomes painfully clear that government has allowed the sovereign grand commander, Shoreline to continue managing government's assets despite the fact that Shoreline routinely experiences financial difficulties and has clearly shown impotency in its management style. I can only guess that this perpetual quagmire is chiefly marked by some of those in government that have haunting fear of losing their jobs.
The basic question really is why the original lease agreement between Shoreline and Government did not include any requirements that Shoreline has to guarantee reliable service in order to undertake the management of the power generation and distribution. It is common practice that when private operators lease government assets, they must service legal agreements. A clause in the lease agreement would have deemed that the lease thus be terminated upon the operator being unable to meet its financial commitments. If Shoreline could not keep the power on reliably, then the lease should be terminated and now is the time to terminate the deal without government exposing the country to total ruin.
I am also guessing that Shoreline may argue that the $2 million is due to low consumption because the riot destroyed most of the business district in Nuku'alofa or CBD. Hence there would be less power used as there are no more buildings. CBD will be operating at far less capacity after the riots. Only the government offices were left standing but due to Martial Law, they were unoccupied as was the rest of the CBD was a No-Go zone. Also the schools were closed due to holidays and the public service was closed for its usual Christmas break. Generation would possibly be at the lowest level in many years, meaning the consumption of fuel would be low. It is possible that the one month of fuel can be as high as $1.6 million based on $2.70 per liter, and as low as say $ 400,000.00 with a variety of factors. One thing that is a variable is the condition of the generators. If Shoreline says they have spent $60 million investing on new generations (or were purchased new in 2001), the generation system would be very efficient with consumption of fuel around or better than 0.2 liters per KW. Hence the generators are gold plated and are very efficient thus the $2 million dollar fuel bill is bogus. If Shoreline claims that these new generators suck $2 million of fuel per month then Shoreline must have been ripped off and sold ratty old crap generators dating back to 1965 or they are simply overstating the real costs of the generators. Whatever argument Shoreline makes, there are Forrest Gumps with spines of tapioca in government that will not suffer a pang if (and when) Shoreline prevails.
Broadmark's (a Seattle company) statement on Shoreline shows that Shoreline loaned US$30 million; US$15 million for capital infrastructure and US$15 million for refinancing (most likely to pay off another loan from another banker). If Shoreline has only loaned US$15 million (TOP$30M) for capital then why the price tag for TOP60 million? The generation system Shoreline invested on does not worth $60 million; please refer to my previous articles on Shoreline. Could it be that Shoreline is tagging on the mobile phone technology, wireless, TV and possibly Peau Vava'u for government to bail out all the businesses under Shoreline Group? Until the $60 million price tag of Shoreline is clearly substantiated, the future of the royal power is very bleak indeed because any interested investors would want the value appraised and business transaction is transparent before committing to a real deal.
The whole truth of the dealings between Shoreline and the Tongan government cannot be known due to lack of transparency in their business practices. However, consumers and tax payers should go into their praying-chamber and give sober thought to this incomparable idiocy hence incomparably amusing deal between government and Shoreline.
There should be a growing sense of empowerment on the part of government leaders in response to the overwhelming challenges before and after the riot. Unfortunately, government in this colossal swindle with Shoreline, helps in a wholesale way pave the way toward inglorious catastrophe. Shoreline, rather than taking money from government, should invest in the reconstruction of Nuku'alofa. Government leaders should be able to catalyze sustainable development to bring the capital back to life. Strong focus on how they can best extract themselves from this quandary, recommending ways to resuscitate and diversify the local economy, improve government effectiveness, infrastructure construction, preparation and implementation of a master building plan that recognizes a significant growth in population and unemployment, school and hospital improvements, and rebuild Nuku'alofa in a way that satisfies and stimulates the people while honoring spatial relationships, cultural priorities and aesthetic synergy of the town.
The political, economic, social and moral climate in Tonga is in more serious trouble than the threat of global warming to our fragile planet. The riot was a threat to the kingdom's peace and security but government's action can potentially be a serious threat to the survival of Tonga.
Mele Payne Lynch
Mlpayne222 [at] aol [dot] com