A funding crisis has led to the cancellation of the new 2004 school program planned by the 'Unuaki 'o Tonga Royal Institute, also known as the UNITEC Tonga Royal Institute UTRI.

Dr Makafalani Tatafu, the director, said that the Institute would not be able to offer the Foundation Level Form 7 and the technical courses that he announced in December 2003, in affiliation with UNITEC New Zealand. Makafalani said that the cancellation was due to insufficient funding.

The founder of the Institute, 'Etuate Lavulavu, a member of parliament, in October 2003, requested a grant from government of $374,000 for the refurbishing of the Institute, which was then known as UNITEC Tonga. 'Etuate, the No. 2 People's Representative for Vava'u, told the parliament that by upgrading the facility of UNITEC Tonga to the same standard as UNITEC New Zealand, it would enable them to offer the same courses. The main advantage for Tonga was that technical courses would be cheaper for Tongan students. He said that UNITEC Tonga would be like a branch of UNITEC New Zealand and New Zealand teachers were to be teaching in Tonga.

The request for a grant of $374,000 was approved by the House with a vote of 13-5. Seven Cabinet Ministers, including the Prime Minister, voted for the request to be passed by the House and then passed on to the Cabinet to see if a grant could be made.

However, the issue of government funding became controversial, and the Chairman of the parliamentary Whole House Committee, Prince Tu'ipelehake, in a public statement said that if government went ahead and gave $374,000 to UTRI there would be a conflict of interest, since the patron is the King and the chairperson is Princess Pilolevu.

The future of the UTRI appeared to rely on a government grant, but by the end of February 2004, the Acting Secretary for Finance, Meleseini Lomu, confirmed that government had not released any money to Unitec Tonga Royal Institute.

The Tongan Ministry of Education has given a 24 months Provisional Approval to the institute. The Director of Education Viliami Takau said that the granting of a Provisional Approval was in line with the policy of his ministry with regards to new vocational training institutes, "giving them time to set up."

Meanwhile, its founder, 'Etuate Lavulavu is to stand trial for fraud in Utah, USA.