Government puts $25m toward Shoreline Power takeover [1]
Tuesday, June 17, 2008 - 10:39. Updated on Tuesday, July 28, 2015 - 16:12.
The Tongan government has allocated $25 million pa'anga in its new budget to buy back Tonga's sole electric power generation facility from the Shoreline Group.
The Minister of Finance, Hon. Afu'alo Matoto, in summarising the 2008-09 Budget told the Tongan parliament last week that the $25 million the government will use to buy Shoreline Power, will come from the selling of the government shareholding in the Westpac Bank of Tonga.
Tonga holds 40% shares in Westpac Bank of Tonga, while the Westpac Bank holds the other 60%. It is one of the very few profitable businesses that the Tongan government has invested in. At year-end September 30, 2007 the bank made a net profit after tax of $7.2 million, being 3% less than the previous year.
Bigger budget
The Minister of Finance told the House there is a $63 million increase in the new financial year's budget. Of this $25 million is to buy back Shoreline Power, and the rest is to be spent on public services. Read more: From the House, Minute 3, June 9 [2]
The Minister said that with regard to purchasing of Shoreline by government, it was the only alternative, because no one else wanted to buy it. There was a company that wanted to buy it but because of 16/11 they withdrew. The Minister commented that the value of Shoreline stood at $USD 26 million.
However, he did not say whether or not the $25 million pa'anga budget allocation was the full price for the government's purchase of Shoreline Power.
King's business
Shoreline Power was put on the market in September 2006 when King George Tupou V announced that he would dispose of all his commercial interests in the kingdom.
At the time arrangements for the divestment of his holdings in the Shoreline Power Company were near completion. A preliminary sale agreement was signed with Northpower of Whangarei, New Zealand, on October 31, but this fell through after the Shoreline offices were razed during the November 16 riots.
Then in January last year the Tongan government injected $2 million into Shoreline Power to pay its fuel bills and prop it up following the destruction of is offices. There was a Cabinet Decision for government to pay for the November 2006 fuel bill of about $2 million in an emergency hand out needed to keep the power running. A government minister, Hon. Paul Karulus told the press at the time that since government was going to buy back the facility the $2 million might go toward that final payment.
TEPB
The King's business acquisitions go back to the 1990s. When he retired from the civil service in 1998, as Crown Prince he became more involved in business, particularly in telecommunications and in power generation.
In 1998 Shoreline took over the business of electricity generation from a government enterprise, the Tonga Electric Power Board, at a time when Tonga's power supply suffered from frequent long power cuts.