A public company, the Tonga Petroleum Holding Ltd TBHL has been formed to advance the Tonga government's plan to establish a Tank Farm before the end of the year.

'Inoke Vala, the CEO for the Ministry of Public Enterprise said that government is currently negotiating with Tonga's two importers of petroleum fuel, TOTAL and Pacific Energy to buy their storage facility at Touliki.

'Inoke was optimistic that a deal would be signed soon, and Tonga Petroleum Holding Ltd TPHL will be the owner of the storage facility to form the base for a Tank Farm. He said that more storage tanks would be constructed later to increase the capacity of the Tank Farm.

William Edwards from Tonga Power Ltd confirmed that the share holders of TPHL are Tonga Power Ltd and the Port Authority of Tonga.

He said the two shareholders have a significant interest in petroleum supply for Tonga. Tonga Power Ltd is the largest consumer of diesel in Tonga, about 15 million litres of diesel, a year for its diesel generators throughout Tonga.

Tonga's annual fuel consumption, including diesel, petrol and aviation fuel is about 45 million litres.

For years Tonga has been trying to reduce the retail price of imported fuel. It adopted the approach of encouraging competition between two petroleum fuel importers with the hope that through competition the retail price of diesel would be kept at a reasonable price.

But since the retail price of fuel is higher than that of our neighbor island countries, there was a need to re-examine Tonga's approach and the idea for a Tank Farm which has been around for a number of year resurfaced again as a feasible option.

William said that with the Tonga Petroleum Holding Ltd and its Tank Farm, they would emulate the Samoa Competitive Fuel Model, whereby government tender the distribution and the supply every 3-5 years "to ensure that supply is competitive under strict terms of tender, and that distribution is tendered to professional outlets like TOTAL or Pacific Energy."

He said that with the Tank Farm, with an increased storage facility, the TPHL  could buy fuel in bulk direct from Singapore, and a medium range oil tanker could sail direct from Singapore to Tonga once a month instead of the current fortnightly fuel supply service from Fiji. 

The Tank Farm approach is another attempt by government to reduce the reduce the retail price of imported diesel.