The People’s Alliance Party says the pressure to increase electricity prices is financial and comes directly from decisions made by the former Minister for Economy, Aiyaz Sayed-Khaiyum, and the FijiFirst Government.
While taking note of the statement by the former Attorney General, People’s Alliance Party General Secretary Sila Balawa says that while it is long and technical, it carefully avoids his own role in creating the situation Fijians now face.
He says that in 2021, under Sayed-Khaiyum’s leadership, 44 percent of Energy Fiji Limited (EFL) was sold to a foreign investor, Chugoku of Japan, in a deal worth around $1.25 billion.
He also says that from that moment, EFL stopped being purely a public service and became a business required to make profits and pay returns to shareholders.
He adds that no serious investor puts $1.25 billion into a company without expecting strong returns, and the demand for higher revenue was built into the system Sayed-Khaiyum created.
Balawa says that EFL’s own submission to the Fijian Competition and Consumer Commission confirms this reality, and that EFL is now seeking a 32 percent electricity tariff increase over the next four years because, according to the company, current prices cannot support its investment needs.
He says that EFL states electricity demand is growing by about 4 percent a year, and that meeting this demand will require around $4.3 billion in new investment by 2031, including about $1.4 billion for transmission and distribution upgrades across Fiji’s main islands.
He further says that EFL also states there has been no tariff increase since 2019, while operating costs and its asset base have grown. He adds that these pressures are not accidental and are the predictable result of turning a public utility into a profit-driven enterprise.
The General Secretary says that Sayed-Khaiyum now lectures the country about regulation, consultation, and transparency, yet he did not properly consult the public on how selling nearly half of EFL would affect electricity prices for ordinary Fijians in the years ahead.
He says they agree that the Fijian Competition and Consumer Commission must follow the law and consult the public, and that is why the People’s Alliance Party supported the pause on the tariff increase and the start of public consultations.
However, he says it is dishonest to pretend this problem started today or sits only with the FCCC or the Coalition Government.
Balawa says that the structure forcing EFL to prioritise shareholder returns alongside public affordability was designed and implemented by Sayed-Khaiyum himself.
He adds that this Coalition Government is now dealing with the consequences of decisions made before it took office and, unlike the previous government, it is listening to the people and allowing proper consultation to take place.
He says the People’s Alliance Party will continue to speak up for ordinary Fijians and will not allow those responsible for creating today’s problems to rewrite history.
Meanwhile, in his facebook post, Sayed-Khaiyum says that it was rather amusing that a few trolls have tried to attribute the price hike to the previous government led by Prime Minister Bainimarama because of the partial divestment of EFL shares to the Japanese investor, Chugoku.
He says that clearly this claim is as ridiculous as those who claimed that the previous government was selling Kadavu to China and that, of course, many politicians and commentators knew then that Kadavu could not be sold but chose to keep quiet and let the falsehood fester for their own political mileage.
Sayed-Khaiyum says that similarly in this instance, some are letting it fester, with the truth being the casualty.
He highlighted that after almost two years of an international selection process for the partial divestment of EFL government shares, with the Government using World Bank/IFC expertise and EFL engaging the services of ANZ International, the settlement took place.
He says that the process included various international roadshows with interested parties from, but not limited to, China, Singapore, Australia, and Japan, and that Chugoku was finally selected.
Sayed-Khaiyum says that Chugoku is a large, reputable utility group and was backed by JICA, an arm of the Japanese Government.
He adds that it also has vast technological capacity in renewable energy, a resource and expertise that is essential for Fiji.
The former Attorney General says that FNPF, which was already a shareholder in EFL before the sale to Chugoku, sold its 20 percent stake, while the Government divested 24 percent to Chugoku.
He says that even though it held its shares only for a brief period, FNPF made a very handsome profit through its sale, and this assisted it to deliver a 5 percent credit to its members at the peak of COVID, which was not an easy feat.
Sayed-Khaiyum says that in that process, the Government also set aside 5 percent of EFL shares to be given ex gratia, in other words for free, to ordinary Fijian domestic account holders.
He adds that many have already received their share certificates and that those who did not apply should do so to receive their ex gratia shares.
The former Minister for Economy says that today, 51 percent of the shares in EFL is owned by the Fijian Government, 44 percent is owned by Chugoku through a special purpose company, and 5 percent is owned by ordinary Fijians.
He says that the total Fijian holding is 56 percent and that Chugoku, which is a minority shareholder, paid for the 44 percent stake in the enterprise value of approximately FJ$1.25 billion, the largest single transaction ever in Fiji.
Sayed-Khaiyum says that through this divestment process, the Government no longer guaranteed any of the loans that EFL took out from lending institutions.
He adds that prior to the sale and since the time EFL/FEA was set up, loans it took from local banks or international institutions had to be Government-guaranteed.
He further adds that, in fact, the Government’s largest contingent liability component was made up of Government guarantees of EFL/FEA loans.
However, he says that after the sale to Chugoku, the Government withdrew all its guarantees and the lenders were comfortable with the withdrawal because of the divestment and partnership with Chugoku.
He says that the Government no longer had these contingent liabilities on its books, thereby reducing its risk and exposure and giving it more fiscal space.
Sayed-Khaiyum clarified that the Japanese shareholder has no influence or input on the current announcement of the hike in electricity rates.
He adds that there was only a 2.74 percent increase approved in 2019 and none in 2023.
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