“On energy, Madam Speaker, the cost of the tariffs in fact, if we were are able to go through this divestment and have a focus on getting renewable energy sources, we could even very soon be able to bring down energy cost and the cost of production of energy, in particular this is going to come from newer sources.”
Those were the words of Fijian Attroney General Aiyaz Saiyed Khaiyum, during the debate and passing of the law occurred on 22 March 2017, that would give EFL partial divestment capabilities.
“Madam Speaker, we want to tell the people of Fiji who are watching and listening that this divestment is actually good for us. It is a good investment, it is a strategic move, it will not affect your rights as a consumer of Fiji, and it will not affect you if you are at the lower end of the socio-economic scale because Government will step in and provide you with assistance, just as we have done with education, water and various other areas.” said Mr Saiyed Khaiyum during the debate in March 2017 during parliamentary debate.
“Madam Speaker, the reality is that this Bill provides a fantastic opportunity for investors to come into Fiji, for us to be able to lift up the standards of FEA and ultimately, for the consumers of Fiji to benefit from a very strategic position.”
Energy Fiji Limited is a monopoly therefore it can dictate and regulate its services as Mr Khaiyum said it in the parliamentary debate.
“Indeed, Madam Speaker, a number of times because FEA is the generator of electricity and the transmitter and the retailer and at the same time it is also the one that regulates itself, sometimes also consumers’ rights are somehow or the other swept to the side because you are actually complaining to an organisation that is fulfilling both roles.”
The Attorney General also promised that the Electricity Bill would “protect the interest of consumers.”
“The primary roles and responsibility of the regulator will be too, with the consent of the Minister issue licences in relation to generation, transmission and supply of electricity, to determine tariffs and price methodology of electricity, to protect the interest of consumers which is specifically stated in the law itself and the administration enforcement and regulation of electricity industry, Madam Speaker.” Mr Khaiyum said.
Two years later, the then Fiji Electricity Authority now known as Energy Fiji Limited is proposing to increase tariff rates by a huge mark up of 17.21% which will see domestic rates of electricity go up from $0.3310 to $0.3882 kWh.
EFL says in its submission to Fijian Competition and Consumer Commission says that an increase in charges/tariff is required because it will ensure that investors/operators business is protected against uncontrollable events which are outside their control.
“This will ensure that the investors/operators future earnings are somewhat protected. Without this protection, a single hit such as a category 5 cyclone can turn the company insolvent and this can become a catastrophic event for Fiji.”
Energy Fiji Limited states that the extremely low electricity tariff rates in Fiji which is lowest in the Pacific countries including some parts of Australia and New Zealand), is the real reason for the lack of entry of private investors and IPPs into Fiji’s electricity generation industry.
“It is rather a fact that investors choose to invest in countries where the electricity tariff is high since they will get better returns. This is one disadvantage of setting tariff structure too low.”
If an increase is granted, EFL says they will better manager their debt and it will send the correct market signals to all electricity users to conserve electricity and hence incentivize them to reduce their electricity consumption through efficient and effective use of electricity, which will help the Fiji government’s and EFL’s initiatives on Demand Side Management.”
The last increase was granted to the then FEA in 2013.