FIJI POWER COSTS CAN ONLY GO UP

Editorial

Fiji Sun

SUVA, Fiji (Nov. 4) – Fiji is no longer approaching an energy crisis. We are right in the middle of one. As the world price of oil rises almost by the day, the Fiji Electricity Authority finds itself paying three times its break-even price for fuel to run its generators.

This clearly cannot be sustained. And while the price of oil is unlikely to remain at its present historic highs, the days of diesel fuel at $374 per ton are very probably gone forever.

This means that under present conditions the FEA is doomed to ever-mounting losses. For even if Monasavu were filled to overflowing, the mounting demand for power has meant that the diesel generators, originally intended as backups, are in more or less constant – and highly unprofitable – use.

And the FEA’s losses have to be funded by someone and that someone will be the people of Fiji. There is no other source of funding.

The FEA’s preferred solution is to increase the price of electricity and its submission is still before the Commerce Commission. It has pledged to look after the interests of the poor in any revised price structure but its powers to do so are limited.

If, for example, it makes the biggest users – industry and commerce – pay the highest price, that cost will be passed on to the public in increased prices of goods and services. If its submission is rejected, the FEA could carry on making losses until it was unable to pay its bills, including wages, at which point it would have to turn to the Government – and again the public would pick up the tab.

It could commission more hydro-electric schemes but these are long term projects requiring vast capital input – and again the public would have to find the money to repay the large loans involved.

The FEA and its customers may well have to live with the harsh reality that power is going to cost more. Once that reality is accepted, it becomes a matter of how we protect those most vulnerable to price increases. And that’s no simple matter either.

November 4, 2004

FijiSUN: http://www.sun.com.fj/

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