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NUKUALOFA, Tonga (Matangi Tonga, September 1) – Tonga's Electric Power Board [TEPB] is considering a recommended increase in the price of Tonga's diesel-driven electricity by up to 5.21 seniti per kilowatt.

It is almost certain that the rise will be at least three seniti per unit, an amount that was yesterday recommended by TEPB chairman Hon. Siosiua 'Utoikamanu, in response to a request from the sole supplier of electricity for Tonga, Shoreline Power.

But Shoreline wants the TEPB approve an increase of at least 5.21 seniti to cover a steady increase in the price of diesel fuel during the past 12 months. According to Shoreline, between November 2004 and January 2006 the price of diesel went up by 38.27 percent from $0.8604 per litre to $1.1897 per litre.

The last hike in the electricity tariff was in November 2004 when an additional 11 seniti pushed the consumer price up to 26.6 seniti per kilowatt. This 11 seniti rise has been subsidised by the government, which pays Shoreline $1.8 million annually. By the same calculation, a 5.21 seniti increase might bring in another $850,000 a year for Shoreline.

Whether government will increase or terminate its electricity subsidy is another decision that has yet to be made, but this time any increase in tariff has to be paid by the consumers.

A New Zealand consultant was brought in to look at the electricity pricing. On August 30, Alex Sundakov of the Castalia Strategic Advisors of Wellington, presented his recommendation to the TEPB for an increase of 5.21 seniti per kilowatt. He said that the 5.21 seniti rise was only to offset the increasing price of fuel and it did not take into account other company expenses.

Two members of the TEPB Ramsay Dalgety and Hon. Paul Karalus were to present Alex's recommendations to the Chairman of the Board, the Minister of Finance, Hon. Siosiua 'Utoikamanu.

Then on August 31, Hon. Siosiua 'Utoikamanu in a released statement recommended to the TEPB an increase in tariff of 3 seniti. He said that the Board was committed to follow a transparent process by consulting with consumers and civil society before a final decision is made on the tariffs.

"People need to be given an opportunity to understand the causes of the tariff increase and to express their opinion," he stated.

September 4, 2006

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