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Solomons struggling to pay $2.5 million fuel bill

By Mary Kivo

HONIARA, Solomon Islands (Solomon Star, July 20, 2008) – The World Bank has stepped in with a $28 million [US$4 million] grant to assist the cash-strapped Solomon Islands Electricity Authority (SIEA) improve its service delivery.

The assistance comes as SIEA struggles to clear its $18 million [US$2.5 million] fuel bill with suppliers Markwarth Oil Limited.

An agreement stipulating the $28 million assistance was signed Monday in Honiara between World Bank rep Dr Antonie De Wilde and Finance minister Snyder Rini.

Mr Rini said the assistance will help improve energy security and help support further economic growth for the country. He said more help is required to build the capacity of SIEA to improve supply of electricity.

"Our effort to address our energy issues does not stop here," Mr Rini said. The agreement was signed during a workshop held to look at alternative energy sources. Mr Rini said with the rising cost of fuel, we must continue to look for lower cost and alternative sources of energy.

So far Dr Wilde of World Bank had:

**Reconstitute SIEA’s balance sheet – their assets, condition of their engines, what needs to be done to have them operate efficiently and effectively.

**Prepared a Generator repair and maintenance programme for Honiara. lPrepared a programme to reduce distribution losses from 19% to 8% saving electricity, reducing diesel oil consumption.

**With SIEA, developed and agreed on a commercialisation programme which will strengthen board and management, reduce blackouts and following a debt restructuring programme that will assist SIEA to break even.

Dr Wilde explains that the $28 million assistance programme will run for three year. Minister for Mines, Energy and Rural Electrification Edward Huniehu said the government’s approach is centred on renewable energy and fuel industry.

He said the long term strategy target of the ministry is to electrify at least 50% of the rural population by year 2020. "The government is looking at sources of renewable energy namely hydropower, solar energy, wind energy and biodiesel and other sources."

But the minister said the country will still depend on fossil fuel for a while yet. He said the government development budget on energy had increased five times in comparison to previous years of several conservative governments.

"The financial system of SIEA needs to be strengthened," he said. He said the government supports the move by the World Bank to reform SIEA, but also would prefer to see that management contract is filled with personnel that have experience on utility.

He said that the country now needs an urgent attention to develop a small hydropower project for Honiara immediately within the next two years.

"All provincial centres that have the potential to have small hydropower project should be developed and constructed as soon as possible," he said.

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