Tongan Government Moves To Sell Shares Of Tonga Cable

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Proceeds from sale to Digicel to fund fiber cable

By Pesi Fonua

NUKU‘ALOFA, Tonga (Matangi Tonga, Feb. 23, 2016) – The Tonga Government is currently negotiating to sell some of its shares in Tonga Cable Ltd. to Digicel to cover a shortfall in the funding it needs to connect Vava’u and Ha'apai to the submarine fibre optic telecommunications cable network that has linked Tongatapu to the rest of the world since 2013.

Hon. Poasi Tei, the Minister for Public Enterprises told the Tongan Parliament yesterday, 22 February, that government, the major shareholder of the Tonga Cable Ltd is currently negotiating with Digital Tonga Ltd. to buy about 20% of its shares in the public enterprise Tonga Cable Ltd. It would have the same number of shares as currently held by TCC, excepting that the shares are now more expensive.

Commitment

Back in May 2014, the then Prime Minister, Lord Tu’ivakano made a ground breaking ceremony in Neiafu, with a pledge that Vava’u was to be connected to the submarine fibre optic telecommunication cable network by the end of 2014. It would mean a faster internet service for Vava'u.

It is now 2016, and the new government of Hon. ‘Akilisi Pohiva needs another USD$5 million to connect Ha’apai and Vava’u to the submarine fibre optic cable network that has connected Tonga to the rest of the world for two years. This is in addition to the funds already allocated by the World Bank.

The extension of the network to Vava'u and Ha'apai is crucial in order to use up about $5 million pa'anga that was left over from the World Bank allocation to bring the submarine fibre cable to Tongatapu - or else the World Bank will take the funding surplus back.

Shareholders

The two shareholders in Tonga Cable Ltd. at the moment are the Tongan Government 80% and the Tonga Communication Corporation TCC 20%. Both Tonga Cable Ltd. and Tonga Communications Corporation (TCC) are Public Enterprises.

Digital Tonga Ltd. is Tonga’s second internet service provider, in competition with TCC.

When Lord Tu’ivakano made the cable ground-breaking ceremony in Vava’u in 2014, Paula Ma’u the CEO for the project said that they already had $5 million pa’anga on hand, money that they saved from Phase One. At the time, the plan was that after Phase Two, the next phase would be connecting Ha‘apai to the submarine cable network.

Parliament

The issue of government negotiating to sell its shares in Tonga Cable Ltd to Digicel was raised in parliament by Lord Nuku yesterday, 22 February the final day of parliament for 2015-16.

Lord Nuku expressed his surprised that such an important negotiation was going on but parliament had never been informed. He queried the democratic principles that government has been bragging about; public participation and transparency, then the parliament of the People had not been informed. He also queried the fact that Tonga Cable Ltd is a Public Enterpries, but why wasn't the Board of Tonga Cable negotiating for the sales of its shares instead of the government negotiating the sales with Digicel. He wanted the Prime Minister to give an answer.

The only answer that the PM Hon. 'Akilisi Pohiva could give was that a report would be presented to parliament once the negotiation was finalised.

The members of the board of Tonga Cable Ltd are:

Government funds

On a completely different issue the PM then expressed his concern over a ‘secret network’ within the civil service who are "spying on him with a bad-heart," to see if he was misusing government funds, particularly when he travels overseas. He specifically appealed for the assistance of Radio A3Z [Tonga Broadcasting Commission], "unless of course if they have their own plan."

Lord Nuku, told the PM that the so-called "secret network" of civil servants are not following him with a "bad heart", "they are simply just doing their jobs."

Foreign company

But back to the government negotiation with Digicel to buy shares in Tonga Cable Ltd, Lord Fusitu’a queried why government was selling its shares to Digicel, a foreign company but not to a Tongan business. Deputy PM, Hon. Siaosi Sovaleni responded that Digicel is a Tongan registered company.

"But foreign owned," Lord Fusitu’a hit back.

The two also disagreed on share percentages. Siaosi said that the existing shareholding is 80% for government and 20% for TCC, but Fusitu’a said that it is 79.9% and 18.1%. At the end, the real figures were not clear.

Questions were also asked over why government did not get the National Retirement Fund to invest their millions, sitting in banks at a very low interest rates, to invest in Tonga Cable.

The response from Hon Poasi Tei was that they had been working very closely with the World Bank and the Asian Development Bank, and the most viable option was for Digicel to buy the shares at a price that they were still negotiating on.

Lord Tu’ivakano, who was the PM when Tonga Cable Ltd. was formed, reminded the House that Digicel and TCC were invited at the beginning to buy 20% shares each in Tonga Cable, TCC bought shares but not Digicel. He warned government to be aware that the World Bank has an affiliation body, the IFC, and that the IFC is a shareholder in Digicel.

The 2015-16 session of the Tongan parliament eventually came to an end, with the official closing to take place on Thursday 25 February.

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