Office of the Minister of Finance
5 April 2006
The Government is pleased to be working with the Shoreline Group in securing the best ownership structure and regulatory framework for Tonga’s electricity sector.
As part of this process, the Government is considering partnering with one or more suitable private sector investors in the ownership of the electricity generation and distribution assets currently held by the Shoreline Group. The Government is seeking expressions of interest from suitable investors with expertise in managing and operating electricity assets.
The Government is also reviewing the regulation of generation, transmission and electricity retail activities. This regulatory review will also assist in developing a regulatory framework that is robust, fair and efficient, and which encourages continued investment, development and increased penetration of the Kingdom’s electricity network.
The Government considers that the objectives of the regulatory regime can be achieved with private sector assistance through investment and expertise, contributing to a stable and efficient electricity network.
MEDIA release – Chairman, shoreline group of companies
In May 2005, the Chairman of the Shoreline Group of Companies His Royal Highness Crown Prince Tupouto’a, offered to transfer to the Government of Tonga and potential partners all the electricity assets owned and managed by the Shoreline Group since 1998.
His Royal Highness has stated “I acknowledgement the key role that the provision of electricity plays in the social and economic development of the people of the Kingdom. Having completed significant investment and modernisation of the generation and distribution of power throughout the Kingdom of Tonga from its initial inefficient and underperforming state at acquisition, I now believe that the time is right for ownership and management to be passed back to the Government and a strong partner with relevant expertise in managing and operating electricity assets. The objective is to ensure the continued reliability, efficiency and sustainability of electricity to the citizens and businesses of the Kingdom of Tonga.”
The Shoreline Group has since the announcement of last year, worked closely with the Government and her advisers on ownership options and regulatory frameworks that will facilitate the identification of an optimal partner, maintain the modern platform achieved, and continue to build on the success of Shoreline.
Since 1998, Shoreline has made significant investments in the assets generating electricity, replacing all the pre-existing power stations with up to date plant and equipment. In addition, an accelerated capital programme for the distribution network has been implemented, significantly reducing line losses. These initiatives have greatly improved operational efficiency in an effort to minimize the costs of electricity production. This flows to the direct benefit to power consumers by holding costs down and partially offsetting the significant increase in fuel costs.
Shoreline, having achieved its social and investment objectives to modernise and upgrade electricity generation and distribution, is now in a position to transfer the power operations to the Government and suitable investors with expertise in managing and operating electricity assets. This is in line with the primary objective of the Shoreline Group to transform or build up underperforming national assets which are critical to social and economic development, restoring them to an efficient and cost-effective state. In returning ownership of these assets to the Government of Tonga, Shoreline has facilitated an opportunity for the Government to review its social and development objectives, obtain support from investors and experienced partners and move forward to ensure the continuity of the critical power sector in securing a better future for the people Tonga.