Concerns have emerged regarding the $1.2 billion investment made by a Japanese power consortium, which now owns a 44 percent stake in Energy Fiji Ltd (EFL). The Fiji Commerce and Employers Federation (FCEF) has submitted a detailed 21-page document to the Fijian Competition and Consumer Commission (FCCC), raising questions about the management of these funds and urging a reconsideration of the upcoming tariff increase set for December 19, 2025.
In their report, FCEF outlined what they describe as “fatal deficiencies” in the assessment process, particularly regarding the management of the substantial payment from the Japanese consortium. They contend that the funds generated from the partial privatization of EFL in 2018 could have been utilized to finance critical capital projects rather than leading to a need for increased tariffs on consumers. The federation argues that the allocation of these funds has not been properly reconciled with EFL’s actual capital requirements as claimed by the utility.
Additionally, they highlighted remarks from the current Minister for Finance, who noted that the transaction lacked adequate future protections for the country’s strategic electricity utility. FCEF stressed the critical importance of transparency about the utilization of these proceeds, questioning if the money was reinvested into necessary infrastructure or rerouted to the government’s consolidated fund.
FCEF also expressed concerns regarding EFL’s recent decisions, such as a $40.7 million dividend payout to shareholders despite the company reporting an after-tax loss of $24.8 million. Furthermore, they pointed out that EFL’s gearing ratio is unusually low—between eight and 26 percent—compared to the industry standard of 60 to 100 percent, indicating an unused borrowing capacity of about $257.1 million.
Moreover, FCEF challenged EFL’s forecasts for demand growth, which include a projected nine percent increase in 2024 and an expected five percent annual growth rate that would require nearly doubling generation capacity within four to eight years. They argue that such projections have not been independently verified and should be aligned with Fiji’s demographic trends and the unpredictable state of the commercial sector.
As a corporatised private entity operating as a regulated monopoly, FCEF asserts that EFL must adhere to specific corporate financial standards. They advocate for meeting capital needs through various financial strategies, including borrowing and shareholder contributions, rather than imposing additional costs on consumers. The federation argues that the current regulatory framework tends to prioritize consumer tariffs instead of exploring alternative financing methods.
This scrutiny represents an opportunity for stakeholders in the energy sector to advocate for increased accountability and a more equitable approach to capital financing. By fostering transparency and protecting consumer interests, the ongoing assessment highlights the essential need for robust oversight within monopolistic sectors, ensuring the regulatory system fulfills its role in safeguarding consumers effectively. This situation, while challenging, provides a platform for necessary reform and enhanced financial practices within Energy Fiji Ltd.