I WAS looking through the old copies of a newspaper and saw the advertisement in the issue of August 20, 2016 for partial divestment of Fiji Electricity Authority (FEA). The Oxford Dictionary’s meaning of “divest” is: deprive someone of something; remove or get rid of.
Two of the advertised objectives of the divestment program are: “Ensure more reliable and affordable supply of electricity,” and “increase participation of ordinary Fijians in the development of the capital market. There seems to be a contradiction between the stated objective that imply new investment to increase the capital and development of FEA and the “divestment” objective. It is also not clear from the advertisement how much of FEA is to be divested.
My reading of authoritative studies of “divestment” show that partial privatisation of government owned utilities in countries like New Zealand, the US and Australia, is that it is only the first step towards full privatisation, usually involving take-over by foreign companies, not local investors.
The FEA is a natural monopoly and a strategically vital industry for the people of Fiji. It should not be put through a process of being sold off to foreign energy companies that are not likely to have the national interest foremost in the development and running of the FEA. That is the experience of such policy pursuit in other countries and Fiji I believe will not be different.
Furthermore, overseas experience shows that the price of energy to consumers increases and does not reduce even when the supply of available electricity has increased. This happens because the new entity’s sole objective is to increase profits, particularly when debts accruing from the takeover have to be paid. The new owner takes advantage of monopoly to increase prices to a captive market.
The stated objective of increasing Fijian participation I believe will not be achieved because the criteria for participation is primarily aimed at foreign energy companies. It also appears to me that no local company or individual will be able to meet the advertised criteria for divestment of FEA. If the objective is the need to increase participation of ordinary Fijians in the development of the capital markets then, when will the advertisement for shares subscription be done? If the FEA needs new capital investment, will the Government consider just raising this capital domestically from the 192,000 electricity consumers in Fiji and the employees of FEA so they can be shareholders, instead of inviting foreign companies to have first option to “divest” FEA?
Experience overseas also shows that “divestment” means overseas speculators buy stocks in the energy company first, and then bid up the value of the company and, then sell their shares to others to make a killing. The exercise is therefore not an investment in the long term needs of FEA for energy diversification of sources but for the benefit of short term “investors”. I hope that the Minister for Public Enterprise can assure the public that I am wrong.
If I am wrong, then will the Government explain what is the real purpose of privatising the FEA, which has provided reasonably satisfactory service to the 192,000 Fijian consumers in the last 40 odd years?
I have not seen any evidence of a clamour from electricity consumers or employees of FEA for the privatisation of the FEA. Taxpayers had paid for the development of FEA through rates, FEA savings and loans to meet the energy needs of the Fijian people up to now and in the future. When will the Government publish which companies have been accepted to be divestment partners of the FEA so the people of Fiji know how much is local or of overseas origin.
If Fiji’s energy supply needs to diversify to other sources of renewal energy, I believe the Government should encourage interested local businesses that can invest in such opportunities through appropriate incentives to develop and supply to the national grid. If the FEA needs capital for development, this can also be provided locally by the Government, the FNPF, Fiji Development Bank and the ordinary consumers of electricity in Fiji. I believe these local entities have real interest in the long-term development of FEA as a strategic national asset and keeping prices affordable for Fijian consumers.
The move towards foreign ownership of Fiji’s strategic public assets had begun in the Fiji ports companies and the mahogany forests. Others may follow including the Fiji National Provident Fund.
The Fijian people who voted for FijiFirst in the 2014 election, I believe, did not vote for the Government to sell off Fiji’s strategic assets. I have not read the FijiFirst election manifesto and may be a party supporter or reader who has a copy can tell us.
I believe privatisation of a strategic public enterprise owned by the state is part of the ideology of free market, or economic neoliberalism, that has been completely discredited since the collapse of the financial sector of the global economy in 2008. The world economy has still not recovered from the collapse. I believe it is shocking that the Government is implementing an ideology that can no longer provide practical answers to the needs of ordinary people for low cost sustainable energy.
* Jone Dakuvula is the chairman of Pacific Dialogue. The views expressed are the author’s and not of this newspaper.
