Energy Fiji Ltd’s CEO Hasmukh Patel is misrepresenting facts by claiming that EFL has lost $100m over the past years because of a decrease in electricity tariff in 2013, says Labour Leader Mahendra Chaudhry.
Speaking to members of the Nadi business community, Mr Patel said the reduction in tariff in 2013, “had resulted in a loss of almost $60m annually”. (FT 28 June).
“The truth is that EFL has made huge profits in the past}
four years. Its after tax profit for the four years to 2018 were: $40m (2015), $60m (2016), $67m in 2017 and $64m in 2018,” said Mr Chaudhry.
Mr Patel is also misleading the public when he claims that EFL needs tariff increase to upgrade ageing assets which he valued at $150 million.
“EFL has been making annual provisions for asset replacement over the years. In 2018 the company had $815m in accumulated capital reserves. It is also holding security deposits of $97million.
“What is this money being set aside for? It should be used to replace and upgrade its assets,” said Mr Chaudhry.
“In fact, EFL is financially in a very healthy position and this, admittedly, is due to good administration and prudent and competent management of its finances.
“It certainly does not need an increase in tariff to pay for its capital works. The tariff reduction in 2013 was necessary in the interest of equity because of the substantial increase it was granted in 2010.
In its 2018 Annual Report, Mr Patel is quoted as saying “ EFL’s balance sheet remains in a strong position, owing to our consistent profitable performance over the past three years. Our gearing ratio stood at 25.63% as of 31st December 2018… well within the industry standard maximum of 45%”.
Mr Chaudhry said EFL must realize that it is the provider of an essential service.
“It has a role to play in society and the economy. It should not look at itself as a solely private profit-making company. Its role is to provide affordable and reliable energy to households and businesses. It is a company owned by the people and it must take account of the public interest and the national economy.
“EFL paid $29m to government this year as dividend. A similar payment of $20m was made last year. The payment of dividend to government is questionable in the light of its negligible investment in EFL.
“The proposed 17.25% increase is totally unwarranted. As it is the people are going through very hard times. Businesses are experiencing a worrying downturn. Energy costs constitute a large part of business as well as household expenditure.
“Businesses will not be able to absorb the increases costs and will be forced to pass it on to their customers, thus pushing the cost of living up even further,” Mr Chaudhry said.