FEA Bill -abuse of parliamentary process, says Labour

  • 17th March 2017
  • 2017
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The disturbing manner in which the public consultation process was managed shows a contemptible disregard by the government and the Committee for openness and accountability. More importantly, it is a gross abuse of the parliamentary process, says Labour Leader Mahendra Chaudhry .

FLP Submissions on Bill No 7 of 2017
Electricity Bill 2017

The Fiji Labour Party wishes to register its concern at the manner in which the above Bill is being rushed through the House of Representatives.

In moving the Bill, the Attorney General invoked Standing Order 51 in the sitting of the House on 10 February 2017 with the following time lines attached to its passage:

  •  That the Electricity Bill 2017 be considered by Parliament without delay;
  •  That the Bill must pass through one stage at a single sitting of Parliament;
  • That the Bill must be immediately referred to the Standing Committee on Justice, Law and Human Rights;
  • That the Standing Committee must report on the Bill to Parliament in the March sitting of Parliament;
  • That upon presentation of the Report on the Bill by the Standing Committee, the Bill must be debated and voted upon by Parliament in the March sitting of Parliament but then one hour be given to debate the Bill with the right of reply given to me as the Member moving this motion.

We submit that Standing Order 51 should only be invoked when there is an urgent need to legislate on an issue of national importance or in the public interest. The invocation should be strictly restricted to such situations.

Bill No 7 of 2017 cannot be considered an urgent legislation by any stretch of the  imagination.

True, it deals with an important policy matter – whether strategic State assets should remain in public hands or be divested, partially or wholly, to private interests.

Given its importance from the viewpoint of public interest, it is only proper that the Bill must receive wide public attention and be the subject of robust debate in parliament.

However, the disturbing manner in which the public consultation process was managed shows a contemptible disregard by the government and the Committee for openness and accountability. More importantly, it is a gross abuse of the parliamentary process.

The public consultation process was, it seems, deliberately abridged to discourage public submissions by setting unrealistic deadlines.

The advertisement by the Standing Committee calling for written submissions from the public was published in the newspapers on 18 and 20 February 2017 with a deadline for submissions by 4pm on 20 February 2017.

The advertisement also stated that oral submissions would primarily be based on written submissions and would be invited by the Committee and would be heard from 21-23 February 2017 and from 28 February to 2nd March 2017.

It was simply preposterous for the committee to expect written submissions to be made on a 57 page Bill within a time frame of 2 days. Likewise, a second advertisement with similar content to that of the first was published in the newspapers on 7th March 2017 gave the deadline for written submissions to be made by 4pm on 8th March 2017, with oral submissions being heard on 7th and 8th March 2017.

In both cases, the Committee reserved the right on whether or not to call for written submissions. It is more than abundantly clear from the above that the public consultation process was nothing short of a sham staged to fool the people. Such disregard for the right of the people to be heard on important
national issues is to abhorred.

It is astounding that the Opposition parties have not protested such abuse of the parliamentary process.

We call on the Committee and the government to defer consideration of this Bill to allow for a fair consultation process that would give reasonable time to members of the public as well as interested institutions and businesses to air their views before the Committee.

Another important issue that needs consideration is whether the Bill has been referred to the relevant Standing Committee of the House. As things stand, it is before the Standing Committee on Justice, Law and Human Rights, obviously the wrong standing committee.

The Bill deals with matters which lie properly in the domain of economic affairs and should rightly be considered by the Standing Committee on Economic Affairs. Its referral to the Justice, Law and Human Rights Standing Committee is seen as another abuse of the parliamentary process.

It makes one wonder why it was referred to this Committee in the first instance. The Bill does not deal with matters of administration of justice or law or human rights – then how did it end up in this committee except by deliberate design.

The object of the Bill is fourfold:
1. First to corporatize FEA to operate as a company under the Companies Act and to partially divest its shares to private entities or individuals.

2. Second, is to remove the regulatory role of FEA or any of its successors, in the industry and appoint an independent regulator.

3. Third is to permit the Minister to enter into agreements as may be required to manage the initial divestment transaction and in each subsequent case achieve the objectives set out in the Act.

4. Fourth is to create opportunities for independent power producers to provide electricity thereby improving competition and efficiency in the system operations and wholesale markets.

Independent Regulatory Authority
The appointment of an independent Regulatory Authority for the electricity industry has been long overdue and should be proceeded with as quickly as possible.

Corporatising FEA
Converting FEA from a statutory commercial entity to a company with shares that may be traded on the Stock Exchange opens the way for the privatisation of FEA at some future date.

Government Revenue Budget 2016/2017 shows $250 million to be received from sale of assets. It is well known that government is cash strapped and intends to raise additional revenue to finance its escalating Budget deficits and loan repayment commitments.

Indeed, this seems to be its undisclosed reason for rushing with this Bill and empowering the minister to “enter into such agreements as may be required to achieve the initial divestment transition and in each subsequent case achieve the objectives set out in the Act”.

Both the Prime Minister and the Economy Minister have publicly stated government’s intention to sell up to 49% of the FEA (or its successor company) thus raising around $500m.

However, both have been short on providing divestment details and this Bill, if passed, will rest complete authority in the Minister to determine how the shares in FEA’s successor company would be disposed of.

The Attorney General, as the mover of the Bill, provided no details or even the sketchiest of information on this very important policy matter. His entire contribution, when introducing the Bill in the house on 10 February 2017, consisted of seven short paragraphs without even justifying why the Bill was
being fast-tracked under Standing Order 51.

We submit that the authority to decide on divestment transactions  should not be left to the Minister alone and that a more accountable  and transparent process be provided for such determinations ultimately requiring parliamentary approval.

FEA as a commercial entity
It needs to be understood at the outset that the assets of the Fiji Electricity Authority, which is the subject of the Bill, were substantially, if not wholly, funded by the revenues generated from the sale of electricity.

FEA is a successful commercial entity with a healthy balance sheet. Its 2015 Annual Report and audited Accounts show that it earned an after tax profit of $37 million. It had total assets of $1.17 billion against total liabilities of $525 million and net assets worth $647 million as at 31 December 2015. It is not a
burden on the tax payer relying on government subsidies to keep afloat.

FEA is a reliable and efficient supplier of electricity and its current available capacity of around 245 MW far exceeds the optimum demand of around 170MW. Thus, it carries a surplus capacity of around 75MW.

It is professionally well managed by our own local people and not dependent on expatriates as are some other government commercial entities. Government’s contribution to the acquisition of FEA’s assets can only be minimal except for underwriting its loans.

This point is made to assert the fact that the real owners of FEA are in fact its customers (the people) who have provided the capital for its operations and growth over the years since its establishment 50 years ago.

Independent power producers have been welcomed and assisted by FEA to sell power to the national grid at rates negotiated between them. If the private sector is keen to invest in the energy sector, the way is open for them. They can be encouraged to set up renewable energy power plants and assist the FEA in maintaining an efficient and economical electricity industry.

We must also consider the private sector culture of maximising their profits. While conceding the fact that electricity tariffs will remain under Commerce Commission surveillance, one should not altogether ignore the pressures that may be exerted on the authorities to grant tariff increases to the detriment of
both the domestic as well as commercial/industrial customers.

All in all, competition is good for the consumer but let such competition be generated by the private sector’s own resources rather than through buying into profitable State owned enterprises at an advantage.

To conclude, we submit that Bill 7 of 2017 should not be proceeded without the following conditions being met:
1. The Bill’s passage in the House should be subject to Standing Order 83 and not Standing Order 51.
This is to facilitate full debate on the subject matter of the Bill rather than it being restricted to just one (1) hour which is preposterously short, to permit members of the House to fully air
their views on this important matter which is of interest to all consumers of electricity.
The Bill cannot be considered urgent legislation, as explained earlier, and does not, in our view, qualify for passage under SO 51. Public consultations on the Bill were deliberately restricted as mentioned earlier and more time must be given to the people to air their views. Public consultations must be undertaken in each district by the Standing Committee to obtain a balanced picture. One must question why it has been restricted to Suva only.

2. The Bill has been referred to the wrong Standing Committee – it falls properly in the purview of the Standing Committee on Economic Affairs and should be considered by that committee.

3. The Bill was not properly introduced to the House by the Attorney General. His very short address of 7 short paragraphs, delivered in less than 4 minutes, failed to provide information on many key aspects of the 57-page Bill.

His casual approach to an important Bill must be questioned – it points to professional incompetence at best or at worst, a total disregard of his responsibility to the House as a senior Minister.

This submission may not comply with the unrealistic time lines set by the Committee. Nonetheless, the issues concerned are of sufficient critical importance to be brought before the Committee and the public at large.

It is simply a question of whether our Parliament is being taken for granted by the governing Party and whether the Opposition parties are really up to it in safeguarding the integrity of our Parliament by effectively opposing and exposing such disturbing developments.
Yours faithfully
Mahendra P. Chaudhry
General Secretary/Leader