Members of the FNPF must brace themselves against losses running into hundreds of millions in the long term over its loan to the Natadola Bay Resorts Ltd (NBRL).
The development of the resort was completed by the interim regime. It began operations in August 2009. The total cost of the project was put at $385 million but within a year of its operation it was revalued at $84m, a write down of $301m in the FNPF accounts of 2010.
According to a report published in the Fiji Times of October 24, the NBRL debt was restructured into three segments:
Loan 1: $60m to be repaid over 26 years at 8%
Loan 2: $40m to be repaid over 26.5 years at 8%
Loan 3: $203m is interest free and has an indefinite
loan repayment term
In other words, NBRL can sit on this loan for as long as it likes without making any repayment.
Isn’t this absurd? Where else can one find a pension fund held in trust giving out huge interest-free loans without a definite repayment period?
Interest alone at 8% on this massive loan of $203m would fetch the Fund an annual income of $16m, let alone principal repayment.
So, for as long as NBRL enjoys its generous interest free, repayment exempt benefit, the members of the Fund stand to lose at least $16m annually or $160m over 10 years, $320m over 20 years and so on.
Is this how pension fund moneys are to be frittered away while pensioners and members are told that they will have to take substantial cuts in their pensions so that NBRL and its luxurious Natadola Bay Resort (Fiji’s flagship hotel) where the big guns spend their week-ends, may survive?