Leaders Debate over High Electricity Cost in Solomon Islands
Solomon Power is said to be making huge profits at the expense of its customers.
This was the sentiment shared by members of parliament when debating the Solomon Islands Electricity Authority Annual Report 2021 in parliament last week.
Tabling the report in parliament Leader of the Opposition Group Hon Mathew Wale said despite the importance of making profit for business sustainability, state owned companies must be aware that their role is to also provide services at a reasonable cost.
“The level of profits is too high, when it is too high, we need to start looking at it as they do not exist solely to make profits. Profit for sustainability is important especially for such a size as SIEA requires significant profit to justify it however these organizations exist to provide public goods at price costs that are reasonable and part of an ecosystem that creates a conducive economic environment, both for households and families so that cost of living is not too high and also for economy,” Mr Wale said.
He said the high electricity cost is one factor that hinders the country’s economy from transitioning to processing and manufacturing on the big scale.
Member of Parliament for South Malaita Constituency Hon Rick Houenipwela in his contribution said, while SOE’s are encouraged to make profit it shouldn’t be at the expense of the people and the economy.
“You can’t run huge profits at the expense of the public, I think it’s immorally wrong, it’s wrong. Every state-owned enterprise has an obligation to provide services to this country, especially most of which have no competitors, you can’t run an organization which is a monopoly and do it at the expense of the people,” he said.
Hon Houenipwela said due to Solomon Power’s high profitability goal they were not able to fulfill their own mission to provide a safe, reliable, affordable and accessible supply of electricity to the Solomon Islands.
“Nothing in their mission statement has been reached, this is very discouraging because power is supplied to Honiara but only 17 percent of the Honiara population access power and that is them not achieving their mission. When you look at the population in Solomon at large less than 3 percent of the population access power, these are figures in the report and as one of the oldest SOE’s in the country this is not acceptable,” Hon Hou said.
The Asian Development Bank (ADB) through its technical assistance program, the Pacific Private Sector Development Initiative (PSDI) Finding Balance 2023 report released in May revealed that Solomon Islands electricity cost is the highest in the pacific region.
In his response, Minister of Mines Energy and Rural Electrification Hon Bradley Tovosia said his ministry has been tirelessly working to resolve the high electricity cost and frequent power outage currently experienced in Honiara.
The government early this year started reviewing the electricity act to reduce the country’s high electricity cost and separate Solomon Power’s position as both the sector’s regulator and service provider.
“The review paper on the Solomon Islands electricity act is already with the Attorney General’s office and will soon go to cabinet, this is to separate the powers Solomon power currently has. I believe this will be done in a short time. Maybe during the next parliament sitting we will amend the law,” Hon Tovosia said.
Meanwhile, the Minister of Commerce, Industry, Labor and Immigration Hon. Frederick Kologeto said the reality that fuel prices are driving up the cost of electricity in the country is an issue they have limited power over.
“It is hard for us to control the fuel prices because we are only a price taker, what is given, we must take. There is little we can do to change the fuel price but in comparison to other pacific island countries like Australia and New Zealand their fuel prices are high compared to Solomon Islands but why is our electricity cost still high, this is something I’ll leave up to the management,” Hon Kologeta said.
In an interview with SIBC News, Solomon Power’s Board Director and South Pacific Oil Human Resource Manager Muriel Ha’apue-Dakamae said one of the reasons for the high electricity cost in the country is that Solomon Power is not subsidized by the government as its counterparts in the region.
She explained Solomon Power pays one of the highest costs of fuel in the world.
Around 98 percent of power produced by Solomon Power comes from diesel fuel.
By Sharon Nanau