By Netani Rika
With Fiji caught in the darkness of a descending cloud of COVID-19, its government has pushed through the sale of a large portion of the national energy company to a Japanese consortium.
In its initial announcement, the government said it had sold 44% of Energy Fiji to Chugoku Electric Power Company. That stake was made up of shares held by the government (24%) and the Fiji National Provident Fund’s 20% share.
On June 3 of this year, Attorney General and Minister for the Economy, Aiyaz Sayed-Khaiyum, told parliament that the State received “about $440 million” (US$212 million) from the consortium. This equates to “about” $2 per share for 220 million shares (EFL has issued 500 million shares in total).
The first attempts to sell a 44% stake in EFL were made in 2015. When there were no international takers, shares were sold to the Fiji National Provident Fund as a stop-gap measure. In April 2019, Sayed-Khaiyum said Fiji had rejected an offer from a Malaysian company which wanted total control of the company. “It was always understood that FNPF will hold on to the shares until the Government finds a strategic partner to buy the 44%, in which case FNPF will sell its holding, as per the sale agreement,’’ he said.
FNPF bought 20% of EFL (or 100 million shares) from the government for $206,109,989.13 in October 2019 according to its Annual Report for that year. That equates to $2.06 per share. EFL’s net asset value as of December 31 of that same year was $850.79 million.
The most recent EFL sale was finalised in Singapore through a consortium – Sevens Pacific Pte Limited – owned by Chugoku and the Japan Bank for International Cooperation.
Sevens Pacific Pte Limited is based at 160 Robinson Road, Singapore, and has been in existence for three months. It lists its other holding companies as its principal business. The address is a towering complex owned by the Singapore Business Federation and houses hundreds of offices, medical clinics and other commercial entities.
Chugoku Electric Power Company was described by Acting Minister for Economy Faiyaz Koya earlier this year as a reputable partner which would help Fiji “as it prepares to spearhead Fiji’s transition to carbon neutrality by 2050.” At that time, no mention was made of sale price, but the usual platitudes were rolled out about Fiji’s strong diplomatic ties with Japan and Chugoku’s “operational capacity and expertise’’ to help EFL “perform better for the Fijians who rely on their services today while transforming into the driving force behind Fiji’s renewable energy revolution.”
Choguku’s other international investments include natural gas fired power generation in Ohio, USA and Myanmar, offshore wind generation in Taiwan, hydroelectricity in Indonesia, and coal fired power generation in Malaysia.
Prior to the June parliamentary sitting, National Federation Party Leader Professor Biman Prasad had called for transparency. “These shares belong to the people of Fiji,’’ Prasad said.
Prasad said the government must tell the public what would be done with the revenue from the sale of the EFL shares.
Many questions remain – did the FNPF overpay the Fijian government for its original purchase? Did the Government undervalue EFL in the Japan sale? Did the FNPF make a loss in one or both sales?
The difference in what FNPF appeared to pay for its shares in 2019, and what it sold them for this year, is approximately F$6 million. Meanwhile FNPF continues to pay out hundreds of thousands of unemployment benefits to members, sourced from its own savings and government top ups.
As COVID-19 numbers continue to surge in Fiji, it appears that the sale of EFL shares is far from the minds of the people and their representatives. And in Parliament, for the moment, apart for Prasad, the light has failed to come on. Those who do have questions remain in the dark for now.
