Barely a year after it bought a 20 percent stake in Energy Fiji Ltd (EFL), the Fiji National Provident Fund (FNPF) is in the process of selling it.
While details have yet to be announced, Islands Business has been reliably informed that the divestment by FNPF was a condition in the initial purchase agreement when the pension fund bought the shares from the Fiji Government in August 2019.
"It was always understood that FNPF will hold on to the shares until the Government finds a strategic partner to buy the 44 percent, in which case FNPF will sell its holding, as per the sale agreement" Islands Business was told.
Whether the FNPF will recover the $206.1 million it forked out for the 20 percent stake in EFL stakes – as disclosed in the 2019 EFL Annual Report – is not known, but Islands Business has been told that talks on the divestment have concluded and that a statement will be issued soon.
In an interview with state-owned radio FBC news last week, Fiji's Minister for Economy Aiyaz Sayed-Khaiyum said negotiations had begun between EFL and an investor experienced in the energy sector for the divestment of the 44 percent stake in EFL.
"We are very excited about this one particular company that brings a lot of international savvy, international expertise and they have the ability to attract international capital to this particular divestment process and should they cross the line and we have this divestment in place then we think that EFL will be very much complimented by this new partnership," Sayed-Khaiyum told FBC.
Power production in Fiji is an open market but EFL, as a fully government-owned company, holds the monopoly license for retail power sale and distribution.
The Fijian Government has been trying to divest 44 percent of the company since 2015, but its earlier efforts have been unsuccessful.
A flash regulatory reform in 2017 produced the updated Fiji Electricity Act 2017 and paved the way for a 20 percent sell-off to FNPF after calls for Expressions of Interest failed to attract buyers.
Five percent, deemed non-voting shares, were offered for free to current and future EFL customers, while 75 percent was retained by the Government as it continued its search for potential buyers.
Upon completion of this latest round of divestment, the new ownership structure of EFL is likely to be: Fiji Government (51%), EFL customers (5%), and the new partner (44%).
Unscripted and unplanned, Fijians have returned quietly to the land and the sea over the past months as the impacts of job losses brought about by the COVID19 pandemic began to bite.
In the tourism belts of Nadi and nearby Sigatoka, former hotel and resort workers – in their hundreds – are turning to farming and fishing virtually overnight.
Necessity is driving them, and no one knows when, how, or indeed if, this quiet revolution will end.
“With many in the village losing their work, we no longer have a steady income to buy food so we’re planting our own,” says Epeli Ganilau.
He is Turaganikoro, village administrator of Sanasana, the traditional owners of the land which hosts the multi-million dollar InterContinental Fiji Golf Resort & Spa and the Natadola Bay Championship Golf Course.
With almost all the men and women in the village laid off work from the resort and its neighbouring golf course, Sanasana has revived their youth and women clubs to spearhead the return to subsistence farming and fishing.
Other villages in Fiji’s tourism belt on Viti Levu’s west coast and Vanua Levu’s south coast around Savusavu town have done the same; closure of hotels and supporting businesses has driven jobless men, women and youths back to subsistence farming, or fishing.
Figures are daunting, and likely to worsen
A survey of tourism businesses by the International Finance Corporation and Fiji’s Ministry of Commerce, Trade, Tourism and Transport found that if the current situation doesn’t change by this November (a likely scenario given recent increases in COVID diagnoses in the Australian and New Zealand source markets), over 500 of the 3,569 businesses surveyed anticipate bankruptcy. If international travel does not resume within six months, 60.5% of those surveyed will close or move away from the tourism sector.
The study further found that 20% of tourism businesses are currently unable to service their debt, and a further 16% expect to default on their debt within one to four months, and have called for loan repayment moratoria, further tax reductions/holidays, and financial support for recovery and rent deferral.
Meanwhile a study by the International Labour Organisation on the impact of COVID-19 on employment also released at the end of last month found half of the workers surveyed had lost their jobs, and most of those still in employment were on reduced hours. More than half of redundant workers said they could not find jobs and needed financial support, and 46% had ventured into subsistence living and operating a microbusiness. Almost all (99%) said the government should do more to protect their jobs and rights, “instead of depleting their retirement fund.”
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Fiji’s workers’ pension fund, the Fiji National Provident Fund has reiterated that members funds are well protected and that the Fund has the capacity to meet partial withdrawals for members who have lost work orworking on reduced pay or hours due to the impacts of the COVID19 pandemic.
Fund chief executive officer Jaoji Koroi gave the reassurance during a news conference he called at the Fund’s boardroom in Suva to announce the start of a new round of withdrawals for affected members.
“I must stress that the Fund is well within its financial means to enable these withdrawals for members, while continuing to monitor and manage the impact of the pandemic on our business and operations. The Fund’s total assets is in excess of $7 billion and with cash deposit in excess of $500m, so the Fund has the financial capacity to pay this financial obligations to our members.”
With the next phase of payout to members due to start on 1 September, and continue for the next two months, Koroi could not say how long this assistance would last. “We are continuing to assess as we go.We are hopeful that things can turn out quickly but as I said Phase Two Round 2 is for another five fortnights, of $110.”
To date, a total of 113 thousand FNPF members have been assisted in which a total of $87 million have been paid out. This number is expected to rise however to around 159-thousand workers when new payout schemes are rolled out by the Fund, including draw down for those who have been unemployed since October 2017.
On Fiji Airways, Koroi said therehave been no new talks for additional loans to the national carrier after it lent $53 million in March this year. He confirmed though that the airline had applied and granted a moratorium on interest payments. “Like any lender, we are assessing the situation that we have on hand now. Of course Fiji Airways plays a very important role for our tourism sector, we also have a lot of our own investments in the tourism sector, so we will have to assess that loan under the current environment that we have. Our facilities are well secured, in terms of the $53m that we lent recently was guaranteed by government.”
An invitation by Amalgamated Telecom Holdings(ATH) to existing shareholders to buy up more shares is still being considered by the Fiji National Provident Fund (FNPF).
FNPF is the major shareholder, owning around 72% of the telecom group.
"We are still assessing that investment," FNPF CEO Jaoji Koroi told Islands Business.
"It's a strategic investment for us. ATH has grown the past years into the Pacific and the rights issue is to fund that growth. Of course the environment now has changed (due to COVID-19) so we have to assess [it] differently," Koroi said.
ATH is listed on the South Pacific Stock Exchange (SPX) and announced late April an intention to raise F$126.76 million (US$58.32 million) via a 1 share for 6.66 rights issue, at a discount price of F$2 (US$.91) per share.
The rights issue, which was to have closed on June 18, has now been extended to July 17.
Around 8,000 members of the Fiji National Provident Fund (FNPF) now have less than F$35 in their General Account (GA) after exhausting it over COVID-19 assistance.
This was revealed by the Fund this week when it gave details of a second phase of assistance for members - to begin tomorrow (Friday June 5) with a payout of around F$1.7million ($220 each) to the 8,000 members.
"These are the members who came in during COVID 1 (COVID-19 Assistance Phase One) and have exhausted their GA balances. Why we have kept the $35? It is to cover their Special Death Benefits. So about 8,000 workers have between $0 and $35. For these 8000 members, the government will fully pay their assistance for the next five fortnights," said FNPF Chief Financial Officer Pravinesh Singh.
Phase 2, announced by government last week, will see FNPF members unemployed due to COVID-19 dipping again into their own accounts for a total of $1,100 per member, paced out in five fortnightly payment of $220 per fortnight, with those having less than $1,100 to be topped up by government.
Category 1 of Phase 2, which comes into force today, caters for 8,000 members, according to Singh.
While the first $220 will be directly deposited into their bank accounts this Friday, they will only qualify for the next fortnight's $220 and subsequent installments if they are able to verify, via their previous employer, that they are still unemployed.
Singh said the Fund expects total value of assistance for this first group to be at around F$8.8 million, if all 8,000 members qualify for the duration of the five fortnights.
Category 2 and 3 of Phase 2 will be activated on June 9, with total value dependent on number of applications approved.
The FNPF, a compulsory pension scheme for Fijian workers, maintains a 70/30 access rule for each member, where 70 percent of a member's account is preserved for retirement (Preserved Account) and 30 percent is for members to access for a list of approved benefits such as housing, unemployment and education(General Account).
According to CEO Jaoji Koroi, this 70/30 rule was instituted in 2012 following a reform of the Fund and this has helped build up members' Preserved Account from F$2.5billion in 2014 to F$4.72 billion at the end of June last year.