Power play

Vanuatu’s power and water utility UNELCO politicises development projects unnecessarily

Written for the Vanuatu Daily Post

UNELCO’s star rose considerably in the days and weeks after cyclone Pam. Consistently rated among the best power companies in the Pacific islands, the utility exceeded even these high expectations, restoring electricity and water to critical locations sooner than expected in many cases.

Yesterday, the company confirmed that they had finalised a plan to complete the handover of Port Vila’s streetlights in time for Independence celebrations this year. In the past the municipality struggled to provide this service reliably. Now, the utility has promised more lighting for longer hours using more efficient technologies.

Soon, it will begin extending its power grid in Malekula to an estimated 300 new households.

But in spite of these successes, it still tries to duck around its responsibilities to the Utilities Regulatory Authority, and has reportedly appealed directly to politicians instead.

A 2004 World Bank report identified issues with the company’s tariff calculation methods. It recommended that an independent body be established to oversee power generation and water supply.

The Utilities Regulatory Authority made a number of missteps in its early days, but has since enhanced and regularised its operations, thanks partly to significant assistance from the Australian government’s Governance for Growth programme.

In spite of this, UNELCO seems unwilling to recognise the regulator’s authority.

On the 26th of June, Minister of Lands Paul Telukluk and the Parliamentary Secretary met with Hasso Bhatia, CEO of the URA. Also present were representatives from UNELCO. During the meeting, the minister claimed that he had assumed responsibility for energy.

At one point, Mr Telukluk spoke one-on-one with the URA CEO. Mr Bhatia denied that any policy discussion occurred during that conversation, claiming instead that the minister passed on a complaint concerning a URA staff member.

The following Monday, Mr Bhatia met with the Minister of Climate Change, Thomas Laken. The director of Energy was also present, and confirmed at that time that he still reported to Mr Laken. The Prime Minister’s Office later confirmed that this was indeed the case.

UNELCO, meanwhile, had written to Mr Bhatia, indicating that “the minister” was intent on seeing the Malekula grid extension move ahead. Asked which minister they meant, he said, “I don’t know. They just said, ‘the minister’.”

Around the same time, the regulator was informed by email that UNELCO had written to the Director of Energy, suggesting that an investment of 15 million vatu in material costs and 54 million vatu in labour was required for the Malekula extension to go ahead. They indicated that they wanted to have this investment considered during the next tariff review.

But the government plays only a very limited role in UNELCO’s tariff review. The URA is an independent entity. While it consults widely, it does not report to any ministry.

Mr Bhatia appeared bemused by the situation. “They should come to us,” he said. “Either they come to us before they start the project or after.” He added, “if they come to us before… then we can pre-approve the project and then we are committed… to the investment.”

He suggested that the Director of Energy should advise UNELCO to obtain pre-approval for the project. “It would be best to advise them to come to us first…. And he did that.”

The issue has been resolved to everyone’s satisfaction. But it appears the UNELCO’s attempts to ignore the regulator only served to complicate and delay a process that has broad support from all involved, including the URA itself.