New Ten Year Plan Announced to Reduce Electricity Costs in Tonga
NUKU'ALOFA, August 22, 2012 - The World Bank and the Government of Tonga today signed a US$2.9 million grant agreement to implement the Tonga Energy Road Map, which will improve the access, efficiency and cost of energy for Tonga’s 104,000 people. The Government of Australia, through the Pacific Region Infrastructure Facility, is contributing US$2.5 million of the total grant.
Fuel imports in Tonga account for one quarter of the country’s total imports and one tenth of its GDP. This heavy dependency on imported fuel has taken its toll on the country, exposing it to extreme volatility and shocks that have seen fuel prices increase by 60 percent in recent years. These shocks have passed on high costs that place a heavy burden on poor households, affect livelihood opportunities, and raise the cost of running businesses and services, like hospitals and schools.
The grant will be used to support the implementation of the Tonga Energy Road Map (TERM) - a ten year plan to help reduce Tonga’s vulnerability to oil price shocks, and achieve an increase in quality access to modern energy services in an environmentally sustainable manner.
Activities that will be implemented under this project include: electricity and petroleum sector policy advice aimed at improving energy supply and efficiency; legal and regulatory reform; and technical assistance towards developing renewable sources for electricity generation, and a petroleum price management framework. Upgrades to electricity networks and systems operations procedures will be undertaken on Tongatapu, Vava’u and Ha’apai.
These activities will lead to more efficient use of energy resources, resulting in lower, more predictable energy bills, improved quality of electricity services and improved access to affordable electricity for households, businesses and service providers.
“Providing effective, accessible and affordable energy to Tonga is a fundamental building block in the country’s development and will transform livelihoods, and reduce the cost of living for the Tongan people,” said Ferid Belhaj, Country Director for the Pacific Islands at the World Bank. “We are committed to working with the Government to bring affordable energy solutions to homes, businesses, hospitals, schools and beyond, and are committed to doing so in cooperation with our strategic partners in the Pacific, Australia in particular.”
“Investment in clean and affordable energy and energy conservation, to reduce vulnerability of Pacific countries to high oil prices is a key priority for the region. Australia is pleased to support the Tongan people to diversify the sources of energy available to them and reduce their vulnerability to increasing energy costs,” said HE Thomas Roth, the Australian High Commissioner to Tonga.
“I would like to thank the World Bank for their continual support not only through the Grant for the TERM but also support to the State Owned Enterprise Utility, Tonga Power Limited,” said Lord Tui’vakano, Honourable Prime Minister. “The World Bank was there at the beginning of the creation of the TERM and has played an essential role as Lead Development Partner Coordinator, which has ensured continual engagement and support by Tonga’s development partners.”
The TERM is the result of a year of intensive dialogue between Government, and other energy sector development partners. The project will be implemented by the Tonga Roadmap Implementation Unit and Tonga Power Limited. The Asia Sustainable and Alternative Energy Program Multi-Donor Trust Fund (ASTAE) is providing US$0.4 million towards the total grant.