PACIFIC UTILITIES PUSH FOR BULK FUEL BUYING
‘We cannot operate in isolation any more’

By Tara Carr

RAROTONGA, Cook Islands (Cook Islands News, Aug. 19, 2008) – There is an urgent need for regional action to be taken on fuel prices as high diesel prices are harming the viability of Pacific power utilities, their communities and consumers.

This declaration was made as part of the communiqué from the 17th annual Pacific Power Association conference held in the Cook Islands last week.

According to Te Aponga Uira chief executive Apii Timoti, the managers of the power utilities from the Pacific region who attended the conference recognise that a regional approach must be taken to resolving the issues they face as power utilities.

"We are very small by global terms and in the challenges that face each one of us, we need the support of one another. We cannot operate in isolation of each other any more", says Timoti.

Consumers taking a hit because of rising fuel costs were also discussed. However, it was agreed that the postponement of fuel price increases into the power utility tariff undermines the utility's ability to successfully raise capital for energy projects and cover necessary fuel expenses.

For the regional action plan to begin, a majority of PPA utility chief executives have agreed to a fuel price-hedging programme involving the World Bank, the UNDP (United Nations Development Programme) and the OPEC (Organisation of the Petroleum Exporting Countries) Development Fund.

"By combining utility fuel purchases there would be sufficient gallons/litres to mitigate the effects of oil price shocks. Individual utilities were too small to do this individually.

"The PPA would work with the Forum Secretariat and governments to develop bulk fuel procurement arrangements to reduce costs. It was also agreed that the PPA would coordinate action to improve utilities' efficiency, promote the use of renewable energy and develop demand side management to help individual and business consumers reduce their energy costs," the communiqué states.

Assistance for this is already coming from the European Union (EU), US Department of Interior (USDOI) and the chief executives have called for more donors to assist the PPA in practical action.

The PPA, a member of the Council of Regional Organisations in the Pacific (CROP) is tasked with implementing energy efficiency and human capacity improvements in power utilities.

Among the countries represented at last week's conference were the Federated States of Micronesia (the States of Pohnpei, Kosrae and Yap), Republic of the Marshall Islands, Papua New Guinea, Samoa, Tuvalu, American Samoa, Solomon Islands, New Caledonia and French Polynesia.

The regional action plan is to be prepared for the Pacific energy ministers meeting in 2009 in Tonga.

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