E.P.C. still red despite administration costs spiking 40 per cent
Administration costs for the Electric Power Corporation (E.P.C.) spiked more than 40 per cent for 2018 Financial Year, or an increase of $3.43 million tala.
The administration costs of $11.25 million were confirmed by E.P.C. Board Chairman, Pepe Christian Fruean, in the E.P.C.'s annual report.
Despite the burgeoning administrative bill, the annual report highlighted the Corporation ended the year with a net profit of $5.1 million Tala.
In the report, Pepe explained the administration costs increased as a result of Government charges of $2 million tala for Goods and Services Tax equalisation collected by the Ministry for Revenue.
A licensing fee of $859,000 levied by the Office of the Regulator also added to the Corporations costs.
“The Corporation’s board has directed management to ensure that these new recurring costs are properly budgeted moving forward so as to lessen the impact on the corporation’s financial statements," Pepe said in a statement contained in the annual report.
“Facing increasing costs pressure, the Corporation remains committed to delivering on its objective of improving the affordability of electricity for the people of Samoa, by ensuring that the tariffs are structured in such a way that all consumers are bearing a fair share of the Corporations significant investment in world class electricity infrastructure across Samoa."
Pepe stated they have started the process of tariff reform by improving the structure of tariffs for the 100 largest industrial and commercial consumers.
“We look forward to working with the Office of the Regulator to continue this process of tariff reform for smaller consumers in order to deliver the fairest and least-cost outcomes for Samoa’s electricity consumers.”
The most significant factor driving the E.P.C.'s strong bottom line was the increased generation of hydro power.
“Hydro generation was 62 per cent higher compared to 2017 (primarily due to the commissioning of the refurbished hydro power stations at Fale ole fee and Lotosamasoni); the increased hydro generation output allowed the variable costs of hydro production to reduce by 28 per cent," the report said.
This also meant that EPC reduced its diesel generation production in 2018 by 17%, and subsequent reduction of variable costs of diesel generation of $4.2 million Tala,” says Pepe in his report.
The Chairman also shared the thirty sixth Annual Report for the year ended 30 June 2018 the Corporation faced another challenging year driven by the effects of unpredictable weather patterns including natural disasters namely Tropical Cyclone Gita in February 2018 which caused substantial damage to EPC infrastructure.
“As well as a dampening of Electricity consumption during the subsequent restoration and rehabilitation period, volatile international fuel prices also drove the costs, increased risk and put pressure on the Corporations profitability.
“Notwithstanding those significant challenges, the corporation still achieved a positive profit for the year and subsequently dividend of $2 million Tala in line with Government Dividend Policy whilst delivering on a range of key infrastructure projects, community service obligations, and achieving its objectives of improving service delivery and network reliability, whilst ensuring affordable electricity for all Samoans.”
Pepe indicated that despite the challenges currently being faced, and managed, by the Corporation, they remain committed to a vision of improving service delivery and network reliability, whilst ensuring affordable electricity for all Samoans.
“These objectives can be realised through a structured rollout of the Corporation’s renewable energy program and focused operational optimisation,” he said in the report.