E.P.C. $140 million debt manageable - Minister
The Electric Power Corporation (E.P.C.) is confident they are able to service their borrowings which currently stand at $139.74 million, the Minister in charge of the state-owned utility, Papali’i Niko Lee Hang has said.
“The E.P.C.'s main loans are with Asian Development Bank (A.D.B.) and Power sector expansion project and before they release any loans, they conduct a financial assessment whether the Corporation can afford the repayment," the Minister said.
"And the loans with the A.D.B. are [on] soft terms and there are grace periods such as six or ten years.
"I want to emphasise the A.D.B. conducts assessments on the cash flow and revenue and from there they make a determination whether the Corporation can afford a loan".
The $139.74 million figure is outlined in the E.P.C.’s annual report for financial year 2018.
The report says that in 2002 the Government assisted the utility by restructuring its debts totaling $70.77 million tala with the Asian Development Bank by assuming responsibility for the repayments.
“The Corporation then entered into a loan agreement with the Government in 30 June 2001 for a period of 20 years which matures on 30 June 2021," Papali’i said.
“Principal loan repayments are $5 million tala per annum with interest to be charged at the rate of 5% per annum after a 5 year grace period that expired in June 2007 but has been extended to 30 June 2009.
"Therefore from 1 July, 2009 the Corporation will be recognizing interest expense. The Government bears the foreign currency exchange risk on the repayment of the loans to the principal lender being A.D.B.”
According to E.P.C.’s report the loan repayment in Financial Year 2018 amounts to $15,041,946 covering both principal and interest.
Papali’i told the Samoa Observer the Corporation needs the loans to carry out their mandated services.
“The main revenues are from the electricity bills and in saying that, the Corporation is charging the fees at the minimum for the public's benefit. And keep in mind the E.P.C. is not in the business to make a profit, they are a service provider," he said.
“They should not look at making a profit, rather providing the service at a minimum rate,” said the Minister. "And make their obligated repayments."