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Proposed power hikes in Samoa will hit business hard

A proposed jump in the price of electricity will hit businesses hard and halt export efforts.

Cries of outrage have been heard from the business community about a 10 percent rise in tariff rate proposed by Electricity Power Corporation (EPC).

EPC’s proposal sits with the Office of the Regulator.

Chamber of Commerce’s response now also with the Regulator: the proposed increase is too much and too sudden.

No doubt chamber hopes the proposal dies at the Office of the Regulator before it reaches Cabinet for endorsement.

Part of EPC’s justification for the rise is to pay for what chairman of its board, Fa’aolesa Katopau Ainu’u said was its “sizable debt” of between $100 and $200 million.

In Parliament recently Opposition leader Palusalue Fa’apo II said the debt was $US100 million ($235.3m) and the rise was to pay for it.

All Governments borrow for development, said Prime Minister Tuilaepa Sa’ilele Malielegaoi.

Only foolish governments don’t, Tuilaepa said.

EPC’s capacity to generate electricity was reached and new generators were needed, he said.

“If you sat here (Government benches) you would do the same thing.”

CEO of Chamber of Commerce Ane Moananu said the proposed rise will stop manufacturers from breaking into export markets.

Chamber members say the rise will affect businesses of all sizes, multinationals will look away from Samoa towards Fiji and other island states where the cost of doing business is lower, capital investment will be slowed, and “difficult staffing decisions will be made,” Moananu said.

“Our members tell us time and time again through consultations and surveys that the high cost of utilities is one of the most significant constraints to doing business,” she said.

“At the same time that the private sector is expected to drive economic growth and development, those who venture into the business sector are penalized by high tariff rates on essential services.

“How does this help us to reduce reliance on donour assistance and encourage sustainable economic growth locally?”

Chamber has told the Regulator that EPC’s calculations do not take into account the price impact on medium and larger businesses.



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