EPC recorded loss $12.2 million as of 31 March, 2022

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Due to a significant reduction in the capital budget for FY22/23, the Management has decided to put Tiapapata Hydro Plant on hold for this fiscal year.

The budget for this project is allocated to fund the new power station in Savaii given the growth in electricity demand.

This is according to the quarterly report for the current financial year covering January to March 2022.

The Corporation also recorded a Net Loss after Tax of $7.8million during the quarter, leading to a YTD NLAT of $12.2 million.

In the previous quarter, due to the increase in fuel cost as a major expenditure and the decrease in revenue compared to budget, the Corporation incurred a net loss of $310,224 for the first three months of FY2022.

ANNUAL REPORT 2020 

The Corporation since 2019 has encountered significant challenges driven by health pandemics namely the measles outbreak in October 2019 followed closely by COVID-19 in March 2020 with worldwide border closures and domestic lockdowns.

This is according to EPC’s latest annual report available for FY 2020.

The report says the uncertainty created by these events had significant macro-economic impacts on the Samoan economy and affected the Electricity sector by dampening consumption demand led by the large commercial consumers with the hospitality sector drastically affected.

“As part of the Government of Samoa’s economic response to the pandemic, EPC was required to assist Government’s stimulus efforts by providing Tariff relief in the form of a retail tariff reduction of $.10 sene per KWh for all consumers and 50% tariff reduction for a fixed rate for the hospitality sector.

“The total cost of the COVID-19 Government stimulus support for the period was $1.98 million, this cost was based upon the estimated sales forgone due to the usage charge component of the stimulus package.

“These significant pandemic events coupled with an evolving regulatory environment, onerous commercial agreements (Power purchase agreements – PPA) with Independent power producers (IPP), volatile international fuel prices placed pressure on EPC’s cost structure, increased risk and put pressure on the Corporations profitability.

“In addition to the Corporation’s normal business risk, an area of concern which will require resolution is the consistent underfunding of circa $1 million Tala per annum for Community service obligation (CSO) namely the Street lights which continue to place a burden on the Corporation’s working capital.

Notwithstanding, EPC continue to engage proactively with the Ministry of Finance to seek ways of alleviating the annual funding shortfall, as indicated EPC previously recommend that the underfunded CSO activities be set-off against EPC’s annual dividend to its shareholder; i.e. the Government of Samoa. EPC will require the approval of Cabinet to do so.”

The report says that for the Financial year 2020, although the Corporation’s results were significant called down by nearly half, EPC still achieved a healthy profit for the year of $5.1 million.

“Based upon Government policy EPC should be looking to pay a dividend of $1.785 million Tala plus the CSO social dividend of $1.215 million = Total EPC Dividend of $3m is over and above the expectation of the Government Dividend Policy of 35% 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.”

The Corporation ended the year with a net profit of $5.1 million tala in 2020 down 57% or $6.5m million tala from the previous year’s profit.

The most significant factors driving the positive variance were:

  • The increased cost is driven by the Government of Samoa’s COVID-19 stimulus package for businesses and consumers of $1.98 million
  • Reduction of 16.2% or 8.05 million KWhs in hydro generation for the year. This negative variance was caused by several key hydro plants being damaged and thus requiring urgent repair and maintenance during the year. EPC has been tasked with reviewing and improving regular operations and maintenance of the hydropower plant to ensure this highly cost-effective renewable energy source is available for the benefit of the Corporation.
  • In addition, it was noted that Diesel generation increased by 11.3 million kWh (an increase of 11.8% year on year driven) by the rise in total demand of $156.8 GWh resulting in EPC increasing its diesel variable costs of diesel generation by $5.4 million Tala (7.25%).