THE cost of electricity in Solomon Islands is the highest in the region, and one of the highest in the world.
Leader of Opposition Hon Matthew Wale made this statement in Parliament recently when speaking on the SIEA Annual Report 2021.
Hon Wale said the high cost of electricity is an unacceptable situation that has lasted for too long.
He said even with the lower fuel price, the cost of electricity still remains the highest in the region.
The Opposition Leader said it is projected that with the commissioning of Tina Hydro in a few years’ time, the cost of electricity would be reduced by 40%.
“Whilst any fall in the cost of electricity is a good thing, even after the 40% drop, the cost of electricity in Solomon Islands will be amongst the highest in the region,” he said.
Hon Wale said serious government policy responses are needed to reduce the cost of electricity.
“As unpleasant as it may sound, it may be time to consider introducing competition into the energy sector. Should generation and distribution of electricity remain in one monopoly? Is it time to consider other providers of wholesale energy in generation?” he questioned.
The Opposition Leader said SIEA has been profitable for many years, since the reforms brought in by the SOE Act and improved governance.
However, he said the levels of profits are too high, given the high cost of the service.
“I can’t see how such high levels of profitability are justified in the Solomon Islands economy. This is a matter that requires policy direction from the government,” Hon Wale suggested.
He said the cost of electricity is influenced by the tariff structure and decisions.
The Opposition Leader said it is time to review the tariff scheme to ensure viability of SIEA, but also reduce the cost of electricity.
“Energy is important to the economy, and is an important catalyst for private sector growth. The high cost of electricity and its reliability or otherwise are disincentives to growth in private sector investment in the economy,” he said.
Hon Wale has recommended the Government to explore policy responses targeted at growing the energy sector, reducing the cost of energy, increasing the reliability of services, and expanding the market to include more accessibility, reliability and cheap electricity.