22 May 2006

Out of court settlement under way over power issues in Tonga

2:06 pm on 22 May 2006

An out of court settlement is being negotiated in Tonga between Shoreline Power, the Tonga Electric Power board and the People's Democratic Party, the PDP.

The president of the PDP, Sione Teisina Fuko, told Matangi Tonga that it had served a writ claiming that the Tonga Electric Power Board did not have the right to lease the government power generation facility to Shoreline Power.

It also stated that a rise in the price of electricity in early 2005 was illegal, therefore it was demanding Shoreline Power return the power generation facility to government.

In response, Shoreline offered to return the facility but demanded 29.4 million U.S. dollars for its investment.

Teisina says the money that the government sought to borrow from China to buy back the power supply from Shoreline was a crazy figure.

He says the reason they agreed to negotiate for a settlement out of court was because the government was concerned that Shoreline might pull out all its power investments if a court hearing was held, and people might be left without power for a long time.