Energy / Energy sector development and institutional reform

The proposed TA will have two distinct components. First will be the development of capacity at the Department of Energy to cope with its expanded mandate to regulate the energy sector. The second component will focus on developing the planning capacity at DoE to identify and prioritize sector investments to provide for security of supply, increased renewable generation, and expansion of electricity service to currently unserved Fijians.

The regulatory institutional capacity development component will identify and provide recommendations and consultancy support for: secondary legislation (implementing regulations) necessary for the establishment of the regulatory function within the Department of Energy (including drafting of proposed legislation and/or regulations); organizational structure, staffing profiles, skills and competence matrices, and training requirements; and material resource (e.g. budget) requirements for the newly-created regulatory unit within the Department of Energy. This component will be complemented by TA-sponsored training for key Department of Energy and other relevant Government of Fiji representatives in recognized international training programs on public utilities regulation (e.g. the Public Utility Research Center/World Bank International Training on Utility Regulation and Strategy)

The second component will equip the Department of Energy to develop an electrification master plan (EMP) by establishing the underlying policy framework and tools for identifying, prioritizing, selection, and implementation of discrete electricity expansion investments, i.e. the screening criteria for project identification and prioritization and the capacity to apply them. For the purposes of building this capacity and as a demonstration of the practical application of these tools, the TA will develop preliminary feasibility studies and project definitions for a limited number of candidate projects identified with the involvement of Department of Energy personnel.

Regulatory oversight of the sector is weak. Tariffs are authorized by the Fiji Commerce Commission, but the manner in which prices are reviewed is not transparent and does not offer the long-term certainty and predictability that investors (private and state-owned corporatized FEA alike) require. Aside from rate-making authority residing with the Commerce Commission, FEA has operated as a self-regulating entity, retaining and administering licensing authority, developing and applying technical codes and standards, and defining rules and incentives for third-party generation.

The newly-announced National Energy Policy prescribes the transfer of significant sector regulatory authority from FEA to the Department of Energy (an arm of the Fiji Ministry of Transport, Works, and Public Utilities). Concurrently, the government has announced plans for the legal corporatization and partial divestiture of FEA, which will thereafter pursue a purely commercial agenda.

The lack of investment and limited regulatory oversight is exacerbated by the absence of any clear plans for development of the power sector. Without such plans, investors are not aware of opportunities and regulators cannot assess the reasonableness and efficiency of proposed investments and the tariff levels needed to deliver these.

The proposed TA responds to the government's request for ADB assistance to develop regulatory capacity and sector planning capacity within the Department of Energy.

Enhanced regulatory capacity at the Department of Energy

Enhanced sector planning capacity at Department of Energy.

1. Establishment of regulatory capacity at selected regulatory agency

2. Enhanced sector planning capacity at relevant government department

An international regulatory expert (individual consultant) is recruited to advise the Government of Fiji on the establishment of a public utility regulatory agency to oversee regulation of the power sector (output 1) and prepare a capacity-building program.

A consulting firm for output 2 has been recruited and will be mobilized by 1 April 2017 to develop a policy framework and screening criteria to identify, prioritize, select, and implement discrete renewable generation and network investments.