Stimulus packages under the SOE - Do we have the money for it?
Prime Minister Fiame Naomi Mataafa announced the State of Emergency on Monday midday. There was an unexpected set of conditions, more of a stimulus instead of the restrictions people were expecting.
Did we need to have a State of Emergency declared? The orders outlined could have easily been achieved without a declaration. The bottom line is that we continue to rely on aid and even when the nation is in a crisis, we continue to look at donors to bail us out. It is time to think beyond aid, especially for a crisis like the one we are facing.
This is also an indicator that if the nation were to be hit by a natural disaster, we may have to wait on development partners to get relief outside of the first responders. The reliance on aid and unwillingness to invest directly in infrastructure is one of the main causes why so many government assets and public infrastructure are deteriorating.
It looks like the Samoa National Provident could be used to help people. This is government giving back what people already have. If such an approach is taken, people will just use their money and will come at zero cost to the government. It has been done elsewhere.
The government announced lifting tax and import duties on generators and other electricity-related equipment, including renewable energy systems, procured by EPC, households, businesses, and organisations for electricity generation.
This is good news for the population dealing with the high prices set on such items. This would provide relief to many hoping to procure generators, solar lighting, batteries and hopefully candles. We have to keep in mind the part of the population that cannot afford the generators and the solar panels.
The government has bound itself in the SOE by saying they would ensure the timely arrival and operation of temporary generators before the end of April, ahead of the permanent units scheduled for August and along with the necessary overhaul parts for Fiaga. This means that it would be either September or October until the power supply is normalised.
The government has also announced the possibility of stimulus packages, although how this would work has not been made known. Perhaps it would be through grants or allowing people to take a certain portion out of their superannuation for individuals and households. More will be known about this in the coming days and many will be eagerly waiting this if it involves cash handouts.
It is known that if the power outages continue to impact businesses and private organisations, many could be looking at closing down. The smaller businesses that rely on electricity have indicated that. The bigger ones including major wholesalers said they are considering increasing prices because powering generators for their operation would eventually lead to increased costs. Hopefully, the stimulus packages for businesses allow them to stay in operation and continue contributing to the economy. This may be in the form of loans.
The government has said that it would work to Secure additional and targeted financial and technical support to assist EPC in implementing medium to long-term remedial works. This means that talks are already underway with development partners to fund stimulus packages and or aid in the procurement of generators and spare parts. This is one of the main reasons why a State of Emergency had to be declared.
The Minister of Finance Lautimuia Uelese Vaai had indicated earlier that the government would need to step in and provide support through concessional lending from development partners. This can only be achieved when a State of Emergency is declared.
People are already suffering because of the energy crisis. It is welcoming that the emergency orders will not burden them more by calling on them to make more sacrifices. This situation exists because of the indecisions of the previous and present governments including the lack of maintenance on important electricity infrastructure. For political point scoring political parties will point fingers and shift the blame but the fact remains that both are to be blamed.
Power rationing will continue as planned and the next 30 days will empower certain government authorities with extraordinary powers.
The bill for the spare parts for the four generators is $10 million while the six-month hire of generators for the short-term solution is over $1 million. The nation was told that the Electric Power Corporation has the funds for the short-term solution but it needs government help for the long-term solution. The procurement is around $10 million, this does not include all other associated costs such as installation costs and the overtime hours that would accumulated by the hard EPC staff.
Let us see if the State of Emergency will help achieve a stable power supply and fix the power grid within the specified timeframe.