Minister Olo Questions GridMarket Role in Procuring Independent Power Producers for Samoa

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Apia, Samoa, February 13, 2023/Press Release – The Minister of Works Transport and Infrastructure (MWTI), Hon. Olo Afoa Fiti Vaai continues to question the involvement of GridMarket in the process of acquiring Independent Power Producers (IPP) for Samoa.

Hon. Olo recognizes that whilst the Memorandum of Understanding signed between the previous Government and GridMarket states that the company receives no compensation from the State of Samoa, he also believes that there is no such thing as a “free lunch” in arrangements like this.

Extracted from the MOU signed in 2019 by the Ambassador/Permanent Representative of the United Nations in New York at the time:

“In consideration for the GridMarket providing such GridMarket Services without receiving compensation from the Independent State of Samoa.

“The Independent State of Samoa acknowledges and agrees that it intends to pursue the Clean Energy Initiative and that any Clean Energy Project(s) identified through or in connection therewith will be pursued and sourced solely through the GridMarket platform and only with solution providers agreed in good faith between the Independent State of Samoa and GridMarket.”

“This agreement signed by the previous Government with GridMarket looks very much like a middleman situation to me,” said Hon. Olo.

“The previous Government brought them in to facilitate the processes between the Government of Samoa through the Electric Power Corporation (EPC) and the IPPs, but when we already have the capacity within EPC to do this.

“This MOU guarantees that they will be the sole middlemen for every single procurement process the Government of Samoa will engage in for more IPPs in the future. Why? For what reason?”

Hon. Olo reiterated that while GridMarket is not directly getting compensation from EPC, he understands that the company will receive a commission from IPPs that intend to engage with Samoa to pursue any Clean Energy Project. And currently, the GridMarket is pushing a project with EDF-R, a French Solar Power Company.”

The Minister went on to clarify the questionable dealings between GridMarket, EDF and the previous Cabinet.

“EDF-R is proposing to charge .73 sene per kW/h (.252 cents USD) excluding tax, meanwhile, the EPC sells units to customers for .53 sene per kW/h, which is quite clearly a very bad deal,” said Hon. Olo.

“At the beginning of the process, EDF’s proposed feed-in tariff stood at .14 cents USD tax excluded (38 sene WST), however, due to a project implementation delay, the tariff was increased to 21 cents USD (56 sene WST) without tax. EDF later highlighted that there is another 20 percent increase in price due to the escalation of materials in the world, bringing the price to 25 cents USD (70 sene WST) without tax.”

“We know, no one works for free. The EDF will pay GridMarket and how will they do that? By charging more on their tariff, and who is paying for that? The EPC, and eventually the people of Samoa.

“GridMarket assures to be transparent and open, but to this day, they have not disclosed how much they will be getting out of this project from EDF.

“If they don’t agree with me, then tell me, how are they going to get paid? How much are they going to get from EDF once this project pushes through?

“To really paint a picture of how crooked this dealing is; GridMarket is recruited by the Samoan Government to supposedly support and advise during procurement processes for Green Energy initiatives or projects, then the winning bidder – in this case, EDF – pays GridMarket, while the Government of Samoa pays EDF.”

The Minister also questioned the legal processes undertaken by previous Government in efforts to implement this project.

Hon. Olo said he received a report from the Office of the Regulator spelling out the illegality of the ongoing project of establishing EDF in Samoa, which was enabled through Cabinet directives despite the Regulator’s advice to go through the proper processes.

The issue with the EDF goes back to 2020 in which the former Cabinet approved FK (20) 44 based on the Tender’s Board advice, from the EPC to go ahead with negotiating the EDF contract working closely with the Ministry of Finance, Office of the Attorney General and the Office of the Regulator. However, the negotiation was only between the EDF and EPC without regard to the provisions of the Electricity Act 2010 Part 7 Section 30 – “Regulator’s prior approval for entering into power purchase agreements with independent power producers –

(1) an electricity network services licensee who intends to enter into a power purchase agreement with an independent power producer must first apply in writing to the Regulator for approval.”

During the EDF contract negotiations, the Regulator was never consulted.

“I also want people to know that EDF was asking for a government guarantee of $100+ million,” Hon. Olo said.

“Why was the previous Government considering such an absurd ask? I have heard more than 10 companies with Green Energy project proposals since entering this Office and none have asked for a Government guarantee.”

The Minister of Works praised the former Ministry of Finance, Leasiosiofa’asisina Oscar Malielegaoi, for declining EDF’s ask for a Government guarantee.

“If the former Finance Chief agreed with this guarantee as EDF goes ahead with the installation of equipment, and a hurricane destroyed everything, who is going to pay?

“Our people will pay for it. The Samoan people will pay for that damage, affecting our national debt or national reserve levels.”

The Minister of Works said he refuses to make the same mistake as the previous Government who made the mistake of acquiring one of the current Solar companies in Samoa, selling a whopping .99 sene per kW/h to the EPC.

“These are the sort of things we are trying to get rid of, to ensure our people are not burdened by these stupid decisions made by previous Government,” he said.

“They accepted an IPP to sell units at such a high price of 99 sene WST while EPC sells it to customers at a much lower cost of 53 sene WST, causing financial difficulties for the Corporation. “And why is that? Because of the previous Government’s stupid mistake.”

The Minister of Works, Transport and Infrastructure also wishes to note that to this day, he has yet to receive a formal letter from GridMarket regarding this matter.