THE World Bank and Tonga signed a $5.1 million grant agreement on Wednesday to implement the Tonga Energy Road Map, which is expected to improve the access, efficiency and cost of energy for Tonga's 104,000 people.
Australia, through the Pacific Region Infrastructure Facility, is contributing $4.465 million of the total grant.
Fuel imports in Tonga account for one quarter of the country's total imports and one tenth of its GDP. This heavy dependency on imported fuel has taken its toll on the country, exposing it to extreme volatility and shocks that have seen fuel prices increase by 60 per cent in recent years. These shocks have passed on high costs that place a heavy burden on poor households, affect livelihood opportunities, and raise the cost of running businesses and services, like hospitals and schools, the World Bank said in a statement.
"The grant will be used to support the implementation of the Tonga Energy Road Map (TERM) — a 10-year plan to help reduce Tonga's vulnerability to oil price shocks, and achieve an increase in quality access to modern energy services in an environmentally sustainable manner. Activities that will be implemented under this project include: electricity and petroleum sector policy advice aimed at improving energy supply and efficiency; legal and regulatory reform; and technical assistance towards developing renewable sources for electricity generation, and a petroleum price management framework.
"Upgrades to electricity networks and systems operations procedures will be undertaken on Tongatapu, Vava'u and Ha'apai.
"These activities will lead to more efficient use of energy resources, resulting in lower, more predictable energy bills, improved quality of electricity services and improved access to affordable electricity for households, businesses and service providers," the statement said.
"Providing effective, accessible and affordable energy to Tonga is a fundamental building block in the country's development and will transform livelihoods, and reduce the cost of living for the Tongan people," said Ferid Belhaj, Country Director for the Pacific Islands at the World Bank.
"Investment in clean and affordable energy and energy conservation, to reduce vulnerability of Pacific countries to high oil prices is a key priority for the region. Australia is pleased to support the Tongan people to diversify the sources of energy available to them and reduce their vulnerability to increasing energy costs," said Thomas Roth, the Australian High Commissioner to Tonga.
"I would like to thank the World Bank for their continual support not only through the Grant for the TERM but also support to the State Owned Enterprise Utility, Tonga Power Limited," Tonga's Prime Minister Lord Tui'vakano said.