The three members of the Aitutaki Power Station Authority board were served revocation notices on Monday March 13 signed by CIIC chairman Mike Henry, four days after Henry told them their services were no longer required.
Reliable sources have told CI News that Henry’s intentions to sack the APS board were actually made known to the board over a month ago and before a resolution to do this was formally passed by the CIIC board.
The board was formally appointed in January 2014 and no limit was stated in the three formal warrants of appointment issued by CIIC. This contradicts claims by government that warrants were for just two years and had expired.
In addition, sources close to the issue say a 2014 Cabinet paper endorsed the appointment of chairman Alan Mills, Mii Makimare and Paul Henry as board directors and stipulated their appointments would remain in force until such time an Act making the Aitutaki Power Supply Authority Act a stand-alone statutory body came into force.
The opposition coalition and Aitutaki sources including mayor Teupo’o Bishop believe the APS board was sacked because the directors resisted demands from CIIC for the release of funds held in reserves without first having clearance from the Ministry of Finance.
CI News has been told the board also wanted Cabinet approval to sign off on any release of funds accumulated over the years.
Successive APS boards have been overseeing the day-to-day administrative and management functions of the Aitutaki power station since 2005, when these responsibilities were delegated by CIIC.
“This has assisted with the day-to-day operations,” said a statement from CIIC. The statement added the delegated powers were revocable at any time and could be taken over by CIIC.
It now appears the CIIC is taking over responsibility for the Aitutaki power station. The corporation is also working on introducing a new financial reporting and management process for APS with the Ministry of Finance.
According to CIIC, this is so APS will no longer be treated in the same way as a government ministry or department.
“Under this arrangement, APS will still be required to comply with the requirements of the MFEM Act and normal audit requirements that the Corporation itself is subjected to.”
CIIC says the arrangement will go a long way towards removing confusion over the status of APS and, more importantly, APS management will be able to implement the activities that it has in its business plan using accumulated funds.
These delayed activities arising from the inability of APS to access the funds have become urgent and must be implemented quickly in order to reduce the risk of disruptions to the APS generation capability and distribution network, says CIIC.
The APS structure is confusing. The Aitutaki entity is answerable to two government entities, CIIC and the Office of the Prime Minister (which deals with outer islands governments) with the prime minister co-signatory of APS annual business plans.
Then there is the Aitutaki Island Council which believes that under the Island Government Act it is responsible for the appointment of Crown agency boards such as the APS board. Mayor Teupo’o Bishop said it was the council that elected APS boards and the council believed the entity came under its authority.
Last year the council passed a resolution for the board to continue for another year. The revocation of warrants by CIIC has overridden that council decision and Bishop says it has caused much disappointment on the island.
APS funds are held in an investment account, with separate operations and chequing accounts. The Secretary of Finance and any two of the members of the APS board and general manager are account signatories.
The Financial Secretary and APS board members are required to co-sign any investment initiative of over $50,000, provided the expenditure is supported by an APS resolution.
CI News has been told APS placed its funds in investments in anticipation of establishing a solar farm on Aitutaki. Of note is that APS investments are at the disposal of MFEM and not the Aitutaki Power Station.
Aitutaki has ranked behind Atiu and Mitiaro in the government’s renewable energy initiative for the southern islands. CIIC says it is working on a project that will see installation of solar panels expected to generate 1 MW of electricity for Aitutaki, as well as additional back-up generation and battery storage.
Former CIIC head John Tini says the plan for APS has always been for incorporation and to create a stand-alone State Owned Enterprise. He says that between 2008 and 2009 CIIC purchased three efficient, customised and synchronised generators that would suit Aitutaki demands and conditions.
With its ability to integrate renewable energy and operating at 30 per cent fuel efficiency, Tini says the Aitutaki power station has excellent technology.
“That’s why we built it with those specifications because we were looking at the next 40 years. That was the vision. That vision has been fulfilled and now we seem to be wanting to wreck it.”
He says from being unprofitable, APS is now being able to cover operating and personnel costs. The natural progression, believes Tini, is to establish the Aitutaki Power Station as a SOE.
Government has budgeted $310,000 each financial year until 2020 to cover depreciation at APS. These funds have been transferred by the board to reserves. Included in the 2016/17 budget was $63,000 to cover the cost of installing more street lighting in Aitutaki.
This amount came out of the APS reserves. The street lights have been purchased but can’t be installed until machinery is repaired. The project is in partnership with the island council.
Tini, a chartered accountant, says it would be a shame to see the APS become a “political football”.
“But we seem to be getting to that and that’s why it’s so sad.”