Aitutaki businessman Allen Mills, who was recently fired by the governing Cook Islands Investment Corporation from chairing APSA, along with two other board members, says how the accumulated funds are used should be governed from Aitutaki for the benefit of Aitutaki.
CIIC was recently accused of attempting to access funds accumulated by APSA and bypassing the required supporting resolution from the APSA board and sign-off by the Ministry of Finance.
“All the people of Aitutaki have paid this out of their pockets…pensioners, growers, the least well-off as well as businesses employing locals. It’s the people of Aitutaki’s money as that is the only way the money got into the bank. No grants. No funds from any government agencies and so on.
“I think people should know (about) this and be able to stand against it being used for anything other than what (it) is intended for.”
CIIC has been blamed by Mills and government sources for interfering in APSA operations and costing the taxpayer significantly for allegedly bungling a tender process.
About three years ago APSA was given permission to build a tank farm and retaining walls for the fuel tanks. Specifications were set by APSA for the two-sector project that was to be to turn-key installation and include ring mains connecting the five 25,000 litre fuel tanks. Two tenders were received from New Zealand and another from Rarotonga for construction of the fuel tanks. Just one bid, by a local company, was made for the bund walling.
“APS selected the best and most economical option and forwarded this to CIIC. CIIC dismissed this tender and chose to re-tender through another government agency,” says Mills. That government agency is understood to be a tendering committee appointed by CIIC. Mills said all the tender specifications were handled in Rarotonga and APS board members were not permitted any role in the process.
Although the same parties were tendering in the second round, the bund walling bid increased by $30,000 despite no changes in specifications or requirements. The same applied to the local tender for the tank farm.
“For some reason unknown to APS, this tender round was also cancelled and the third tender round run, again from Rarotonga with no input allowed from APS, although we did point out the tender documents were missing items such as the ring main and isolating values,”
Again the same parties submitted tenders in the third round. Again the bund walling price increased by another $31,000 and the fuel farm tanks by $70,000.
The ring mains and isolating valves were not included in the fuel farm tank package, instead piping was supplied which had to be fitted on-site at an extra cost of $17,500 that APSA had to cover. Freight to Aitutaki was not included in the tenders subsequently accepted by the tendering committee.
“From the first tender round, the cost greatly increased whereas had APS been allowed to run its own tender we would have saved APS and the country considerably.”
Mills estimates there would have been an overall saving of $167,500.00 to the country and installation achieved sooner.
The tendering process and subsequent cost increases made at taxpayer expense could fall within the criteria of the Public Expenditure Review Committee for investigation, he says.
“What many people don’t realise is that apart from APS being the life’s blood for the island, businesses and tourism it also has a controlling role in (direct to Aitutaki) shipping,” says Mills.
He says existing fixed contracts for the supply of fuel direct from New Zealand to Aitutaki enables the Authority to buy it at a cheaper rate. This has resulted in regular shipping to the island and an obligation through fixed contracts for the vessels to offload fuel.
“If the ships were not bound by the APSA contract, in the event of light loading or rough weather they would just miss out Aitutaki, causing food and other shortages.”
Government is looking to change all that by centralising fuel purchasing and distribution from Rarotonga, which would result in fuel costs increasing for APSA and risk the regular shipping to Aitutaki, Mills adds.
The Aitutaki businessman says another critical issue to Aitutaki power supply is the requirement for regular overhauls for each of the three generators. Two need to be running or available to run all the time, and a third on stand-by, he says.
“If we have one out for major over haul then we have no standby. If there is a breakdown with one of the other two during this time, the island would have reduced power or rationed power.”
Mills explains if a fourth engine was purchased which doesn’t have to be a complete “genset”, then there would be a standby than could be fitted within two days.
“This would be done (in the event of) major overhauls or a breakdown. With the reserve standby the maintenance program can be adjusted and be considerably cheaper.”
It is understood APSA has been directed to hire an engine during overhauls at over half the cost of buying one. Mills says it doesn’t make commercial sense to do this.
He says as Aitutaki people paid for their power, their money should be invested back into ensuring they are provided with an efficient power service, and that there are funds set aside to get renewable energy introduced.
“If we had not been blocked from using our own funds much of the upgrading marked to be done would have been completed by now resulting in a much safer and reliable distribution and a new generator engine would have been here by now.”
Mills believes people on Rarotonga, “…do not know what we need and probably are not qualified to judge what we need anyway.”
In the revocation notices issued by CIIC to the three board members, all were thanked for their “excellent and hardworking contribution to the successful operation of the Authority.”
The warrants of appointment made in 2014 did not have a time limit and were to remain in force until such time as an act was passed establishing the Aitutaki Power Supply Authority as a stand-alone State Owned Enterprise.