Abstract

Tonga Power Limited, a 100% state owned public enterprise that generates, distributes and retails electricity in the Kingdom of Tonga finds itself at a significant crossroads related to its strategic change in 2015. The government established Tonga Power Limited in 2008 after violent riots in the countries capital forced political reforms. Tonga Power Limited was established in the hope that electricity services could be improved given the integral nature of this service to economic and social prosperity in the nation. However, 2008 was the year of the great oil crisis and with electricity being produced 100% from fossil fuels in Tonga the prices of electricity were the highest they had ever been. The government recognized the need to move away from fossil fuels to gain greater economic independence from the global oil price. The Tonga Energy Road Map (TERM) expected Tonga Power Limited to be the main implementer as it on average used 30% of the fossil fuel imported into the country. The 10-year TERM started in 2010 and by 2020 the goal was to have 50% of all energy requirements in the Kingdom of Tonga come from renewable resources. Without any hesitation Tonga Power Limited embraced the goals set forth by the government recognizing the global trends to move toward renewable electricity generation. However, unbeknownst to Tonga Power Limited was the significant fragmentation of the industry within the Kingdom itself that became a major barrier to the strategic change. Also, that business models that promoted renewables in other countries simply did not fit with the customer base the lack of subsidies from government or the financial ability of Tonga Power Limited. Add an ever-changing leadership regime leading up to 2015 and the choices made by Tonga Power Limited in 2015 will prove to be some of its most momentous.

Detailed information