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Energy

Fiji's energy situation is characterized primarily by a high reliance on imported fuels. Therefore, there is a need to act now to reduce the reliance on imported fossil fuels through renewable energy while increasing the efficiency of use of current fossil fuel supplies. Challenges will remain in the short?term, but planning and implementing suitable measures today will enable substantive reductions in the medium to long?term. This will improve Fiji's macro?economic stability by making it less vulnerable to volatile international fuel prices and high import payments. Fiji's two other main sources of energy are biomass for cooking and hydropower generated electricity.

Fiji's energy demand is driven by household consumption of electricity and transport fuels and by the need of its major industries, in particular agriculture, forestry, tourism, and mining. Demand has increased over the past decade and is likely to continue increasing, although the rate will depend significantly on the effect of future political developments on Fiji's economic growth.

The 2013 National Energy Policy (NEP) provide guidance in the promotion of access to affordable and sustainable energy service for our rural areas, small businesses, disadvantaged households, schools, clinics and a range of other community establishments. The strategic policies focus on seven key areas that includes:
  • Governance and Institutional Strengthening;
  • Grid Based Power Supply;
  • Rural Electrification;
  • Renewable Energy;
  • Transport;
  • Petroleum and Biofuels; and
  • Energy Efficiency.
The Department of Energy (DoE) is responsible for energy policies and plans, energy efficiency and conservation, renewable energy (RE) and rural electrification. Some of the projects implemented including 500 diesel generators, 4600 Solar Home System and biofuel projects in rural areas. The Prices and Income Board (PIB) regulates wholesale and retail prices of motor spirit (also called gasoline or petrol), kerosene and automotive diesel oil (ADO) and influences to some extent the technical specification of fuels. Ministry of Finance and National Planning is responsible for establishing and enforcing maximum petroleum fuel prices but private oil companies import and distribute fuel products.

INVESTMENT OPPORTUNITIES
Government believes that renewable energy can in many cases provide the least cost energy service, particularly when social and environmental costs are included, and will therefore provide focused support for the development, demonstration and applications of renewable energy. In particular, government will facilitate the sustainable production and management of solar power and non-grid electrification systems, such as the further development of solar home systems (SHS), solar pump water supply systems, solar systems for schools and clinics and solar water heating systems for homes and institutions. All of the above will be largely targeted at rural communities.

BUSINESS OPPORTUNITIES IN THE ENERGY SECTOR
Government will continue to promote power sector development in order to meet future needs and improve quality of supply. Reliable and affordable electricity is considered a major element of economic and social development in both urban and rural areas. Government expects electricity tariffs to become increasingly cost-reflective at all levels both within the national grid and in off grid rural electrification schemes. Power projects may be associated with adverse impacts and if long-term sustainability is to be achieved, these must be managed.

The Fiji Electricity Authority (FEA) will remain the sole operator of the national grid; however government will continue to reform the electricity industry with the aim to improve the economic efficiency of the sector and to establish an environment that promotes participation by private investors and lenders.

The Government is providing incentives to Independent Power Producers (IPP) to sell electricity to the FEA grid. At present Tropik Woods and FSC are the government owned IPPs who generate electricity in Fiji. The Commerce Commission of Fiji has raised IPP tariff rate to 33.08 VEP per unit. This has indeed generated lot of interest from potential investors to supply electricity to the grid. There are other IPP's that have signed a Power Purchase Agreement (PPA) with FEA and have not commenced operations.

INCENTIVES
Bio – Fuel Production
  • 10 year tax holiday is available to a taxpayer undertaking a new activity in processing agricultural commodities into bio-fuels as approved by the CEO from 1 January 2014 to 31 December 2026. To qualify, the taxpayer must have;
  • Minimum level of investment of $1,000,000;
  • Employ 20 local employees or more for every income year;
  • Duty free importation of plant, machinery and equipment for initial establishment of the factory; and
  • Duty free importation of chemical required for biofuel production.
Renewable Energy Projects and Power Cogeneration
  • 5 year tax holiday is available to a taxpayer undertaking a new activity in renewable energy and cogeneration power projects.
Imported Items
Energy Efficient Equipments
  • 5 year tax incentive (only VAT paid) for imported energy efficient equipments including energy saver lights, bicycles, other electrical appliances, materials, etc.
Renewable Energy Equipments
  • 5 years tax incentive (only VAT paid) for imported renewable energy equipments including solar, hydro, biomass, bio gas, Wind, solar water heaters, solar water pumps, geothermal, etc.
FOREIGN INVESTMENT REGULATION FOR THE ENERGY SECTOR IN FIJI
Under the 2009 Foreign Investment Regulations (FIR) and Foreign Investment (Amendment) Regulation 2013 undertaking any activities in energy sector does not have any minimum investment requirement.