Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697772152428.pdf (Fiji)
Annual Report 2015 www.fea.com.fj FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 CONTENTS Letter to the Minister 1 VISION ‘Energising our Nation.’ Key Outcomes for 2015 Members of the Authority Executive Management Team Corporate Governance Chairman’s Report Chief Executive Officer’s Report Review for the Year Financial Statements Statistics 3 4 5 6 8 12 15 33 63 MISSION ‘We aim to provide clean and affordable energy solutions to Fiji with at least 90% of the energy requirements through renew- able sources by 2025.’ VALUES • Customer focus • Honesty • Courage to do what is right for FEA • Team work • Individual accountability • Transparency • Innovativeness CONSTITUTION & FUNCTIONS The Fiji Electricity Authority was established, incorporated and constituted under the provisions of the Electricity Act of 1966 and began operating from 1st August of that year.
The Board Members of the Authority are appointed by the Government.

The Chief Executive Officer is an ex-officio Member of the Board and is responsible to the Members for the Authority’s management and for the execution of its policies.

The powers, functions and duties of the Authority under the Electricity Act are for the basic purpose of providing and maintaining a power supply that is financially viable, economically sound and consistent with the required standards of safety, security and quality.
A uniform tariff rate is charged for electricity used by each consumer group.

The tariffs are determined according to government policy and are designed to meet specified targets while achieving a reasonable rate of return for the Shareholder.

The Authority is entrusted with enforcing the Electricity Act and regulations, setting standards, examining and registering electricians, and is empowered to approve and licence suppliers to serve certain areas.
The Authority is also governed by the requirements under the Public Enterprises Act.

The front and the back cover images shows the Wainisavulevu Weir Raising Project which was commissioned by FEA in November 2015.

The raising of the weir by an additional 8 metres will increase the energy output from the two existing hydros namely Wainikasou and Wailoa hydro-electric schemes.

This project was completed at a cost of around $43M.
FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 30 May 2016 The Honourable Minister for Infrastructure and Transport Level 4, Nasilivata House Ratu Mara Road Samabula Suva.

Dear Minister, Annual Report 2015 I am pleased to present the Fiji Electricity Authority’s Annual Report for 2015.

The report provides a detailed summary of FEA’s performance in accordance with Section 25 of the Electricity Act Cap 180.
FEA recorded a profit after tax of $39.7M in 2015 which turned around the performance of 2014 where it recorded a profit after tax of $0.9M despite the El-nino weather pattern of a prolonged spell of dry weather continuing in 2015.

For the first time in FEA’s history the El-nino weather pattern significantly affected FEA’s operations for two consecutive years.

The profit recorded by FEA in 2015 was attributed mainly due to: • Good management of the Monasavu & Nadarivatu hydro schemes.
• Low fuel price recorded in 2015; and • Cost control measures put in place by Management.

FEA commissioned the Wainisavulevu Weir Raising Project (WWRP) on 3rd of November 2015.

The project increases the Weir level by an additional 8 metres to collect more water and will further improve the generation output from the existing Wainikasou and Monasavu Hydro Power schemes.
In addition to this, the Authority also commissioned the 35MW Heavy Fuel Oil (HFO) Power Plant at Kinoya Power Station on 14th November 2015.

This new diesel power plant which is run on cheaper HFO will bring about substantial cost savings to the Authority and more importantly it contributes additional generating capacity to the Central region of Viti Levu to ensure reliability & security of power supply.
The Authority continued to meet all its obligations and fulfil all its responsibilities whilst also continuing with the efficient operation of the entire power system.

On behalf of the Members of the Authority, I take this opportunity to thank the Government for its continued support and look forward to the same in 2016 and beyond.

Sincerely, - - - - - - - - - - - - - Nizam-ud-Dean Chairman Fiji Electricity Authority: Head Office 2 Marlow Street, Private Mail Bag, Suva, Fiji Islands.
Telephone (679) 3313333; Fax (679) 3311882 Page 1 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 The Honourable Prime Minister, Josaia Voreqe Bainimarama at the opening of the Wainisavulevu Weir Raising Project on 3rd November 2015.

This Project will produce additional 10 million units of electricity per year.

FEA invested around $43M to increase the height of the existing Wainisavulevu Weir.
Page 2 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Key Outcomes for 2015 FEA achieved a financial profit of $39.7M af- ter tax in 2015 as compared to a profit after tax of $0.97M in 2014.

The increase in profit recorded in 2015 as compared to 2014 was due to good management of the Monasavu & Nadarivatu hydro schemes,the low fuel price recorded in 2015 and cost control measures put in place by Management.
The thermal fuel cost decreased substantially by $39M to $141M in 2015 from the $180M recorded in 2014.

The shareholder value of FEA increased from $601M as at the end of 2014 to $647M at the end of 2015.

The total loans & bonds as at 31st December 2015 was $341M and have decreased by $14M compared to 2014.
FEA carried out Capex work totalling around $80.6M in 2015, repaid matured bonds and loans aggregating to F$56.8M and funded around $14.3M of the Monasavu Hydro Scheme half-life repair & maintenance work.

FEA achieved all of the Financial Covenants signed with the financial institutions namely ANZ Bank and FNPF despite 2015 being a tough financial year.

This ensured that Gov- ernment, being the sovereign Guarantor of the FEA loans, was not exposed.
FEA successfully early redeemed two high interest bonds amounting to $25.25M in 2015 which contributed to the reduction in debt level as well as the finance cost for 2015.

FEA’s total asset value exceeded F$1Billion at the end of 2015.

FEA has added significant shareholder value in the past few years.

FEA’s gearing ratio at the end of December 2015 was 29.50% (2014-32.15%) which is well within the international benchmark for power utilities of not more than 45%.
The de- crease in gearing level is a result of the profit recorded during the year and also due to the loan repayments of around $56.8M that was done in 2015.

Successfully renewed the Government Guar- antee facility for all FEA borrowings with the Ministry of Finance till December 2016.
FEA signed a Cooperation Agreement with European Investment Bank (EIB) to pro- vide technical assistance towards the de- tailed feasibility study of the Lower Ba Hydro Schemes and a study on the development and augmentation of the transmission net- work to improve the security and reliability of power supply in Viti Levu.

The total value of the technical assistance is around Euro 4.5M.
FEA spent a total sum of $28.7M on the con- struction of new rural electrification schemes, grid extension for commercial/industrial pro- jects, power system reinforcement works and contract jobs.

Of this amount $5M was au- thorized for construction of fifty four (54) rural electrification projects, $7.6M was authorized for seventy four (74) General Extension pro- jects for commercial and industrial customers and $5.7M was utilized for twenty seven (27) contract jobs.
A total amount of $10.4M was authorized for twelve (12) distribution power system reinforcement projects.

the Hydro Power Stations located in the in- terior of Viti Levu is not available due to cir- cumstances outside the control of FEA.

FEA spent $70.3M on this project.

Completed the construction of a 11kV/33kV substation at Kinoya at a cost of around $9.3M to enable the evacuation of power from the new 35MW HFO Power Plant in Kinoya.
FEA completed Stage 4 of the Electrical Pro- tection Review Program of the entire FEA power system in 2015 to ensure safe and re- liable system operations.

Achieved a Controllable System Average Interruption Duration Index (SAIDI) for un- planned outages of 412 minutes against a target of 700 minutes.

Achieved a Controllable System Average In- terruption Frequency Index (SAIFI) for cus- tomer’s power supply interruption of 5 times against a target of 15 times.
The average time that a customer is without power per in- terruption is measured by the Customer Aver- age Interruption Duration Index (CAIDI).

This index was 82 minutes in 2015.

Achieved a record high ICT up-time system performance of 99.89% against a target of 99.80%.

Carried out a detailed electricity tariff study to establish tariffs that will enable the successful execution of FEA’s 10 year Power Develop- ment Plan.
Completed the SCADA audit in 2015 and rectified all defects to improve power system reliability.

Completed a comprehensive review of the Organisation’s Top Business Risks and im- plemented strategies to mitigate the risks.

This reduced the ratings of our top 20 busi- ness risks by 20%.

Completed the new the construction of 33kV/11kV substation off Knolly Street in Suva.
Further, the work on the replacement of the ageing 12km 33kV underground cables that supply Suva City and the nearby suburbs commenced and is scheduled for completion in stages by 2016.The total cost of both these projects is around $17M.

Completed the construction and commission- ing of the 35MW Heavy Fuel Oil (HFO) Gen- erator Sets at Kinoya Power Station.

These Heavy Fuel Oil generators will be operated to replace the more expensive Industrial Die- sel Oil (IDO).
Furthermore, these HFO Gen- erators will serve as security for the Central Division in the event that power supply from Commissioned the Wainisavulevu Weir Rais- ing Project (WWRP) on 3rd of November 2015.

The raising of the weir by an additional 8 metres will increase the energy output from the two existing hydros namely Wainikasou and Monasavu Hydro-electric Schemes and is expected to achieve a fuel savings of around $4M per annum.
Commenced with the construction of the new 33kV/11kV Zone substation at Volivoli (Raki- raki), the 33kV transmission line from Tavua to Volivoli and the distribution power line from Nayavu to Waimecia.

The entire project will be completed at a cost of around $19M which is being jointly funded by the Government of Fiji and the Fiji Electricity Authority.

Completed installation and commissioning of the 33kV underground cables between Suva and Vatuwaqa zone substations.
Installed 33kV underground cables between Vatu- waqa and Cunningham Road zone substa- tions, Vatuwaqa and Kinoya zone substations and between Cunningham Road and Kinoya zone substations.

Commenced with the construction of a new 33kV transmission line from Waqadra to Momi to supply the Momi Bay Resort.

Also commenced the construction of a new 33kV switching station at Nawai and a 33kV/11kV zone substation at Momi.

This project is scheduled for completion by the end of 2016.
FEA commenced with the establishment of a Depot in Taveuni.

The Government has approved a funding of $7.2M which also in- cludes the purchase and installation of two diesel generators.

The FEA Team received the Gold Award in Organization Development & Leadership of the year at the 10th Fiji Human Resources Institute (FHRI) Awards Program in 2015.
FEA’s Team Kaizen - a 4 Member Team who won the GOLD Award at the 19th National Convention on Quality in 2014, attended the International Exposition on Team Excellence (IETEX) in Singapore and was Awarded a 2 STAR Plaque in 2015.

The FEA Team further received the Gold Award for the most Model Quality Circles Or- ganisation 2015 at the NTPC’s 20th national Convention on Quality in 2015.
Page 3 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Members Of The Authority Nizam-ud-Dean Chairman Gardiner Whiteside Deputy Chairman Francis Kean Member Isikeli Voceduadua Member Alipate Naiorosui (Joined - May 2015) Member Hasmukh Patel Chief Executive Officer Ex-Officio Member Page 4 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Executive Management Team Hasmukh Patel Chief Executive Officer Bobby Naimawi Bobby Naimawi Chief Financial Officer/ Board Secretary Fatiaki Gibson General Manager Major Projects Om Dutt Sharma General Manager System Planning & Control Eparama Tawake General Manager Generation Jitendra V. Kumar General Manager Network Tuvitu Delairewa General Manager Commercial Annabel Ducia General Manager Customer Services Naveen Lakshmaiya General Manager Human Resources Page 5 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Corporate Governance Corporate governance incorporates the creation and enhancing of long-term sustainability of the organisation value for the stakeholders through ethically driven business processes.
FEA strives to embed a high level of corporate governance within the organisation.

It is not sufficient for a company to be merely profitable; rather it also needs to demonstrate good corporate citizenship through environmental awareness, ethical behaviour and sound corporate governance practices.

At FEA, it is imperative that our company affairs are managed in a fair and transparent manner.

FEA ensures that it evolves and follows the corporate governance guidelines and best practices.
FEA considers its inherent responsibility to disclose timely and accurate information regarding our financials and performance as well as to comply with good governance prac- tices.

The Board has adopted the FEA Guidelines on Board Effectiveness to help fulfil its corporate governance responsibility towards stakeholders.

These guidelines ensure that the Board will have the necessary authority and processes in place to review and evaluate the Company’s operations.
Further, these guidelines allow the Board to make decisions that are inde- pendent of the Management.

Board of Directors The Board of Directors (‘the Board’) is at the core of our corporate governance practice and oversees how the Management serves and protects the long-term interests of all our stakeholders.

An active, well-informed and independent Board is nec- essary to ensure the highest standards of corporate governance.
As at the 31st of December 2015, the Board composition was as follows: Nizam-ud-Dean Board Chairman Gardiner Whiteside Deputy Chairman Francis Kean Member - Permanent Secretary for Infrastructure and Transport Isikeli Voceduadua Member - Representative from the Ministry of Finance Alipate Naiorosui Member - Private Sector (Joined in May 2015) Hasmukh Patel Ex-Officio Member - Chief Executive Officer In 2015, Board meetings were held 12 times and the attendance of each member was as follows: Director Number of Meetings Attended in 2015 Nizam-ud-Dean 12 Gardiner Whiteside 12 Francis Kean 12 Isikeli Voceduadua 11 Alipate Naiorosui 8 CEO/Acting CEO 12 The General Manager Major Projects, Mr Fatiaki Gibson updates the FEA Board on the progress of the new 35MW HFO Power Station at Kinoya, during a site visit by the Board in 2015.
Page 6 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FEA Chairman and CEO with the Attorney-General and Minister for Public Enterprises, Mr Aiyaz Sayed-Khaiyum before announcing the Performance Pay for the FEA Employees for the financial year 2014 at the FEA Head Office.

FEA Board Chairman Mr Nizam-ud-Dean handing over a signed Operations & Maintenance Agreement for the new 35MW HFO power plant to the General Manager of Pernix (Fiji) Ltd at the FEA Head Office in Suva.
Page 7 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Chairman’s Report FEA undertook a revision of its 10 year Power Development Plan (PDP) in 2014.

It is essential that FEA continues to review its development plan in light of the increasing demand of electricity and the important role the electricity industry play in fostering the socio-economic objectives of Government.

This PDP will be reviewed again in 2017.

The 10 year Power Development Plan will require a huge investment in the en- ergy sector.
FEA is focusing on the maintenance/upgrade of its ageing assets considered as its “strategic assets” which urgently need to be refurbished/re- placed as they have been in service for more than 30 years.

FEA expects the Independent Power Producers (IPPs) to invest substantially in the power generation sector.
With the new IPP fee of 33.08cents per unit (VEP) being offered by FEA, this should entice the private investors to invest and estab- lish their power plant and sell the energy to FEA over a long term contract.

FEA is using the above model in light of the funding constraints it is facing due to the inadequate electricity tariff rate prevailing at present and the limitations with its existing government guaran- tee.
Therefore, it is important that the review of the 10 year Power Development Plan also takes into account the appropriate electricity tariff rate that will ensure the successful implementation of this plan.

2015 Profitability FEA made a financial profit of $39.69M after tax in 2015 as compared to a profit after tax of $0.97M in 2014.This equates to a Return on Shareholder Funds (ROSF) of positive 6.13%.
The increase in profit recorded in 2015 as compared to 2014 was due to the following: • The lower fuel price recorded in 2015.

The average fuel price was $1,352.65 per Metric Tonne in 2015 compared to $1,852.08 per Metric Tonne in 2014.
The thermal fuel cost decreased substantially by $39.3M in 2015 from $180M re- corded in 2014; • The good management of the Hydro Schemes at Mona- savu and Nadarivatu despite the prolonged spell of dry weather experienced in 2015; and • The cost control measures implemented by Management throughout the year.

The profitability of FEA for the period 2006 to 2015 is illus- trated in the graph shown below.
Operating Profit / (Loss) s n o i l l i m $ F 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 After Tax Before Tax FEA incurs significant non-commercial obligation (NCO) cost each year when supplying subsidised electricity to rural Viti Levu and to the whole of Vanua Levu and Ovalau.

FEA incurred around $21.1M of NCO cost after tax when fulfilling its social obligations in 2015.
Although the Public Enterpris- es Act requires the Government to reimburse the NCO cost to FEA, such cost is not refunded.

Instead, the Government has accepted, via Cabinet deci- Page 8 sion CR2002 18th Meeting dated 10th September 2002 that FEA’s non-commercial contribution to social and community services through its electricity subsidies be recognised as its annual dividend to the Government.
Therefore, the deemed dividend paid to the Government by FEA for 2015 is a no- tional adjustment to account for the NCO cost which would have resulted in an after tax financial profit of $60.79M and a ROSF of positive 9.10% for the year.

The adjusted profitability numbers and ROSF are shown be- low for the period 2006 to 2015.
After - tax Operating Profit/(Loss) To Account for NCO 120 100 80 60 40 20 0 -20 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Before adjusting for NCO cost After adjusting for NCO cost Return on Shareholder Funds To Account for NCO 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Before adjusting for NCO cost After adjusting for NCO cost FEA appreciates the support provided by the Government through granting of duty concessions for its Renewable Ener- gy Projects and guaranteeing FEA’s borrowings.
It is essen- tial that the Government continues to support FEA to ensure the long term financial sustainability of the organisation and achievement of its long term Power Development Plan.

FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Financial Strength FEA’s balance sheet continues to display a strong position.

The Authority’s financial gearing ratio has improved from 32.15% at the end of 2014 to 29.5% at the end of 2015, and is well within the industry benchmark of 45% maximum.
The Authority spent nearly $80.6M on new capital works and paid off $56.8M in bonds and loans during the year, leaving a long -term debt portfolio of $341M at the end of the year.

All this was achieved without the Authority defaulting on any of its debt covenants signed with lenders.
I am pleased to report that the Authority’s shareholder value rose from $601M at the end of 2014 to $647M at the end of 2015, while its total assets value rose from $1.1B at the end of 2014 to $1.2B at the end of last year, indicating a positive growth in terms of both its asset base as well as its share- holder value.

FEA Restructure The restructure process for the Initial Public Offering (IPO) of the Fiji Electricity Authority, with the intention to partially privatize the Company, continued in 2015.
Progress on Renewable Energy Projects The 40MW Nadarivatu Renewable Hydro Power Project was registered for carbon credits under the Clean Develop- ment Mechanism (CDM) with the United Nations Framework Convention on Climate Change (UNFCCC) in 2014 and FEA worked towards getting the UNFCCC to approve our request for issuance of CERs (Carbon Credits).

In January 2015, the UNFCCC issued 44,048 units of CERs for the project which has been put on sale on the Carbon Credits Market to attract the best offer.
FEA signed Power Purchase Agreements with some renew- able energy Independent Power Producers and has put out a tender for Expressions of Interest from developers who are able to supply renewable energy on a continuous basis into the grid.

This includes hydro schemes, solar hybrids as well as biomass and waste to energy.
In addition, FEA received from the Department of Energy the JICA report on the work carried out on the feasibility studies on the potential hydropower developments in Vanua Levu and Viti Levu.

The recommended scheme on the Waivaka River in Namosi was put through a Peer review by FEA prior to embarking on the next phase of investigations.

The Government also decided to handover to FEA the Somosomo Hydropower Scheme being constructed in Tave- uni by the Chinese Government as part of its aid program to Fiji.
This scheme is nearing completion and will be handed over to FEA in 2016.

As part of FEA’s establishment of a depot in Taveuni, the Government has approved a funding of $7.2M which also includes the purchase and installation of two diesel genera- tors and the Operations & Maintenance teams to manage the power system.
Thermal Power Generation Expansion Plan The New Kinoya 35MW Heavy Fuel Oil (HFO) Power Plant was commisioned on the 14th November 2015 and was op- erated in November and December respectively which as- sisted FEA during the prolonged dry spell as inflows to the hydro stations were minimal.

The 35MW injection of capacity was timely as the fuel price was on a downward trend.
Furthermore, these HFO Generators will serve as security for the electricity supply to the Central Division in the event that power supply from the Hydro Stations located in the in- terior of Viti Levu was disrupted for some reasons and will further assist in catering for the future growth in the electricity demand.

Acknowledgement I wish to convey my sincere appreciation and thanks to the fellow Board Members for their continuous support and con- tribution throughout the year.
Their commitment and direc- tion was instrumental in ensuring that FEA remained focused and on-track to achieve its strategic goals and objectives.

I wish to thank the Cabinet, especially the Honourable Min- ister for Infrastructure and Transport and the Honourable Minister for Public Enterprises, for their invaluable support provided to FEA during the year.
To our valued customers, we will continue to explore and implement ways in which we can further improve our ser- vices to meet or exceed their expectations.

To our Management Team and employees, I am highly ap- preciative of their efforts and contribution during the year.

The level of dedication and commitment that they and our outsourced service providers showed throughout the year has enabled us to energise our nation under very challeng- ing conditions.
- - - - - - - - - - - - - Nizam-ud-Dean Chairman FEA and the Department of Energy receiving the JICA report on the feasibility studies carried out for potential Renewable Energy developments in Vanua Levu and Viti Levu from the JICA consultant.
Page 9 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FEA Chairman Mr Nizam-ud-Dean and FEA Board Secretary Mr Bobby Naimawi signing the “Co-operation Agreement” with European Investment Bank (EIB) officials for the technical assistance valued at Euro $4.5M for the de- tailed feasibility study of the Lower Ba Hydro Schemes and a study on the development and augmentation of the transmission network to improve the security and reliabilty of power supply in Viti Levu.
FEA commissioned the Wainisavulevu Weir Raising Project (WWRP) on 3rd of November 2015.

The raising of the weir by an additional 8 metres will increase the energy output from the two existing hydros namely Wainikasou and Mona- savu Hydro-electric Schemes and is expected to achieve a fuel savings of around $4M per annum.
Page 10 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Achievement of Board Key Performance Indicators The FEA Board developed eight (8) Key Performance Indicators (KPIs) for 2015 to enable Government to measure the performance of the FEA Board.

The KPIs were included as part of the FEA’s Statement of Corporate Intent (SCI) for 2015.

The actual achievement of the KPIs is detailed below: Key Performance Indicators Final Outcome 1.
Ensure that FEA Comply with the debt covenants set by Lenders subject to the key assumptions for 2015 becoming a reality.

ACHIEVED.

FEA recorded an audited financial profit after tax of $39.7M in 2015.

This profitability level has assisted in the achievement of all the Financial Covenants signed with lenders namely ANZ Bank and FNPF.

2.

Fully comply with the following statutory requirements: • Submission of 2016 to 2018 Corporate Plan, SCI and EIRP by 30th September 2015 ACHIEVED.
Submitted on 30th September 2015.

• Submission of half year report for 2015 financial year by 1st August 2015 ACHIEVED.

Submitted on 31st July 2015.

• Submission of draft un-audited financial accounts for 2014 by 31st January 2015 ACHIEVED.

Submitted on 31st January 2015.

• Submission of draft 2014 annual report by 31st March 2015 ACHIEVED.

Submitted on 27th March 2015.

• Submission of the annual report and audited financial accounts for 2014 by 31st May 2015 ACHIEVED.

Submitted on 30th May 2015.


3.

Monitor the key project milestones of Pacific Renewable Energy Limited and Tropik Gimco who have signed PPAs with FEA and ensure that they are on track to achieve their commercial operations date as per the PPA.

ACHIEVED.

Tropik Gimco has commenced construction at site and Pacific Renewable is finalizing its financial closure.

4.

Implement all FEA Action Items as per the Agreed Timetable with MinterEllison and Ministry of Public Enterprise.

ACHIEVED.
ACHIEVED.

FEA provided all the information sought by the Ministry of Public Enterprises regarding the restructure of FEA in a timely manner.

5.

Ensure that the construction of the 35MW HFO Generator Sets at Kinoya progresses according to the project schedule for the year 2015.

6.

Ensure that the extension of the transmission line from Korovou to Tavua which is jointly funded by Government and FEA progresses according to the project schedule for the year 2015.

7.
7.

Ensure that the construction of the new 33kV Zone Substation off Knolly Street and installation of a new 33kV underground cable from Vatuwaqa to Suva progress according to the project schedule for the year 2015.

ACHIEVED.

The Project was commissioned on 14th Novem- ber 2015.

ACHIEVED.

Project progressed according to the work sched- ule for 2015.

ACHIEVED.

The Project was completed and commissioned on 23rd December 2015.

8.
8.

Make a firm recommendation on the way forward for the development of the Qaliwana / Upper Wailoa Diversion Hydro Scheme together with the associated transmission network development.

IN PROGRESS.

FEA is still negotiating with International Finance Corporation (IFC) and Hawkins Infrastructure Ltd of New Zealand on an ap- propriate financial model that will be acceptable to FEA for the development of the project.
Page 11 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Chief Executive Officer’s Report 2015 was another challenging year for the Authority as for the first time in its history the El-Nino weather pattern affected its operations for two consecu- tive years in 2014 and 2015 respectively.

FEA recorded below average rainfall for nine months in 2015 which affected the performance of the Monasavu and Nadarivatu Hydro Schemes.

The Monasavu Hydro Scheme generated its sec- ond lowest energy output to date.
It generated only 321M units of electricity in 2015 against a long term average of 400M units per annum.

Furthermore the Nadarivatu Hydro Scheme generated 52M units of electricity in 2015 against a long term average generation output of 100M units.
To make matters worse the FEA commenced the year with an operating cash balance of a merely $0.5M and with the following important commitments to fulfill in 2015: i) Honor the obligation of the loan moratorium agreed with ANZ Bank in 2014 where the deferred loan principal payment from July 2014 to December 2014 had to be strictly paid in the first half of 2015 together with the mandatory loan repayments for 2015.
This arrangement was put in place in view of the financial hardship that FEA went through in 2014 as a result of the El-nino weather pattern.
The deferred loan repayment from 2014 together with the mandatory loan repayment for 2015 aggregated to $31.5M; ii) Carry out critical capital expenditure works to the tune of around $81M; iii) Continue with the Monasavu half life major refurbishment work with an estimated cost of around $14M and also replace/upgrade ageing assets considered critical that have been in service for more than 30 years; iv) Ensure that the financial covenants signed with the lenders ANZ and FNPF are not breached which could expose Government being the sovereign guarantor of the FEA loans; and v) Continue with the day-to-day diligent operations of FEA to ensure the security and reliability of power supply to customers.
While it was a mammoth task for the Authority to overcome the above challenges, it is pleasing to note that FEA rose above these challenges in 2015 and turned around the financial performance of 2014 to record a profit after tax of $39.7M in 2015.

FEA recorded a profit after tax of $39.7M in 2015 which turned around the performance of 2014 where it recorded a profit after tax of $0.9M, despite the El-Nino weather pattern of a prolonged spell of dry weather continuing in 2015.
For the first time in FEA’s history the El-Nino weather pattern significantly affected FEA’s operations for two consecutive years.

The profit recorded by FEA in 2015 was attributed mainly due to: • Good management of the Monasavu & Nadarivatu hydro schemes.

• Low fuel price recorded in 2015; and • Cost control measures put in place by Management.

The increase in profit recorded in 2015 as compared to 2014 was due to the lower fuel price recorded in 2015.
The av- erage fuel price was $1,352.65 per Metric Tonne in 2015 compared to $1,852.08 per Metric Tonne in 2014.

The ther- mal fuel cost decreased substantially by $39M in 2015 from $180M recorded in 2014.

FEA commissioned the Wainisavulevu Weir Raising Project (WWRP) on 3rd of November 2015.

This project raises the existing weir by an additional 8 meters and will increase the generation output from the existing Wainikasou and Wailoa Hydro Power Stations.
In addition to this, the Authority also commissioned the 35MW Heavy Fuel Oil (HFO) Power Plant at Kinoya on 14th November 2015.

The new 35MW HFO Power Plant was operated by FEA in November and De- cember respectively which contributed to the low fuel cost recorded for the year.

FEA’s business will continue to be vulnerable to the chang- ing weather pattern as a result of climate change as well as the volatility in the global fuel price.
Despite having two uncontrollable factors directly influencing its day to day busi- ness, FEA will continue to adopt a robust business model to ensure that the following key objectives are achieved in the short, medium and long term: • Successful implementation of FEA’s 10 years optimum power development plan involving substantial investment in the power network sector as well as the power generation sector to ensure security and reliability of power supply and also to meet the ever growing demand of electricity; • Repayments of bonds and loans when they fall due with- out defaulting with the aim of reducing FEA’s debt level as well as the Government Guarantee; • FEA meeting its debt covenants signed with lenders to ensure that Government being the sovereign guarantor of the FEA borrowings is not exposed; • Ensure the participation of genuine Independent Power Producers into the power generation sector, now that an at- tractive feed-in-tariff is being offered; • Continue with the repairs and maintenance of aged as- sets particularly the generation and transmission/distribution network assets considered its “strategic assets” such as the Monasavu Half Life Refurbishment Work, upgrading of the 33kV underground cables in Suva city and the upgrading of the old 6.6kV ring main system in Suva to 11kV to ensure reliability and security of power supply to customers; • Assist achieve Government’s socio-economic objectives and economic growth; and • Ensure that FEA remains financially sustainable in the short, medium and long term.
Page 12 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FEA invested around $70.3M to purchase and install 35MW of Heavy Fuel Oil (HFO) generating plant at Kinoya Power Station together with the associated transmission network to successfully evacuate the power generated out of this new power station.

This project was completed and com- missioned on the 14th November 2015.
FEA completed in- stallation and commissioning of 33kV cables between Suva and Vatuwaqa zone substations, completed installation of 33kV cables between Vatuwaqa and Cunningham Road zone substations and completed installation of 33kV cables between Vatuwaqa and Kinoya zone substations.

In addition to the above, FEA also commissioned the new 33kV/11kV Zone Substation off Knolly Street to improve reliability of power supply and meet the future demand of electricity in the Suva CBD and surrounding areas.
Work continued on the Power Supply to electrify the Koro- vou - Rakiraki corridor.

Work is currently in progress on the construction of a new 33kV transmission line from Tavua to Volivoli.

Construction of a new 33kV/11kV Zone substation at Volivoli commenced in 2015 and will be completed before the end of 2016.

The overall project is expected to be de- layed further as a result of Tropical Cyclone Winston which has caused a lot of damage to the power line infrastructures from Rakiraki to Ba.
The entire Project will be completed at a cost of around $19M and is jointly funded by the Government of Fiji and the Fiji Electricity Authority.

Work also continued on the $12.9M project to electrify the Momi Bay Resort that is currently being developed by FNPF.

Construction of a new 33kV transmission line from Waqadra to Momi to supply the Momi Bay development is currently in progress.
Work also commenced on the construction of a new 33kV switching station at Nawai and a 33kV/11kV zone substation at Momi.

This project is scheduled for completion by the end of 2016.

Finally, I thank the Chairman and the Board Members for their valuable guidance and constructive support throughout the year.
I wish to record my thanks and appreciation to my colleagues in the Executive Management team and to all the employees of our organisation and other external service providers for their continuing support, dedication and pa- tience throughout 2015.
I also record my sincere thanks and appreciation to the Honourable Prime Minister and his Cabinet Ministers, Per- manent Secretaries and Government officials, the Reserve Bank of Fiji, the Fiji Commerce Commission, the Fiji Rev- enue & Customs Authority and the executives of the FEA Bargaining Units for their kind assistance, support and co- operation rendered in 2015.
The invaluable contribution of one and all mentioned above made it easier for FEA to rise above the challenges it faced during the year and end the year with a profit.

I look forward to their continued support in delivering in- creased value to our Shareholder and Stakeholders in the coming year.

Hasmukh Patel Chief Executive Officer A “Collective Agreement” was signed between FEA and the Fiji Electricity Workers Association (FEWA) in 2015.
This Collective Agreement constitutes the terms of employment and conditions of service between the Fiji Electricity Authority and FEWA as the registered representative of the Bargaining Unit for the Staff Category.

Page 13 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FEA Contact Centre located at the Head Office in Suva continues to address the concerns of customers Fiji wide with urgency.
The FEA CEO, Mr Hasmukh Patel, shaking hands with FRCA CEO, Mr Jitoko Tikolevu, after signing the Memo- randum of Understanding (MOU) on the information sharing between FEA and FRCA at the FEA Head Office in Suva.

Page 14 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 2015 - Year in Review CUSTOMERS Customer Services The number of customer accounts increased by 2.95% from 167,017 in December 2014 to 171,939 in December 2015.
The customer accounts are made up of: 99 Industrial cus- tomers (0.06%); 16,749 Commercial (9.74%) and 155,091 Domestic and Institutional (90.20%).

The increase in custom- er accounts was mostly in the Domestic Sector recording a growth of 2.55%, most of which were in the remote rural ar- eas as a result of the Rural Electrification projects funded by the Government and FEA.
There was an increase in demand for electricity by an overall 3.93% from 794.87 million units in 2014 to 826.11 million units in 2015.

The electricity demand by domestic customers increased by 4.3% from 233.9 mil- lion units in 2014 to 244 million units in 2015.

Demand also increased by 5.71% in the Commercial sector as well as in the Industrial (Maximum Demand) sector which increased by 0.40%.
The increase in electricity consumption in the Do- mestic, Commercial and Industrial sectors is attributed to the growth in the economy.

Furthermore, the power supply in the Central, Western and Northern divisions was not affected by any natural disasters in 2015.

Contact Centre The Contact Centre continued its good performance in 2015.

The Grade of Service (GOS) achieved for the year was 92.2% with Calls Abandoned at 3.58%.
This was a good result in a challenging year where the Contact Centre was required to manage information flow to customers on the revised regula- tory fees and ancillary charges, new 2016 Government Elec tricity Subsidy, Vat reduction as announced by Government in 2015 to be implemented from 1st January 2016, continu- ous review of consumer security deposits, disconnection and reconnection of electricity accounts, prepay customer issues, and planned and unplanned power outages.
Total calls re- ceived as at 31st December 2015 were 402,021, an average of 33,502 calls a month.

This was an increase of around 6.5% from 2014 when a total of 377,445 calls were received.

The increase in call volume was the result of customers enquir- ing about power restoration after unplanned outages, revised regulatory fees and ancillary charges, approved 2016 Gov- ernment Subsidy and reduction in VAT.
The focus continues to be on the quality of service delivered to the individual cus- tomers by Contact Centre staff when answering the calls.

The Contact Centre continues to operate 24hours, 7days a week with the main Contact Centre in Suva closing at 9.00pm and the services then taken over by the Contact Centre staff at the National Control Centre in Vuda.
Usage of the emergency 913 number for non-emergency calls by customers continues to be a concern with a total of 15,719 calls received on this number of which only 2,570 were genuine emergency calls and 13,149 non-emergency calls.

For the 2015 Customer Services Survey, six survey ques- tions were prepared and survey forms sent out to custom- ers with their electricity bills in November 2015.
Customer Service Survey forms were also available at all Customer Service Centres in Central, West and North and all Prepay Vendor locations.

Customer Service Satisfaction Survey will close on 31st January, 2016 when all forms received will be analysed.

FEA was pleased with the improvement in its overall cus- tomer satisfaction level for both domestic (92%) and com- mercial/industrial customers (90%).

However, FEA wishes to improve further on its level of service to all customers.
Accordingly, it will put in place appropriate action plans to address the areas of improvement highlighted in the sur- vey.

In the meantime, FEA is also investigating on how it could improve on the overall customer response going forward into the future by obtaining views from a majority of its customers.

FEA Contact Centre located at the Head Office in Suva continued to address the concerns of customers with urgency Fiji wide.
Prepay Customers The On-Line Syntel prepayment vending system is now being used by all prepay vendors and there is a total of 33 such vendors located in the Central, Western and Northern divisions.

Prepay customers can buy their tokens from any of these vendors.

Through this online vending system, the Authority is able to manage its prepay customers better.

There are a total of 23,534 rural customers on prepay meters as at 31st December 2015, an addition of 1,109 new prepay customers in 2015.
Product Awareness Awareness on energy savings and electrical safety tips were the main focus of FEA’s communication activities to its customers.

Presentations were carried out in schools and communities to create awareness on energy savings and electrical safety.

Page 15 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FEA made full use of its billing network to maximize the exposure of its safety messages by printing messages on the electricity bill itself and on bill inserts.
Visits were made to prospective rural customers in villages to complete customer documentation, provide information on energy conservation, electrical safety and training on how to use the prepay meter prior to connection.

Television inter- views and participation in radio talkback shows were carried out for creating public awareness and dissemination of infor- mation regarding the Authority’s operations.
Demand Side Management FEA carried out energy meter re-calibration of its fourth batch of top 150 customers and upgraded 6 two-transformer fed installations to summation CT metering to ensure that the Customers’ meters were functioning properly and recording correct consumption of electricity.
FEA also replaced 6,033 old energy meters installed at cus- tomers’ premises and will continue with this replacement of old energy meters during the next year to ensure correct re- cording and billing of electricity consumption.

FEA continues to assist its customers to become more en- ergy efficient by providing technical advice and billing data to those customers who request for such data.
FEA’s Reactive Energy Metering Policy was strictly enforced during 2015 with penalties imposed on those customers using excessive reactive energy and not complying with the power factor re- quirements as stipulated under the Electricity Act.

Custom- ers’ excessive reactive energy usage increased by around 19% in 2015 when compared to 2014.
Electricity Subsidy Government as part of its 2015 National Budget approved the increase in the threshold for the residential customer’s electricity subsidy from 75 kWh per month to 85 kWh per month.

Customers that use 85 units or less in a month will qualify for this subsidy.

The new electricity subsidy threshold of 85 kWh per month was implemented effective from 1st January 2015 for residential customers.
The electricity con- sumed by residential customers in January 2015 will be con- sidered for the subsidy in February 2015 at a rate of 15.90 cent per unit (VEP) which will be paid by Government as subsidy.

The customers will pay 17.20 cents per unit (VEP).

As a result of the increase in the threshold for residential customer’s electricity subsidy, the total customers benefiting from this subsidy has increased from approximately 49,000 customers in 2014 to approximately 69,000 customers in 2015.
For Primary and Secondary Schools, the subsidy scheme remains the same.

A step up subsidy model applies where the first 200 units consumed in a month will be subject to a subsidized tariff and units in excess of 200 units will be charged the full commercial tariff of 33.10 cents per unit (VEP).

Government subsidy is 12.51 cents per unit (VEP) and the Schools will be charged a subsidized electricity tariff of 20.59 cents per unit (VEP) for the first 200 units consumed in a month.
A total of 1,374 schools benefited from this sub- sidy.

Consumer Security Deposit The review of the consumer security deposit is ongoing, based on the consumption pattern changes.

Customers have the option to pay the required consumer security de- posit either in cash or by providing a Bank Guarantee.

FEA Metering Technician carrying out metering system re-calibration work at Punjas Biscuit factory in Lautoka.
This is to ensure that the customer’s meters are functioning properly and recording correct consumption.

Page 16 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 The above pictures show the newly constructed 35MW HFO Power Plant that was commissioned on the 14th November 2015.

FEA spent around $70.3M on this project.


The Attorney-General and Minister for Public Enterprises, Mr Aiyaz Sayed-Khaiyum with FEA Head Office employees after the announcement of the performance pay for the financial year 2014 at the FEA Head Office in Suva.

Page 17 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 HUMAN RESOURCES Best practice Human Resources initiatives are something that emerging Human Resource practitioners aspire to develop and implement.
To explore this further, there is absolutely no doubt that 2015 saw some positive outcomes of our various initiatives and processes implemented which were attained successfully.

Some of the major achievements in 2015 are a reflec- tion of the enormous effort put in by Management and Staff to ensure FEA is recognized as an exemplary or- ganization with Human Resources policies designed to foster productivity and learning throughout the organi- zation.
Milestone achievements for FEA in 2015 are: Inaugural Employee of the Year and most Safe Team of the Year Awards On 12th March, 2015 FEA held its first Excellence Awards Night, where 40 champions were recognized and honoured.

This was an exciting event that would broaden the focus on building a stronger Team FEA.
Ambitious projects were embarked upon such as iden- tifying the Employee of the Quarter in each Strategic Business Unit (SBU), Employee of the Year, the Safety Team of the Year and Zero Sick Leave Award.

2015 can be summarized in a few words: In the face of significant challenges, tremendous progress was achieved.
• Employee of the Year Award - Tariq Bahadur of Network SBA, Navutu • Safety Team Award - Substation Team West Human Resources Policies & Manual On 27th of April, 2015 the Board endorsed the revised Human Resources Policies & Procedures Manual which is aligned to the Employment Relations Promulgation (ERP) Amended Act 2015 and the Employee Handbook.
Inaugural In-House Quality Circles Convention The inaugural in-house Quality Circles Convention 2015 was dubbed as one of the biggest productivity programs hosted in Fiji by a Statutory Commercial Authority.

The ap- plication of the program was not only to look for process improvements via Quality Circles but also to have pro- jects relating to revenue generation.
competitive GOLD Award Winner of the 19th National Convention on Quality 2014, attended the International Exposition on Team Excellence (IETEX) in Singapore.

Historically in the 20 years of the Quality Circle move- ment in Fiji, Team Kaizen was the first fully funded Quality Circle Team to take part in such a competition.
Team KAIZEN - Awarded 2 STAR Plaque in Singa- pore FEA Team KAIZEN receiving their award in Singapore 20th National Convention on Quality (NCQ), 2015 Top three (3) FEA Quality Circle Teams: Team Inspire, Team RHIZOME and Team Power Rangers were part of the ten (10) Quality Circle Teams that participated in the 20th National Convention on Quality.
Team FEA was awarded the following prize: • Model Quality Circles Organisation 2015 • Most Innovative Team for the Year 2015 -Team Inspire, Labasa • Silver Award Winner - Competitive Category - Team Inspire, Labasa • Outstanding Quality Circles Facilitator- Manoj Kumar 10th Fiji Human Resources Institute (FHRI) Awards The Human Resources SBA for the second time en- tered in the 10th Fiji Human Resources Institute (FHRI) Awards Program and won two awards.
The FEA had also won an award in the first year of participation while ensuring that our human resources processes are aligned to best practices.
• Outstanding Human Resource Organization of the Year 2015-Fiji Electricity Authority (Gold Award) International Exposition on Team Excellence (IETEX) - Singapore, 2015 • Senior HR Practitioner of the Year Award-Ritesh Ronald Reddy (Gold Award) FEA’s Team Kaizen - a four (4) Member Team, the Page 18 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 EMPLOYMENT RELATIONS FEA reached an agreement with the Fiji Electric- ity Workers Association (FEWA) on their 2014 Log of Claims and signed the Collective Agreements for their Staff and Tradesperson.
The FEA also awarded a 4% increase in their wages and allowances as from the 1st January, 2015.

In 2015, those employees, who were eligible to become members of a Bargaining Unit, joined the Fiji Electric- ity Workers Association (FEWA), who had registered two Bargaining Units for the Staff and Tradesperson categories respectively.
HEALTH, SAFETY & ENVIRONMENT (HSE) There were three (3) fatalities recorded due to work- place accidents and these contributed to an unprec- edented number of 660 days lost due to workplace injuries.

The number of vehicle accidents also escalat- ed resulting in an unprecedented driver initiated motor vehicle accident cost of $295k in 2015.
The HSE department carried out quarterly roadshows for all FEA employees to emphasise and stress the importance of taking personal responsibility for their health and safety actions.

Furthermore, the HSE De- partment embarked on the development of FEA’s Top 10 Life Saving Rules and ensured that the employees comply with these rules to the best of their abilities.

To curb the problem of increase in motor vehicle acci- dents, the Authority installed Vehicle Tracker Systems (VTS) in all FEA vehicles.
The VTS also incorporated a beeper that activated should the vehicle exceed the na- tional highway speed limit of 80km per hour.

The Land Transport Authority and the Fiji Police Traffic Officers were part of the Fleet, Health and Safety roadshows around all FEA locations driving home the important safety messages to all employees.
To empower the employees in taking personal respon- sibility for their actions, a training called ‘Managing Rule Breaking’ was conducted, where 370 operational staff were trained.

The Health and Safety Department spent 352 hours carrying out field visits and interacting with the field Teams to identify improvement opportunities.

A total of 422 corrective actions were completed which were re- ported through various hazard reporting mechanisms.
The Health and Safety Department was also reinforced with a new officer based in Labasa to look after the Northern region.

TRAINING & DEVELOPMENT The Fiji Electricity Authority Training Centre endeav- ors to build partnerships with various institutions en- gaged in human resources development and support development programs.

We always prioritize to treat the workforce of our growing economy in a remarkable and unique way.
Page 19 FEA CEO receiving the 2015 Model Quality Circles Organisation award from the Minister for Education, Heritage and Arts, Dr Mahendra Reddy.

PRODUCTIVITY IMPROVEMENTS FEA has achieved significant productivity improvements since 2000.
The number of employees has decreased by 24%, from 960 in 2000 to 725 in 2015, at a time when: • Number of customers has increased by around 46%, from 117,315 in 2000 to 171,939 in 2015 • Electricity Generation output has increased by around 75%, from 523 gigawatt-hours (GWh) in 2000 to 914GWh in 2015; • Route Length of power lines and underground cables has increased by around 37%, from 7,124 km in 2000 to 9,730 km in 2015; • Total assets have increased by around 148% from $473M in 2000 to $1.17B in 2015; • Total shareholder funds have increased by around 105% from $316M in 2000 to $647M in 2015.
As a result, the following productivity improvements have been achieved between 2000 and 2015: • Customers per employee have increased by 94%; • Electricity Generation output per employee has increased by 131%; • Route Length of power lines and underground cables per employee has increased by 81%; and • Asset value per employee has increased by 229%.
FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Our distinctive training programs always thrive to pro- vide exceptional experiences to both our customers and our Staff.

FEA under the Method “A” grants scheme achieved a score of 99.71% for the 2014 assessment period.

This represented the highest level of grants assessment score received by the Authority and it is also the high- est score in Fiji.
FEA further sponsored two (2) GOLD Medals for USP’s - Faculty of Science, Technology & Environ- ment School of Engineering for Outstanding Student in the Mechanical and Electrical Engineering disciplines.

Outlined below are the results of the Grants schemes for four (4) consecutive years: .
2011 2012 2013 2014 82.34% 91.52% 94.16% 99.71% FEA is also engaged in providing external Training in collaboration with Pacific Power Association (PPA), Ja- pan International Cooperation Association (JICA) and Public Service Commission, not only to organizations in Fiji but to other Pacific Island countries.

Twenty six (26) sessions of various technical training programs were conducted for external organizations and the to- tal revenue derived from these training programs was $89k in 2015.
FEA has been providing work attachment and training to the neighbouring Pacific Island Electricity Utilities in Technical and Non-Technical areas.

In 2015, FEA provided work attachment and training for the Nauru Electricity Utility and the Solomon Islands Electricity Authority.

Furthermore, the Authority embarked on a series of Leadership training programs for their Executive Man- agement Team and the Senior Management Team to improve and develop their leadership skills.
A total of 237 Training Courses were conducted in 2015 with a total number of 35,467 training hours as com- pared to 2014 during which some 293 Training Courses were conducted with a total number of 41,315 training hours.
Partnership with the University of the South Pacific (USP) for the Bachelor of Engineering programme FEA and USP signed a Memorandum of Understanding (MOU) that allows USP Bachelor of Engineering stu- dents to gain valuable work experience in FEA to fulfill their program work attachment requirements and after completion of their program of study are eligible to be recruited by FEA as Graduate Engineers.
FEA recruited fifteen (15) Graduate Engineers: twelve (12) Electrical and three (3) Mechanical Engineers pur- suant to the MOU with USP.

Page 20 FEA graduate engineer, Mr Jowesh Goundar, receiving gold medal from the Acting CEO, Mr Bobby Naimawi for the Outstanding Student in the Mechanical Engi- neering discipline.
The Authority continues to engage practical attaches from the Fiji National University (FNU), University of the South Pacific (USP) and University of Fiji (UoF) as part of their program requirement so that they are able to graduate.

This is an opportunity for the Author- ity to ensure that these practical attaches receive the relevant practical training and development in-house in preparation for employment opportunities that may arise.
There were forty-one (41) USP Engineering stu- dents attached during USP semester breaks and eight (8) students from FNU on industrial attachment to gain valuable work experience and also to fulfill their pro- gram requirements.

The 2015 employee turnover rate was 3.72% com- pared to 5.55% in 2014.

Out of this, 1.38% came from the technical area due to employment opportunities abroad compared to 2.99% in 2014.
The Authority ac- cepts the fact that the staff turnover in the technical areas will continue due to employment opportunities abroad.

The Authority also finds it difficult to compete with overseas employers in the terms and conditions of employment offered to the Authority’s employees.
FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Course Instructor, Mr.Mayur Kalbag conducting Leadership Training Programme at the FEA Training Centre in Suva for the FEA Team Leaders on the topic “Creating Successful New Managers”.

This is part of the succession planning program for FEA.

Course Instructor, Mr Roger La Salle conducting a training programme on Corporate Governance for FEA Executives and Senior Managers at the FNU Training Centre in Suva.
This is also part of the succession planning program for FEA.

Page 21 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 PRODUCTION OF ELECTRICITY Hydro Generation The water level at the Monasavu Dam at the beginning of January 2015 was 736.18 metres above mean sea level (AMSL), which was 21.18 metres above the minimum safe operating level of 715 metres.

At the end of December 2015, the water level was 742.05 which was 27.05 metres above the minimum safe operating level.
Monasavu Dam Storage Level Maximum Dam Level 2013 2015 2014 Safe Minimum Dam Level ) s e r t e m ( l e v e L m a D 750 745 740 735 730 725 720 715 710 705 700 Typically, some 400 million units of electricity generation is expected annually from the Wailoa Power Station.

Total rain- fall received at Monasavu in 2015 was 4,223 mm compared with 4,137 mm in 2014.
The lowest ever rainfall recorded was 3,540 mm in 2004. in Fiji since the customer demand has been growing at an average of around 4% per annum over the last three years.

The major Power Stations namely Kinoya, Vuda and Labasa performed admirably and contributed significantly towards meeting the growth in customer demand.
Furthermore, these thermal power stations also complimented the reduc- tion in the hydro power generations which were affected by the prolonged spell of dry weather experienced throughout 2015.

The total energy generated from the Industrial Diesel Oil (IDO) and Heavy Fuel Oil (HFO) power stations for 2015 was 480,422 MWh against 454,039 MWh in 2014.

Furthermore, FEA commissioned a new 35MW Heavy Fuel Oil (HFO) power plant at its Kinoya Power Station on 14th November, 2015.
This new diesel power plant which is run on cheaper HFO will bring about substantial cost savings to the Authority and more importantly it contributes additional generating capacity to the Central Region of Viti Levu to en- sure reliability and security of power supply to customers.

Butoni Wind Farm Butoni wind farm generated 5.674 million units of electricity in 2015.

This is equivalent to a fuel cost saving of around $1.94M in 2015.
Graphically depicted below is the energy output from Butoni Wind Farm since commissioning in 2007: Butoni Generation (Kwh) Statistics for the wind farm from the commencement of its operations in June 2007 are given below: • Total Generation Output = 48.70 million units of electricity • Total Diesel Fuel Cost Savings = F$18.14M • Total Foreign Exchange Savings = USD$10.60M • Total Diesel Fuel Saved = 10,232 tonnes of diesel • Total Green House Gas Emission Reduction = 31,781 tonnes of Carbon Dioxide.
Generation Mix Monthly Power Generation Mix The months of January, February, March, April, June, July, September, November and December received below long term average rainfall while May, August and October received long term average rainfall.

The below average rainfall for nine (9) months in 2015 resulted in the third low- est ever power production from the Wailoa Power Station in thirty-two (32) years generating only 320.88 million units of electricity.
Nadarivatu Power Station was commissioned in May 2012.

It produced some 52.9 million units of energy in 2015 and 67.5 million units of energy in 2014 respectively against a long term average generation output of 100 million units.

The performance of the Monasavu and Nadarivatu Hy- dro Schemes were severely affected due to the extended drought season throughout 2014 and 2015.
Thermal Generation FEA generated 52% of its energy from the thermal power sta- tions in 2015 to meet the ever growing demand of electricity Page 22 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 The power generation mix for 2015 was 44.90% hydro, 52% diesel and heavy fuel oil, 0.63% wind with the remaining 2.47% provided by the Independent Power Producers (IPPs), namely Tropik Wood Industries Limited (TWIL) and Fiji Sugar Corporation (FSC).
In comparison, 44.96% was generated from hydro in 2014, 50.91% from diesel and heavy fuel oil, 0.48% from wind with the remaining 3.65% from TWIL and FSC.

In 2015, the FEA renewable power stations generated 411.70 million units of electricity (45.53%), thermal power stations generated 470.25 million units of electricity (52%) and Inde- pendent Power Producers (IPPs) generated 22.35 million units of electricity (2.47%).
Power Generation Mix - Renewable vs Thermal over the Years x i M e g a t n e c r e P 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 %Renewables & IPPs %Therma l Power System Reliability Three (3) internationally accepted performance indicators are used each year to measure FEA’s power system reli- ability: • The average total length of time that a customer is without power over a year is measured by the System Average Interruption Duration Index (SAIDI).
Against a target of maximum 700 minutes, the Authority achieved a SAIDI of 412 minutes in 2015.

• The average number of times that a customer’s power supply is interrupted in a year is measured by the System Average Interruption Frequency Index (SAIFI).

Against a target of 15 times, the Authority achieved a SAIFI of 5 times in 2015.

• The average time that a customer is without power per interruption is measured by the Customer Average Inter ruption Duration Index (CAIDI).
This index was 82 minutes in 2015.
The main reasons for the power interruptions that occurred in 2015 were: • Major extension works on power grid required planned power shutdowns for connectivity purposes • Planned maintenance works on the Power System requiring planned power outages • Heavy rain, lightning and storms • Faults on power line hardware • Overgrown vegetation or trees clashing with power lines • Transient faults • Third party damaging FEA underground cables • Motor vehicles colliding with power poles • Bushfires • Vandalism on FEA overhead power network FEA continues to spend a substantial amount of money to reinforce its power system in order to improve the reli- ability and security of power supply to be in line with inter- national benchmarks for power utilities of similar size and nature.
Furthermore, as the power network ages (most of the FEA power distribution systems have been in service for more than 30 years) they urgently require upgrading or refurbishment.

FEA has incorporated these upgrades and repair works in its development plan.
The initiatives FEA are currently pursuing include: • Live-line maintenance of its power lines at all voltage levels; • Effective vegetation management program; • Use of appropriate technology to detect defects that can be fixed on time and equipment that can assist in restoring power supply quickly; • Ensuring that adequate supply capacity is available to meet the demand for electricity at all times; and • On-going program to replace ageing assets.
FEA Chief Executive Officer presenting on the topic “Fiji’s Energy Sector-A Strategic Component to Growth & Development” to the Honourable Minister for Infrastructure & Transport, Mr. Parveen Kumar Bala, at the FEA Head Office in Suva in the presence of the FEA Board Members.

Page 23 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Profitability FEA made a financial profit of $39.7M after tax in 2015.
The profit recorded for 2015 was attributed by the: • low fuel price recorded in 2015 which has never been at this level since 2009.

The average fuel price was $1,352.65 per Tonne in 2015 compared to $1,852.08 per Tonne in 2014; • good management of the Monasavu and Nadarivatu Hydros in 2015; • exploring other revenue initiatives; and • stringent cost control measures put in place by Management.
FEA incurred $21.1M of Non-Commercial Obligation Cost (NCO) after tax when fulfilling its social obligation in 2015.

Taking into account the NCO cost above, the Return on Shareholder Funds (ROSF) for 2015 is positive 9.10%.

Earning before interest, tax, depreciation and amortization (EBITDA) for 2015 was $93.8M.This provided a net interest coverage ratio of 10.57 times.

Revenue from electricity sales for 2015 was $311.9M com- pared to $300.3M in 2014, an increase of $11.6M.
This was a result of the increase in electricity demand for domestic, commercial and industrial customers recorded in 2015.

Electricity Sales Revenue over the past 10 Years n o i l l i m $ F 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 There was an increase in demand for electricity by an over- all 3.93% from 794.87 million units in 2014 to 826.11 million units in 2015.
Units of Electricity Sold over the past 10 Years Other Operating revenue of $9.9M in 2015 was more by $2.8M compared to the $7.1M earned in 2014 due to the increase in the contract income and realized exchange gains made via special foreign exchange rates obtained from com- mercial banks.

The total operating expense of FEA excluding fuel costs, de- preciation and amortization was $87.4M.

This increased by $9.7M when compared with the $77.7M recorded in 2014.
Depreciation and amortisation expense increased by $1.3M in 2015 due largely to the capitalization into the Fixed Asset Register of the new 35MW HFO diesel gensets at Kinoya, establishment of a new 33kV/11kV Zone Substation off Knolly Street in Suva and the commissioning of the Wainisavulevu Weir Raising Project.
Thermal Fuel Cost over the past 10 Years 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 s n o i l l i m $ F 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 The thermal fuel cost decreased substantially by around $39M in 2015, from $180M in 2014 to $141M in 2015.

This was due to the low fuel price recorded in 2015 for both HFO and IDO despite FEA burning more quantities of fossil fuel to generate electricity in 2015 as compared to 2014.
The fuel quantities increased from 97,205 tonnes in 2014 to 104,021 tonnes in 2015.

The thermal fuel cost accounted for around 53% of FEA’s total operating expense of $266M in 2015 compared with 61% in 2014.

Electricity generated from the thermal power stations in- creased by 26.3GWh in 2015 in comparison to 2014.

The Wailoa hydro power station generated 321GWh of en- ergy in 2015, higher than the 314GWh that was recorded in 2014.
Total quantity of Industrial Diesel Oil (IDO) fuel burnt in 2015 was 60,504 tonnes and Heavy Fuel Oil (HFO) fuel burnt was 43,517 tonnes, aggregating to 104,021 tonnes.

In comparison, the total quantity of IDO fuel burnt in 2014 was 59,538 tonnes and HFO was 37,667 tonnes, aggregating to 97,205 tonnes.
Total IDO and HFO Fuel Usage over the past 10 Years h w G ) 0 0 0 ’ ( s e n n o T 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ial 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 IDO HFO Page 24 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 IDO and H FO Prices over the past Years e n n o t r e p $ F 2,400.00 2,200.00 2,000.00 1,800.00 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 - 3 0 - c e D 4 0 - r p A 4 0 - g u A 4 0 - c e D 5 0 - r p A 5 0 - g u A 5 0 - c e D 6 0 - r p A 6 0 - g u A 6 0 - c e D 7 0 - r p A 7 0 - g u A 7 0 - c e D 8 0 - r p A 8 0 - g u A 8 0 - c e D 9 0 - r p A 9 0 - g u A 9 0 - c e D 0 1 - r p A 0 1 - g u A 0 1 - c e D 1 1 - r p A 1 1 - g u A 1 1 - c e D 2 1 - r p A 2 1 - g u A 2 1 - c e D 3 1 - r p A 3 1 - g u A 3 1 - c e D 4 1 - r p A 4 1 - g u A 4 1 - c e D 5 1 - r p A 5 1 - g u A 5 1 - c e D The average price of IDO fuel was $1,628 VEP per Metric tonne in 2015 compared to an average price of $2,088 VEP per Metric tonne in 2014.
The IDO price peaked at $2,165 VEP per Metric tonne in March 2015.

The average price for HFO was $988 VEP per Metric tonne in 2015 compared with an average price of $1,494 VEP per Metric tonne in 2014.

The net financing costs decreased by around $1.5M in 2015 from $11.3M in 2014 to $9.9M in 2015.

This was due to FEA early redeeming two high interest bonds during the year.
FEA’s gearing ratio, as measured by Debt to Debt plus Capi- tal and Reserves excluding cash-in-hand, was 29.5% as at 31st December 2015 and has reduced from the 32.1% re- ported for 2014.

This is well within the international bench- mark for power utilities of about 45%, despite FEA spending around $80.6M on Capital Expenditure projects in 2015.

The positive gearing level provides opportunities for additional borrowing by FEA to fund its long term Power Development Plan.
The decrease in gearing level is due to the good profit recorded during the year and FEA repaying bonds and loans aggregating to $56.8M in 2015.
Total Borrowings ($M) & Gearing Ratio (%) 359.67 359.28 351.81 41.67% 41.31% 328.78 34.30% 370 360 350 340 330 M $ 320 39.76% 310 300 290 280 270 354.77 340.63 303.12 32.15% 29.50% 29.56% 2009 2010 2011 2012 2013 2014 2015 Furthermore, FEA’s balance sheet will continue to show reasonably high borrowing cost due to the nature of the in- dustry as it is highly capital intensive.
The high borrowing cost recorded from 2009 to 2010 was due to the funding for the construction of the Nadarivatu Hydro Power Project.

FEA commenced repayment of this loan from 2012 and re- duced the borrowing cost to around $303M in 2013.
The net increase in debt level over the period 2014 to 2015 was due to the following funding for capital development works: $35M to fund FEA’s contingency Plan in 2014, $60M to fund the purchase, installation and commissioning of the 35MW HFO plant at Kinoya in 2014/2015 and $10M to fund the Taveuni Electrification Project in 2015.

The shareholder value of FEA was $647M at the end of 2015 which has increased from $601M at the end of 2014 and $324.9M at the end of 2002.
FEA’s total assets are worth $1.2B, an increase from $1.1B in 2014 and $456.7M in 2002.

This shows that FEA has added significant sharehold- er value over the last 13 years since the implementation of organisational reforms.

Capital Expenditure & Funding FEA spent a total of around $80.6M on capital projects in 2015.
It had to defer a number of capital expenditures to 2016 due to the huge cost incurred in burning excessive vol- umes of fossil fuels to supplement the low generation output from the Monasavu and Nadarivatu Hydro Schemes due to below average rainfall recorded for most of the months in 2015.
The Capex of around $80.6M was made up of the 33kV/11kV Zone Substation off Knolly Street, Telecom & SCADA infrastructure upgrade, power system reinforce- ment projects, Wainisavulevu Weir Raising Project, 33kV Vuda/Waqadra double circuit transmission line, Switchgear upgrade project at various sub-stations, Rural Electrification Projects, new 35MW Kinoya HFO Project, Network Aug- mentation Projects, purchase of energy meters, test equip- ments and metering accessories and other assets acquired by FEA in 2015.
FEA provided funding for these projects through borrowings and partially from its internal cashflows.

All the debt covenants imposed by the lenders namely, ANZ Bank and FNPF were satisfactorily met in 2015.

A total of $56.76M of Loans and Bonds repayment was done in 2015 which is really a great achievement for FEA taking into ac- count that it started the year with an opening operating cash balance of $0.5M only.
Out of this amount, $19.91M was for the 2015 mandatory loan repayments for ANZ Bank includ- ing $11.6M as recovery of the principal repayments from July to December 2014 which was part of the moratorium approved by ANZ for FEA.
In addition to these mandatory loan repayments, FEA also early redeemed two high inter- est bonds aggregating to $25.25M in 2015.This was essen- tial as it will reduce FEA’s borrowing level, financing cost and the total bonds and loans covered under the gov- ernment guarantee facility.

FEA had a total debt portfolio of around $341M as at 31st December 2015.

This debt has to be serviced and repaid over the next 10-15 years.
The capital expenditure planned for the next 3 years are $113M, $100M and $91M for 2016, 2017 and 2018 respec- tively, aggregating to $304 million over the 3 years.
The pro- jected Capital expenditure for 2016 of $113 million compris- es of the 6.6kV ring main system upgrade to 11kV in Suva, Korovou-Tavua Grid Extension Project, Upgrade/extension of Tavua 33kV Substation, construction & commissioning of the new 33kV substation at Volivoli in Rakiraki, construction of the new 132kV and 33kV transmission lines and substa- tion to evacuate power from FSC Rarawai, Construction of Momi Bay 33kV Zone Substation, Waqadra–Nawai-Momi 33kV Transmission Line Project, Construction of the Switch- ing Station at Nawai, Vatuwaqa 33kV Substation Building and associated electrical equipment upgrade, 33kV/11kV Switchgear Upgrade projects, Land acquisitions, Taveuni power reticulation project, Rural Electrification Projects, Network Urban Reinforcement Projects, Purchase of Elec- tricity Meters and Vehicle Replacements etc.
Page 25 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 In view of FEA’s huge capital expenditure plan, the Ministry of Finance has approved the extension of the Government guarantee facility of FJ$404M and US$50M till the end of December 2016.

FEA has utilised around FJ$335M of this government guarantee as at the end of 2015.
Cabinet ap- proved the extension of the Government Guarantee facil- ity till the end of December 2016 to accommodate any new loans that FEA will borrow in 2016 to fund its 2016 capital expenditure plan.

It is envisaged that FEA will continue to utilize the above Government Guarantee facility to meet its 10 Year Power Development Plan.

Therefore, FEA’s financial performance over the next 3 years will be critical in determining how successful it can fund the above commitments.
It will have to keep aside cash surplus of at least $30M-40M a year and this means that FEA has to record reasonable levels of profits to generate the neces- sary cashflows required.

It will be very difficult for FEA to achieve the required level of profitability given that there are two uncontrollable factors being the global fuel price and the weather pattern that largely influence its business.
There- fore, it is imperative that FEA adopt a business model that is robust and will achieve the desired profitability level to en- sure that it remains financially sustainable over this period to fund the above capital expenditure and loan commitments.

During the year, FEA obtained approval of the Government guarantee facility which enabled FEA to partially drawdown $26M from FNPF to fund the purchase and installation of the 35MW HFO Generator Sets at Kinoya Power Station.
Further, FEA has commenced the loan repayments of the FNPF $60M loan of around $5M per annum from November 2015 after the project was commissioned in October 2015.

The new HFO generator sets at Kinoya will improve the se- curity and reliability of power supply in the central region of Viti Levu.

FEA further borrowed an additional $10M from ANZ Bank in 2015 to complete the funding of the Wainisa- vulevu Weir Raising Project.
FEA has also commenced the loan repayments of the $10M FNPF loan which was fully drawn down in September 2015 to partially fund the Taveuni Electrification Project together with the replacement of 33kV underground cables from Suva to Vatuwaqa.

FEA’s average cost of borrowing was 3.4% per annum as at the end of 2015 compared to 4.2% per annum for 2014.

FEA also early re- deemed $25.25M worth of high interest Bonds in July 2015 to improve its cash position and reduce its debt level.
FEA completed the review of its 10 year Power Develop- ment Plan (PDP) ending 2025 in September 2014.The ten (10) year power development plan contains the load fore- casting, the power generation planning up to 2025 for Viti Levu, Vanua Levu and Ovalau power systems together with the associated network assets to be developed and the in- vestment plan required for the development and augmen- tation of the 132kV and 33kV transmission networks.
The total investment required in the transmission and distribution system is estimated to be around $530M for both Viti Levu and Vanua Levu.

These investments in reinforcing the trans- mission network are expected to be funded either by FEA or from external sources.

The private sector is expected to invest substantially in the power generation sector as Inde- pendent Power Producers (IPPs) and sell the electricity to FEA via long term Power Purchase Agreements.
It will be a huge task for FEA to successfully implement its PDP up to 2025 particularly investing heavily in reinforcing its transmis- sion network infrastructures at the prevailing low electricity tariff rates.

The key enabler in achieving this plan is to have the right electricity tariff rate in place to ensure that FEA has the ca- Page 26 pability to borrow to fund its Optimum Power Development Plan and also ensure the financial sustainability of FEA in the medium and long term.
Internal Audit The internal audit function for the Fiji Electricity Authority pro- vides a number of important services to the company and management.

The department helps FEA accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal controls and good corporate governance processes.
Thus the role and scope of the Internal Audit department in the year 2015 have been broadly-grouped into the following areas: • Risks, internal controls, compliance, operational, capital projects and Information Technology (IT) auditing & assurance; • General audits including stocktaking, inventory manage- ment/stock controls, surprise store/site visits & procedural audits; • Policy/procedural documentation, reviews, monitoring and enforcement, reviewing violations, safeguarding Company assets/properties against misuse, fraud and management override of controls including applying discipline; and • Regular and random review of cashier activities/anom- alies, irregular transactions, adding value to improve/en- hance the current business operations by analysing and suggesting ways/areas for improvement thus bringing in efficiencies within the current business processes, strength- ening the key controls & ensuring/providing assurance and comfort that these are being effectively followed.
Risk Management FEA takes a proactive approach to risk management.

Risk management is the culture, processes and structures that are directed towards realising potential opportunities whilst managing adverse effects.

Risk management is the respon- sibility of all employees of FEA.
In order to meet our objectives, the Risk Management Frame- work is designed to apply systematic and consistent risk management methodologies across FEA in order to identify critical risk issues as well as to focus on improving capabili- ties for predicting and managing uncertainties.
It enables us to: • identify, assess, evaluate, prioritise and manage risks across the organisation; • create value to the organisation through informed decision making and the effective allocation of resources; and • build a risk awareness culture with risk embedded into the day to day activities.
A key requirement of effective risk management is the pro- vision to the Board of a consistent and transparent view of material risks, enabling it to assess the adequacy of manage- ment’s strategies and treatments relating to those risks.
We at FEA, believe that a sound risk management system will not only provide regulatory compliance, but that the real return and value for FEA is gained by enhancing risk man- agement capability, and integrating risk management into the business decision making activities.

FEA’s Risk Management Framework is based on the principles and guidelines set out in the International Standard for Risk Management - AS/NZS ISO 31000:2009.
FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 The above picture shows the new 33kV Zone substation off Knolly Street in Suva.

FEA spent $9.3M on this project.

This substation will improve the reliability and security of power supply in the Suva CBD areas.

FEA employee carrying out the testing of new cables before being commisioned by the FEA technicians.
Page 27 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 POWER DEVELOPMENT PROGRAMME Independent Power Producers (IPPs) Fiji Sugar Corporation (FSC) and Tropik Wood Industries Limited (TWIL) are the only Independent Power Producers (IPPs) who at present generate electricity in Fiji and sell to FEA.

They produce electricity for their own use through co-generation and sell the surplus to FEA.
circuit, Sabeto – Waqadra 33kV sub-transmission circuit, and installation of modern protection relays for Wailoa Switch- ing Station 132/33kV transformer (T5) and 11kV switchgear, Savusavu Power Station 11kV switchgear, and procurement of equipment for Cunningham Road 132/33kV transformers’ protection upgrade.

Seventy-one percent (71%) of the elec- trical protection relays in 11kV, 33kV and 132kV networks are modern numerical protection relays.
Fiji Sugar Corporation (FSC) FSC supplies electricity to the FEA grid during the crush- ing season from its mills in Lautoka, Ba and Penang.

FEA and FSC signed a new Power Purchase Agreement (PPA) in 2013 with FEA for FSC Labasa to supply electricity to the FEA grid in Labasa throughout the year.

However, their power plant went out of operation from November 2013 and could not supply thereafter.

FSC Labasa has supplied to the FEA grid during the crushing season only in 2014 and 2015.
FSC has advised FEA that they are in the process of installing their new 8MW plant which is expected to sup- ply throughout the year as per the PPA from June 2016 on- wards.

Tropik Wood Industries Limited (TWIL) The 9.3MW Tropik Wood Industries Limited (TWIL) Co-gen- eration plant stopped supplying to the FEA grid in August 2015 due to problems associated with their power plant.

Repairs are underway and no commitment has been made by TWIL with regards to resumption of power supply to the FEA grid.
Tropik GIMCO (Fiji) Limited-PPA with FEA Tropik Gimco (TG) signed a Power Purchase Agreement (PPA) with FEA on 8th December, 2014 to build a biomass project near Nabou between Nadi and Sigatoka with a ca- pacity of 10MW with an annual deemed quantity of around 60 Giga-Watt-Hour.

TG has commenced construction at site and the plant is expected to be operational in early 2017.
Solar Hybrid Power Plant FEA advertised for Expressions of Interest (EOI) for so- lar hybrid powered plants with a capacity of 2MW-5MW in 2015.

FEA had also communicated to prospective IPPs who had been in discussions with FEA for the supply of energy using Solar of the revised Expressions of Interest (EOI) for 2MW – 5MW solar hybrid systems and to provide fresh sub- missions.

FEA received a total of 20 EOIs for a 2MW – 5MW solar hybrid systems.
FEA will complete evaluation of these EOIs and sign a PPA with the successful bidder in 2016.

Augmentation of the Transmission Grid An Electrical Protection Review Study of the entire FEA power system was carried out in 2011 to ensure safe and re- liable system operation.

The work scope was split into vari- ous phases.


The last phase 4 of the recommendations was implemented in 2015, which included the detailed design of modern protection schemes for the Wailoa Power Station generators, Vuda – Waqadra 33kV sub-transmission ‘B’ Page 28 Monasavu Hydro Scheme (MHS) Half-Life Repair & Maintenance Works Work continued on the Monasavu Hydro Electric Scheme Half Life Refurbishment project that commenced in 2011.
Below is a summary of work carried out in 2015 at a cost of around $14.3M: • Commenced manufacture of 132kV circuit breakers.

Pro cured 110V DC control cables and 6 x control panels for this project.

• Prepared tender specifications and called for tenders for the Design, Build, Supply, Testing & Commissioning of the 132kV Mimic Panel, HMI System and Annunciation Panel for 132kV Cunningham Road substation.
• Prepared tender specifications and called for tenders for the design of the Tap Changer Controls for the 132kV/33kV transformers at Cunningham Road substation.

• Replaced 2 units of the Disconnector/Isolator/Earth Switch at Cunningham Road 132kV zone substation.

• Replaced a total of 15 x 132kV insulators at Cunningham Road zone substation.

• Completed Factory Acceptance Testing of the 33kV switch gear for Cunningham Road zone substation.
• Rust refurbishment work commenced on the 132kV transmission towers along the Wailoa – Cunningham Road transmission line.

Access road work is also in progress for all transmission towers.

• Prepared specifications, called for tenders and awarded tender for the manufacture and supply of 132kV suspension and strain insulators.

Other Zone Substations • Commissioned the new 33kV/11kV Zone Substation off Knolly Street, in Suva, to cater for the future electricity growth in Suva City and nearby suburbs.
• Completed the upgrading of 33kV switchgear at the Hibiscus Park 33kV/11kV substation in Suva.

• Completed Factory Acceptance Testing for the replacement of 33kV switchgear at Suva zone substation.

• Prepared specifications, called for tenders and awarded tender for the manufacture, supply, installation and commissioning of 2 x 20/25MVA 11kV/33kV transformers for Kinoya.

• Design review was completed for replacement of 33kV switchgear for Vatuwaqa zone substation.
• Prepared tender specifications and called for tenders for the replacement of fire affected 11kV switchgear at Rarawai substation.

• Prepared tender specifications and called for tenders for the replacement of flood affected 11kV switchgear at Natadola substation.

FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 33kV Underground Cabling Works in Suva Power Reticulation for Momi Bay Resort • Completed installation and commissioning of 33kV cables between Suva and Vatuwaqa zone substations.
• Completed installation of 33kV cables between Vatuwaqa and Cunningham Road zone substations.

• Completed installation of 33kV cables between Vatuwaqa and Kinoya zone substations.

• Completed installation of 33kV cables between Cunningham Road and Kinoya zone substations.

Work continued on the $12.9M project to electrify the Momi Bay Resort that is currently being developed by FNPF.
Construction of a new 33kV transmission line from Waqadra to Momi to supply the Momi Bay development is currently in progress.

Work also commenced on the con- struction of a new 33kV switching station at Nawai and a 33kV/11kV zone substation at Momi.

This project is sched- uled for completion by the end of 2016 as a result of Tropi- cal Cyclone Winston.

Power Reticulation along the Korovou to Raki- raki Corridor in Viti Levu Work continued on the project to electrify the Korovou - Ra- kiraki corridor.
Work is currently in progress on the construc- tion of a new 33kV transmission line from Tavua to Volivoli.

Construction of a new 33kV/11kV Zone substation at Volivoli commenced in 2015 and is on schedule.

This project will be completed at a cost of around $19M and has been deferred to 2017 as a result of Tropical Cyclone Winston.

The Project is jointly funded by the Government of Fiji and the Fiji Elec- tricity Authority.
Rural, Urban and Contract Projects FEA spent a total sum of $28.7M on the construction of new rural electrification schemes, grid extension for com- mercial/industrial projects, power system reinforcement works and contract jobs.

Of this amount $5M was au- thorized for construction of fifty four (54) rural electrifica- tion projects, $7.6M was authorized for seventy four (74) General Extension projects for commercial and industrial customers and $5.7M was utilized for twenty seven (27) contract jobs.
A total amount of $10.4M was authorized for twelve (12) distribution power system reinforcement projects.

The residents of Viwa Island celebrating after the Honourable Prime Minister, Josaia Voreqe Bainimarama officially opened the Rural Electrification Scheme to supply electricity to Viwa Island.
Page 29 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 In terms of procurement of goods & services: • the actual average tender turnaround time of 4.64 weeks was accomplished for the year (for tenders valued at > = $10k and < = $100k) against a target of 6 weeks.

• In addition, corporate savings of around $1M was achieved via procurement /tender negotiations and other supply chain efficiency cost initiatives.
In terms of sound Inventory management, vigilance, and best practices: • FEA achieved the normal operational inventory stockholding level KPI (not including fuel & engine spares) of $10.56M against a corporate target of $11M.

• Stock-turns KPI (Improvement of rate of stock Utilization) was achieved at 8.2% against a target of great er than 6%.

This achievement indicates that FEA’s stock items were been managed efficiently and that stock was turned over regularly.
• The number of stock takes achieved was 4 out of 4 with a variance percentage of 0.000627% against a target of 0.001%.

INFORMATION & COMMUNICATION TECHNOLOGY The ICT System uptime recorded for 2015 was 99.89%, exceeding the Board mandated target of 99.80%.

The Authority embarked on some major projects highlighted within this report and was able to successfully deliver on all fronts.
The year also saw the execution of the ICT strategy to implement ICT technologies/solutions that are relevant and can be leveraged to improve business efficiency, re- duce operating costs and reduce the business risks.

Some of the projects that were commissioned in 2015 to improve customer service delivery were: a.

The implementation of a Document Management System; b.

The upgrade of the Contact Centre Management Server; and c. The upgrade of the Telephony PBX Server.
Through the study and research undertaken in 2015, the business cases for the following projects were approved and are in progress and scheduled to be completed in 2016: a.

Upgrade of the Customer Information & Billing System; b.

Replacement of the Data Centre Server Infrastructure; c. Upgrade of the Video Conferencing System; and d. Improvement of the Disaster Recovery capabilities.
ICT played a key role in enabling the Authority to ensure not only the success of the above projects but also the primary obligation of providing reliable electricity supply to custom- ers.

COMMERCIAL The Fiji Electricity Authority’s Commercial division compris- es of two major operational units namely Supply Chain and Regulatory Units which have a combined total of over eighty team members.

Both teams are distributed over the main FEA Depots in Kinoya, Navutu and Labasa.
1) Supply Chain Unit In 2015, the Supply Chain Unit has maintained its ongoing focus on optimizing its performance in the critical result areas of procurement of goods & services, inventory management, as well as Fleet & Property Services.
Performance optimization of the division was achieved through implementing the following simple but key objec- tives: • Increase Speed of delivery of goods & services rendered to internal & external customers • & external customers • Reduce Costs of providing goods & services rendered to internal & external customers Improve Quality of goods & services rendered to internal Supply Chain Unit 2015 Performance Outcomes Given the Corporate Plan objectives and related divisional key performance Indicators, the following main outcomes were achieved as at 31st December 2015: FEA Unit Leader Substations, Mr Ravin Narayan explains the specialized inventory that FEA imports to the FRCA customs officials during their Audit visit at Kinoya Depot in 2015.
Page 30 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 In terms of Fleet & Property Services: • • • Although the Corporate Fleet Accidents KPI target was not achieved as desired, our Fleet teams worked together with the Health & Safety team (HSE) to mitigate and reduce driving risks through specific driver attitude train- ing including specialist vehicle training programmes.
Additionally, at the end of last year, a Vehicle Tracking system was installed in all FEA vehicles to specifically assist in maintaining safe speeds and highlighting over speeding breaches as well as abuse of vehicle usage and management of fuel efficiency.

Facilitating the process in acquiring the relevant civil con- tractors for foundational preparation for the new 35MW generating station complex at the Kinoya property.
Ensured that all FEA properties & building services were maintained in a timely manner.

FEA installed Vehicle Tracking System in 2015 in all the FEA vehicles to specifically assist in maintaining safe speeds and highlighting over speeding breach- es as well as abuse of vehicle usage and manage- ment of fuel efficiency.
2) Regulatory Unit The Fiji Electricity Authority Regulatory Unit is tasked with its major core function of regulation and compliance en- forcement of the Electricity Act for all stakeholders in the Electricity sector.

Its other functions include (but are not limited) to the following: • Registration and licensing of electricians & electrical contractors.

• Licensing of electrical generation equipment and retailers including licensing of new Independent Power Producers (IPPs).
• Ensuring industry compliance in accordance with the Electricity Act and AS/NZS Wiring standards.

• Electrical testing of imported electrical appliances and fittings used in Fiji upon request.

Investigation and submission of Independent reports on • electrocution incidents to resident Magistrates.

• Testing of electricity meters to ensure compliance (within plus or minus 2.5%).
The following major achievements of this Unit as at 31st December 2015 were: Customer focus and Efficiency A new Inspection Regulatory team was established at Tavua Depot to cater for the increasing number of custom- ers located at Ba, Tavua and Rakiraki districts.
A new energy meter test bench was installed at Kinoya whilst the old meter test bench at Kinoya was relocated and installed at Navutu Depot in Lautoka to bring about efficien- cies in the testing of meters and eliminate the transporta- tion of energy meters from Suva to Lautoka.

Maintenance of Registers for Electricians & Electrical Contractors • Total number of registered licensed electricians in 2015 was 1,895 whilst 1,442 had their licenses validated after the required renewal fees were paid up.
• Total number of registered electrical contractors in 2015 were 277 and 43 had their licenses validated after the required renewal fees were paid up.

• The public were regularly advised of the importance of engaging only licenced electrical contractors via direct customer contact, publication on FEA Website and through advertisements every six months in the daily newspaper.
Number of new installations inspected and approved for connections: • A total of 5,793 new connections were made in 2015 against a target of 4,500.

The new connections com- prised of 4,566 domestic connections and 1,227 com- mercial connections.

Number of energy meters tested in FEA meter test bench • A total of 15,289 energy meters were tested by FEA in 2015 of which 12,705 were single phase meters, 2,009 were prepay meters and 575 were three phase meters.
Target of fixing 90 per cent of the power line faults in urban areas within 3 hours and for rural areas within 4 hours.

• Exceeded target for both rural customers and urban customers by achieving 95% and 93% respectively.

Ongoing and proactive Public Safety Awareness campaign • Achieved a target of 4 safety awareness presentations to various communities, villages & schools in Central and Westerns division to ensure life and property are protected and safe.
In 2015, FEA continued its support for the proposed trans- fer of the Regulatory functions by collaborating and provid- ing relevant policy & operational information to the Ministry of Public Enterprises and its Consultant.

Page 31 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Because of the inherent danger in dealing with elec- tricity, extensive education and training is essential to ensure the safety of FEA workers.

Here pole top rescue is being carried out as part of the safety training.
The FEA liveline team maintaining the overhead trans- mission line to ensure reliability and security of power supply to customers.

The FEA Team as part of their corporate social responsibility hosted a morning tea to raise funds and support cancer awareness in Fiji.
Page 32 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FINANCIAL STATEMENTS for the year ended 31 December 2015 STATEMENT BY MEMBERS OF THE AUTHORITY PAGE 34 INDEPENDENT AUDITOR’S REPORT PAGE 35 STATEMENT OF COMPREHENSIVE INCOME PAGE 36 STATEMENT OF FINANCIAL POSITION PAGE 37 STATEMENT OF CASH FLOWS STATEMENT OF CHANGES IN CAPITAL AND RESERVES PAGE 38 PAGE 39 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS PAGE 40-62 Page 33 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statement By Members of the Authority for the year ended 31 December 2015 In accordance with a resolution of the Members of the Fiji Electricity Authority (“the Authority”) in the opinion of the Members: 1. the financial statements and accompanying notes show a true and fair view of the financial position, results of operations, changes in capital and reserves and cash flows of the Fiji Electricity Authority as at and for the year ended 31 December 2015; 2. the statements have been prepared in accordance with the provisions of the Electricity Act 1966 (Cap 180) and International Financial Reporting Standards; 3. the basis of preparation of the financial statements and the classification and carrying amounts of assets and liabilities as stated in these financial statements are appropriate; 4. at the date of this statement there are reasonable grounds to believe that the Authority will be able to pay its debts as and when they fall due; and 5. all related party transactions have been adequately recorded in the books of the Authority.
................................................ Gardiner Whiteside DEPUTY CHAIRMAN 21 April 2016, Suva ............................... Nizam-ud-Dean CHAIRMAN Page 34 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Independent Auditor’s Report To the Members of Fiji Electricity Authority Report on the Financial Statements I have audited the accompanying financial statements of Fiji Electricity Authority (“the Authority”) which comprise the state- ment of comprehensive income, the statement of financial position as at 31 December 2015, the statement of cash flows for the year then ended and the statement of changes in capital and reserves and the summary of significant accounting policies and other explanatory information as set out on Note 1 to 24.
Directors’ and Management’s Responsibility for the Financial Statements The Directors’ and Management are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the requirements of the Electricity Act 1966 (Cap 180).
This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit.
I have conducted the audit in accordance with International Standards on Auditing.

Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial state- ments.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence that I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Audit Opinion In my opinion: a) proper books of account have been kept by the Fiji Electricity Authority, so far as it appears from my examination of those books, and b) the accompanying financial statements which have been prepared in accordance with International Financial Reporting Standards: (i) are in agreement with the books of accounts; and (ii) to the best of my information and according to the explanations given to me: a) give a true and fair view of the state of affairs of the Fiji Electricity Authority as at 31 December 2015 and of the results, movement in reserves and cash flows of the Authority for the year ended on that date; and b) give the information required by the Electricity Act 1966 (Cap 180) in the manner so required.
I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purposes of my audit.

Suva, Fiji Atunaisa Nadakuitavuki 29 April, 2016 for AUDITOR GENERAL .............................................
Page 35 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statement Of Comprehensive Income STATEMENT OF COMPREHENSIVE INCOME For The Year Ended 31 December 2015 FOR THE YEAR ENDED 31 DECEMBER 2014 FIJI ELECTRICITY AUTHORITY 3 Revenue - electricity sales Other operating revenue Total revenue Personnel costs Fuel costs Electricity purchases Lease and rent expenses Depreciation on property, plant and equipment Amortisation of intangible assets Losses due to flooding Other operating expenses Total expenses Profit before finance costs and income tax Finance Cost: Finance cost Interest income Unrealised foreign exchange loss,net Profit before income tax Income tax expense Profit after income tax Other comprehensive income Total comprehensive income for the year Notes 5 5 6 7(a) 2015 $'000 2014 $'000 311,989 9,877 300,337 7,154 321,866 307,491 (19,975) (140,704) (16,894) (1,567) (37,714) (180) - (48,924) (17,628) (180,032) (19,672) (1,353) (36,178) (390) (169) (38,861) (265,958) (294,283) 55,908 13,208 (9,885) 1,004 (1,673) (11,382) 313 (1,026) 45,354 1,113 (5,664) (141) 39,690 - 39,690 972 - 972 The above statement of comprehensive income has been prepared in accordance with the International Financial Reporting Standards (IFRS) and should be read in conjunction with the accompanying notes.
Page 36 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statement Of Financial Position STATEMENT OF FINANCIAL POSITION As at 31 December 2015 AS AT 31 DECEMBER 2015 FIJI ELECTRICITY AUTHORITY CAPITAL AND RESERVES Retained profits Capital contribution Represented by: CURRENT ASSETS Cash on hand and at bank Short term deposits Held to maturity financial assets Receivables and prepayments Inventories Tax refund due NON-CURRENT ASSETS Property, plant and equipment Intangible assets Deferred tax assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Employee benefit liability Interest bearing borrowings NON-CURRENT LIABILITIES Trade and other payables Interest bearing borrowings Deferred income Deferred tax liabilities TOTAL LIABILITIES NET ASSETS 4 Notes 2015 $'000 2014 $'000 551,999 95,175 512,309 88,340 647,174 600,649 8(a) 12 9 10 11 13 7(b) 14 15 16 14 16 17 7(c) The above statement of financial position has been prepared in accordance with the International Financial Reporting Standards (IFRS) and should be read in conjunction with the accompanying notes.
Page 37 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statement Of Cash Flows STATEMENT OF CASH FLOWS For The Year Ended 31 December 2015 FOR THE YEAR ENDED 31 DECEMBER 2014 FIJI ELECTRICITY AUTHORITY 5 Note 2015 $'000 2014 $'000 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Insurance proceeds for business interruption Net income tax and withholding taxes received/(paid) Net cash flows provided by operating activities Cash flows from investing activities Acquisition of property, plant, and equipment Proceeds from capital contribution for rural electrification, net Proceeds/(repayments) from refundable contribution for general extension, net Proceeds from disposal of property, plant and equipment Net cash flows used in investing activities Cash flows from financing activities Repayment of bonds and loans Proceeds from loans - local Net cash flows provided by/(used in) financing activities Net increase in cash and cash equivalents Effect of exchange rate movement on cash and cash equivalents Cash and cash equivalents - at the beginning of the year 321,111 (226,731) 977 (12,449) 2 (2,385) 304,199 (258,725) 311 (11,577) 1 8,218 80,525 42,427 (80,633) 6,835 7,279 211 (114,089) 13,497 19,680 470 (66,308) (80,442) (56,764) 40,668 (25,165) 75,921 (16,096) 50,756 (1,879) 12,741 699 58,523 474 45,308 Cash and cash equivalents - at the end of the year 8 57,343 58,523 The above statement of cash flows has been prepared in accordance with the International Financial Reporting Standards (IFRS) and should be read in conjunction with the accompanying notes.
Page 38 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statement Of Changes In Capital And Reserves For The Year Ended 31 December 2015 FIJI ELECTRICITY AUTHORITY STATEMENT OF CHANGES IN CAPITAL AND RESERVES FOR THE YEAR ENDED 31 DECEMBER 2014 6 Capital Contributions $'000 Retained Profits $'000 Total $'000 Balance as at 31 December 2013 76,604 511,337 587,941 Capital contribution during the year Total comprehensive income for the year ended 31 December 2014 11,736 - 11,736 - 972 972 Balance as at 31 December 2014 88,340 512,309 600,649 Capital contribution during the year Total comprehensive income for the year ended 31 December 2015 6,835 - 6,835 - 39,690 39,690 Balance as at 31 December 2015 95,175 551,999 647,174 The above statement of changes in capital and reserves has been prepared in accordance with the International Financial Reporting Standards (IFRS) and should be read in conjunction with the accompanying notes.
Page 39 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Statement of Compliance The financial statements have been prepared in accordance with the Electricity Act 1966 (Cap 180) and International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (IASB).
Issue of Financial Statements The financial statements were approved for issue by the Authority’s Board of Directors at its meeting held on 28th April 2016.

Basis of Preparation The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non- current assets and financial instruments.

Cost is based on the fair values of the consideration given in exchange for as- sets.
In the application of IFRS, management is required to make judgements, estimates and assumptions about carrying val- ues of assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements.

Actual results may differ from these estimates.


The estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satis- fies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

New standards, interpretations and amendments effective from 1 January 2015 A number of amendments are effective for the first time for annual periods beginning on (or after) 1 January 2015.
None of the amendments have a material effect on the Authority’s annual financial statements.

Amendment which are relevant to the entity are presented below.

IAS 24 Related Party Disclosures The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key manage- ment personnel services) is a related party subject to the related party disclosures.
In addition, an entity that uses a man- agement entity is required to disclose the expenses incurred for management services.

This amendment is not relevant to the Authority as it does not receive any management services from other entities.

IAS 19 Defined Benefit Plans: Employee Contributions IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans.
Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit.

These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service.
This amendment is effective for annual periods beginning on or after 1 July 2014.

This amendment to IAS 19 has no impact on the Authority’s financial statements.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by refer- ence to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value.
In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset.

This amendment to IAS 16 has no impact on the Authority’s financial statement.

Page 40 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) New standards, interpretations and amendments effective from 1 January 2015 (cont’d) IFRS 13 Fair Value Measurement The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IAS 39.

This amendment to IFRS 13 has no impact on the Authority’s financial statement.
New standards, interpretations and amendments that have been issued but are not mandatorily effective as at 31 December 2015 The following new standards, interpretations and amendments, which are not yet mandatorily effective and have not been adopted early in these financial statements, will or may have an effect on the Authority’s future financial statements.

The Authority intends to adopt these standards, interpretations and amendments, if applicable, when they become effective.
IFRS 9 - Financial Instruments In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9.

The standard introduces new requirements for classification and measurement, impairment, and hedge ac- counting.

IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted.
Retrospective application is required, but comparative information is not compulsory.

Early application of previous ver- sions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February 2015.

IFRS 15 - Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers.
Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue.

The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 Janu- ary 2018 with early adoption permitted.

The Authority is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date.
IFRS 16 - Leases On 13 January 2016, the IASB issued IFRS 16 Leases, which supersedes IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a Lease, SIC 15 Operating Leases-Incentives and SIC 27 Evaluating the Substance of Transac- tions Involving the Legal Form of a Lease.

IFRS 16 eliminates the classification by a lessee of leases as either operating or finance.

Instead all leases are treated in a similar way to finance leases in accordance with IAS 17.
Under IFRS 16, leases are recorded on the balance sheet by recognising a liability for the present value of its obligation to make future lease payments with an asset (comprised of the amount of the lease liability plus certain other amounts) either being disclosed separately in the statement of financial position (within right-of-use assets) or together with property, plant and equipment.
The most significant effect of the new requirements will be an increase in recognised lease assets and financial liabilities.

IFRS 16 applies to annual periods commencing on or after 1 January 2019.

Earlier adoption is permitted, but only IFRS 15 Revenue from Contracts with Customers is also adopted.

The Authority is currently assessing the impact of IFRS 16 and plans to adopt the new standard on the required effective date.
Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortization The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset.
As a result, a revenue-based method cannot be used to depreciate property, plant and equip- ment and may only be used in very limited circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted.

These amendments are not expected to have any impact to the Authority given that the Authority has not used a revenue-based method to depreciate its non-current assets.
Amendments to IAS 1 – Disclosure Initiative The amendments clarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies.

Although the amendments do not require specific changes, they clarify a number of presentation issues and highlight that prepares are permitted to tailor the format and presentation of financial statements to their circumstances and the needs of users.
The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted.

The Authority is currently assessing the disclosure requirements of amendments and plans to adopt the amendments on the required effective date.

Page 41 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) The following significant accounting policies have been adopted in the preparation and presentation of the financial state- ments: (a) Allowance for doubtful debts The Authority establishes an allowance for any doubtful debts based on a review of all outstanding amounts at year-end.

Bad debts are written off during the period in which they are identified.
(b) Bond instruments Bonds issued are recorded at cost which reflects the face value of these instruments.

Transaction costs on the issue of bond instruments are capitalised and amortised to the statement of comprehensive income over the currency life of the bond instruments.

Transaction costs are the costs that are incurred directly in connection with the issue of those bond instruments and which would not have been incurred had those instruments not been issued.
(c) Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred.

Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Authority has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.

(d) Borrowing costs The borrowing costs that are directly attributable to major capital expenditures and projects under construction are capi- talized as part of the cost of these assets.

Other borrowing costs are recognized as an expense in the year in which they are incurred.
The government guarantee fees on loans drawdown specifically for capital projects are capitalised.

Other guarantee fees paid are expensed.

(e) Capital contribution A 100% refundable capital contribution represents the cost of the extension, received from the developer or a prospective consumer.

The cost of the extension is the estimated cost incurred from the Authority’s nearest mains supply point capa- ble of providing the assessed load required.
The developer or a prospective consumer applying for a general extension provides a 100% refundable capital contribution in relation to the cost of the extension which is credited to trade and other payables and is refunded to the customer over a period of 5 and 8 years.

This is in accordance with the determination by the Fiji Commerce Commission.
(f) Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents comprise of cash on hand, cash in banks short term deposits held with banks and bank overdrafts.

Bank overdrafts are shown within borrowings under current liabilities in the statement of financial position.

(g) Comparative figures Where necessary, amounts relating to prior years have been reclassified to facilitate comparison and achieve consist- ency in disclosure with current year amounts.
(h) Deferred income Government grant in aid and assets acquired at no cost to the Authority are capitalised and systematically recognised as other income on the basis of the expected lives of the assets to which the grants relate.

Page 42 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (i) Employee benefits i) Annual leave Provision for annual leave represents the amount which the Authority has a present obligation to pay for employees’ ser- vices provided up to the balance date.

The provision has been calculated on the current wage and salary rate.

ii) Performance pay The Authority maintains a Performance Management System which is used to remunerate employees based on the achievement of certain Key Performance Indicators (KPIs).
These KPIs are established based on predetermined objec- tives of the Authority.

The liability is measured at the wage or salary rates prevailing during the year.

(j) Foreign currency translation Transactions denominated in a foreign currency are translated to Fiji currency at the exchange rate at the date of the transaction.

Foreign currency receivables and payables at balance date are translated to Fiji currency at exchange rates prevailing at balance date.
All gains and losses arising there from (realised and unrealised) are brought to account in determining the profit or loss for the year.

(k) Inventories Inventories are stated at the lower of cost and net realisable value.

Cost is based on the weighted average cost principle and includes expenditure incurred in acquiring the stock and bringing it to its existing condition and location.

Consuma- bles are valued at cost plus the associated delivery charges.
(l) Impairment of non-financial assets The Authority assesses at each reporting date whether there is an indication that an asset may be impaired.

If any such indication exists, or when annual impairment testing for an asset is required, the Authority estimates the asset’s recover- able amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

When the carrying amount of an asset ex- ceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

In determining fair value less costs to sell, an appropriate value model is used.
An assessment is made at each reporting date for non-financial assets as to whether there is any indication that previ- ously recognised impairment losses may no longer exist or may have decreased.

If such indication exists, the Authority makes an estimate of the recoverable amount.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recog- nised.
If that is the case the carrying amount of the asset is increased to its recoverable amount.

The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

Such reversal is recognised in the statement of comprehensive income.

Page 43 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (m) Financial instruments initial recognition and subsequent measurement i) Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and re- ceivables, held-to-maturity investments, AFS financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or con- vention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Authority commits to purchase or sell the asset.
Subsequent measurement For purposes of subsequent measurement financial assets are classified in four categories: – Financial assets at value through profit and loss – Loans and receivables – Held-to-maturity investments – AFS financial assets Financial assets at value through profit and loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

The Authority has not designated any financial assets at fair value through profit or loss.

Loans and receivables This category is the most relevant to the Authority.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.

The EIR amortisation is included in finance income in the statement of profit or loss.
The losses arising from im- pairment are recognised in the statement of profit or loss in finance costs for loans and in cost of sales or other operating expenses for receivables.

This category generally applies to trade and other receivables.

For more, information on receivables, refer to Note 9.
Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to matu- rity when the Authority has the positive intention and ability to hold them to maturity.

After initial measurement, held to maturity investments are measured at amortised cost using the EIR, less impairment.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included as finance income in the statement of profit or loss.

The losses arising from impairment are recognised in the statement of profit or loss as finance costs.

AFS financial assets AFS financial assets include equity investments and debt securities.

Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss.
Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquid- ity or in response to changes in the market conditions.

The Authority holds no AFS financial assets at reporting date.

Page 44 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (m) Financial instruments initial recognition and subsequent measurement (Cont’d) i) Financial assets (cont’d) Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Authority’s statement of financial position) when: – The rights to receive cash flows from assets have expired – The Authority has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Authority has transferred substantially all the risks and rewards of the asset, or (b) the Authority has neither trans ferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets The Authority assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired.

An impairment exists, if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial re-organisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that cor- relate with defaults.
ii) Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Authority’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.

This category also includes derivative financial instruments entered into by the Authority that are not designated as hedg- ing instruments in hedge relationships as defined by IAS 39.

Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IAS 39 are satisfied.

The Authority has not designated any financial liability at fair value through profit or loss.
Page 45 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (m) Financial instruments initial recognition and subsequent measurement (Cont’d) ii) Financial liabilities (cont’d) Loans and borrowings This is the category most relevant to the Authority.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.

The EIR amortisation is included as finance costs in the statement of profit or loss.
This category generally applies to the interest-bearing loans and borrowings.

Financial guarantee contracts Financial guarantee contracts issued by the Authority are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.

Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.
Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the state- ment of profit or loss.

n) Intangible assets Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Costs associated with developing or maintaining computer software programmes are recognised as an expense as in- curred.
Costs that are directly associated with the development of identifiable and unique software products controlled by the Authority, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets.

(o) Leased assets The Authority, the Monasavu landowners and the iTaukei Land Trust Board (iTLTB) in 2005 signed an agreement to lease approximately 23,000 acres of the Monasavu catchment area for a period of 99 years in return for specified pay- ments.
These lease commitments are disclosed in Note 19.

(p) Payables Trade payables and other accounts payable are recognised when the Authority becomes obliged to make future pay- ments resulting from the purchase of goods and services.

Page 46 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (q) Property, plant and equipment Property, plant and equipment are measured at cost less accumulated depreciation and impairment loss.

Cost includes expenditure that is directly attributable to the acquisition of the item.

Cost of leasehold land includes initial premium pay- ment or price paid to acquire leasehold land including acquisition costs.
Additions While expenditure on assets with a value of less than $300 is generally not capitalised, physical control is maintained over all items regardless of cost.
Depreciation rates Depreciation is calculated using the straight line method to write off the cost of each asset over their estimated useful lives as follows: Rates 0.50% - 1.25% 1.25% 1.25% Leasehold land Buildings - concrete Buildings - others Hydro Assets - dams Hydro Assets - tunnels Hydro Assets - plant and machinery Thermal assets Transmission Communication system and control Reticulation Wind mill Furniture and fittings Motor vehicles Computers 1.33% - 2.50% 1.33% - 2.44% 2.50% - 3.00% 4.00% - 7.00% 2.50% 2.86% 4.00% 5.00% 20.00% 33.30% 7.00% - 24.00% Other fixed assets except for capital spares, are depreciated when they are brought into service.
Freehold land is not depreciated.

Leasehold land is amortised over the remaining lease period.

Capital spares Capital spares represent items held primarily for use in thermal stations in the event of a breakdown.

In recognition of the increased risk of obsolescence over a protracted period, capital spares are amortised in line with the depreciation rates applicable to the related plant and machinery.

Capital spares are reported as part of Authority’s fixed assets.
Disposals Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the statement of comprehensive income.

Repairs and maintenance Repairs and maintenance is charged to the statement of comprehensive income during the financial period in which it is incurred.
The cost of major renovations are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Au- thority.

Major renovations are depreciated over the remaining useful life of the related asset.

Page 47 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (r) Provisions Provisions are recognised: - When the Authority has a present legal or constructive obligation as a result of past events; - It is probable that an outflow of resources will be required to settle the obligation; and - The amount can be reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.
A provision is recognised even if the likelihood of an outflow with re- spect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

(s) Reporting currency All figures are reported in Fiji currency.
(t) Revenue recognition Electricity income Electricity income is recorded in the statement of comprehensive income on an accrual basis by estimating the usage for customers till balance date.

Other income Rental income earned from leasing FEA properties is recorded in the statement of comprehensive income on an accrual basis.

Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial as- set.
(u) Rounding off amounts Amounts in the financial statements have been rounded off to the nearest thousand dollars unless specifically stated to be otherwise.

(v) Taxation Current tax: Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the year.

It is calculated using tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Current tax for the current and prior years is recognised as a liability or asset to the extent that it is unpaid or refundable.

Page 48 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) Taxation (cont’d) Deferred tax: Deferred tax is accounted for using the liability method on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recog- nised to the extent that it is probable that sufficient taxable amounts will be available against which deductible tempo- rary differences or unused tax losses and tax offsets can be utilised.

However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods when the asset and liability giving rise to them are realised or settled, based on tax rates and tax laws that have been enacted or substan- tively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Authority expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Authority intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period: Current and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.
(w) Segment information The Authority is not required to report segment information as it is not applicable to the nature of the Authority’s opera- tions.

Whilst electricity revenue is distinguished by key operating segments, this is done purely for information purposes.

The Authority has only one product in electricity, and costs associated with this product are totally common to all operat- ing segments, and it is not possible nor practical to attempt to allocate costs across the operating segments.
The Author- ity’s power generating and distribution systems are operated on a fully integrated basis.

(x) Value Added Tax (VAT) Revenues, expenses, assets and liabilities are recognised net of the amount of Value Added Tax (VAT), except: i) Where the amount of VAT incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii) for trade receivables and trade payables which are recognised inclusive of VAT.
The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

The VAT component of cash flows arising from operating and investing activities which are recoverable from or payable to the taxation authority is classified as operating cash flows.

Page 49 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 2.
FINANCIAL RISK MANAGEMENT 2.1 Financial risk factors The Authority’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

The Authority’s overall risk management programme focuses on the unpredict- ability of financial markets and seeks to minimise potential adverse effects on the Authority’s financial performance.
The Authority does not enter into or trade financial instruments, including derivative financial instruments, for speculative pur- poses.

The Authority’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

(a) Market risk (i) Foreign exchange risk The Authority undertakes various transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.
Exchange rate exposures are closely managed within approved policy parameters.

As at year end, USD $7.24M assets are denominated in USD.

Hence, changes in the USD by 10% (increase or decrease) is expected to have significant impact on the net profit and equity balances currently reflected in the Authority’s financial statements.
Financial assets Average exchange Financial assets (US$’000) rate (USD) (F$’000) 31 December 2015 (Actual) US$ 7,238 0.4701 15,397 Exchange rates - USD weakens by 10% US$ 7,238 0.5171 13,997 Exchange rates - USD strengthens by 10% US$ 7,238 0.4231 17,107 Based on the above, if USD weakens by 10%, the Authority’s investments in financial assets would decrease by $1.4 mil- lion and if the USD strengthens by 10%, the Authority’s investments in financial assets would increase by $1.71 million.
However, a risk also arises on the Authority’s obligation with respect to the foreign currency loan of USD $12.11 million (2014: USD$13.6 million) which remains outstanding as at year end.

For the year ended 31 December 2015, the restate- ment of the Authority’s foreign currency loans has resulted in an unrealised foreign currency loss of $1.96 million.
Further sensitivities are provided to establish the impact to the profit before tax if foreign currency exchange rate differs by 10% (increase or decrease) from that used at balance date: Foreign currency Average Foreign currency borrowings exchange rate borrowings (US$’000) (USD) (F$000) 31 December 2015 (Actual) US$ 12,107 0.4701 25,754 Exchange rates - USD weakens by 10% US$ 12,107 0.5171 23,413 Exchange rates - USD strengthens by 10% US$ 12,107 0.4231 28,615 Based on the above, if USD weakens by 10%, the Authority’s foreign currency borrowings would decrease by $2.34 mil- lion and if the USD strengthens by 10%, the Authority’s foreign currency borrowings would increase by $2.86 million.
The Authority enters into forward foreign exchange contracts on a selective basis to manage its exposure to foreign exchange rate risk.

Forward exchange contracts are initially recognised at fair value on the date a derivative contract is entered into and are subsequently restated to their fair value at each reporting date.

There were no outstanding forward foreign exchange contracts as at 31 December 2015.
(ii) Price risk The Authority does not have investments in equity securities and hence is not exposed to equity securities price risk.

However, the Authority is exposed to commodity price risk as it purchases fuel through a local agent from offshore.

The volatility on international fuel prices and its impact on the Authority’s profitability is given below considering two scenarios based on price, quantity mix, demand growth and hydro availability.
Page 50 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 2.
FINANCIAL RISK MANAGEMENT (CONT’D) 2.1 Financial risk factors (Cont’d) (ii) Price risk (cont’d) Average Fuel Price (F$/Metric Tonne) Consumption (Metric Tonne) 31 December 2015 (Actual) Fuel price-increase by 10% 1,352.65 1,487.91 Fuel price-decrease by 10% 1,217.38 104,021 104,021 104,021 Fuel costs $'000 140,704 154,774 126,633 Based on the above, if fuel price increase or decrease by 10%, the fuel costs to the Authority would increase or decrease by $14 million annually.
The above sensitivity calculation is based on the 2015 fuel consumption levels which is typically on the high side as compared to a normal year due to the prolonged spell of dry weather that impacted the Authorities operations in 2015 (iii) Interest rate risk The Authority has significant interest-bearing assets in the form of short-term cash deposits.

These are at fixed interest rates hence there are no interest rate risks during the period of investment.
For re-investment of short and long term cash deposits, the Authority negotiates an appropriate interest rate with the banks and invests with the bank which offers the highest interest return.

Given the fixed nature of interest rates described above, the Authority has a high level of certainty over the impact on cash flows aris- ing from interest income.

Accordingly, the Authority does not require simulations to be performed over the impact on net profits arising from changes in interest rates.
All debts of the Authority raised through bond issues bear fixed interest rates.

Therefore, the Authority is not exposed to interest rate risk.

The Authority is not exposed to interest rate risk from its borrowings from Suva City Council, as it borrows funds at fixed interest rates.

In relation to the borrowings from other commercial banks, the Authority to a certain extent is not exposed to interest rate risk as these borrowed funds are at fixed interest rates, for the agreed term.
Thereafter, the interest rates are re-negotiated and new interest rates are agreed upon.

The risk is managed closely within the approved policy parameters.

The Authority did not enter into any interest swap contracts during the year.

(b) Credit risk Credit risk arises from deposits with banks, as well as credit exposures to customers, including outstanding receivables.

For deposits with banks, only reputable parties with known sound financial standing are accepted.
Trade accounts receivable consist of a large number of customers, residential, industrial and commercial.

The Authority does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Authority’s maximum exposure to credit risk.
(c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash to ensure availability of funding.

The Authority monitors liquidity through rolling forecasts of the Authority’s cash flow position on daily basis.

Overall, the Authority does not see liquidity risk as high given that a reasonable portion of revenues are billed and collected.
The table below analyses the Authority’s financial assets and liabilities into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date.

The amounts disclosed in the table are based on the contractual undiscounted cash flows.

Fair value estimation The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.
The carrying values of financial liabilities and financial assets and provisions are estimated to approximate their fair values.
Financial Assets Short term deposits (Note 8(a)) (Note 12) (Note 9) 20,000 12,468 39,587 72,055 49,288 - 23,975 73,263 0$ 31,495 - 95,887 127,382 52,762 37,250 183,517 273,529 20,000 12,468 39,587 72,055 133,545 37,250 303,379 474,174 Page 51 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 2.
FINANCIAL RISK MANAGEMENT 2.1 Financial risk factors (Cont’d) (d) Other risk (i) Regulatory risk The Authority’s profitability can be significantly impacted by regulatory agencies established which govern and control the electric- ity sector in Fiji.

Specifically, fuel surcharges, regulatory fees and electricity tariffs are regulated by the Fiji Commerce Commission.

(ii) Operational Risk Operational risk is the risk of loss arising from systems failure, human error, and fraud to external events.
When controls fail to per- form, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial crisis.

The Authority cannot eliminate all operational risk, but through a control framework and by monitoring and responding to potential risks, the Authority is able to manage risks.

Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment procedures.

3.
3.

CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including ex- pectations of future events that are believed to be reasonable under the circumstances.

3.1 Critical accounting estimates, judgements and assumptions The Authority makes estimates and assumptions concerning the future.

The resulting accounting estimates will, by definition, seldom equal the related actual results.
The estimates and assumptions that have a significant risk of causing a material adjust- ment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment of property, plant and equipment The Authority assesses whether there are any indicators of impairment for all property, plant and equipment at each reporting date.
Property, plant and equipment are tested for impairment and when there are indicators that the carrying amount may not be recoverable, reasonable provision for impairment are created.

As at balance date, no provision for impairment has been made as the Authority reasonably believes that no indicators for impairment exist.

(b) Impairment of accounts receivable Impairment of accounts receivable balances is assessed at an individual level and impairment tests are performed on a more specific basis.
All receivable balances relating to the closed customer accounts are estimated to have been impaired and are accordingly provided for.

(c) Deferred tax assets Deferred tax assets are recognized for all unused tax losses to the extent that taxable profits will be available against which the losses can be utilized.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely level of future taxable profits together with future planning strategies.

(d) Provision for stock obsolescence Provision for stock obsolescence is assessed and raised on a specific basis based on a review of inventories.

Inventories con- sidered obsolete or un-serviceable are written off in the year in which they are identified.
(e) Customer Security Deposit The Customer Security Deposits are classified as Current and Non Current liability based on the customer’s average of 2 months electricity consumption.

The customer security deposit is reviewed on a regular basis by the Authority.

4.
4.

CAPITAL RISK MANAGEMENT The Authority’s objectives when managing capital are to safeguard the Authority’s ability to continue as a going concern in or- der to provide returns and benefits for stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Authority monitors capital on the basis of the gearing ratio.

This ratio is calculated as net debt divided by total capital.
Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the statement of financial position) less cash and cash equivalents and short term deposits.

Total capital is calculated as ‘equity’ as shown in the state- ment of financial position plus net debt.
The gearing ratios at 31 December 2015 and 2014 were as follows: 31-Dec-15 31-Dec-14 $’000 $’000 340,629 354,765 Total borrowings (Note 16) Less: Held to maturity financial assets (Note 12) (12,468) (11,642) Less: Cash and cash equivalents (Note 8) (57,343) (58,523) Net debt 270,818 284,600 Total capital and reserves 647,174 600,649 Total capital (total capital and reserves plus net debt) 917,992 885,249 Gearing ratio (net debt / total capital and reserves x 100) 29.50% 32.15% The decrease in the gearing ratio during the year resulted from the repayment of bonds worth $25.25M and repayments of loans amounting to $31.51M in 2015.
Page 52 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FIJI ELECTRICITY AUTHORITY 17 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 5.
OPERATING REVENUE ELECTRICITY SALES Commercial Industrial Domestic Others Total electricity sales OTHER OPERATING REVENUE Bad debts recovered Business interruption insurance claims received Contract sales Deferred income Gain on disposal of plant and equipment Lease rental - fibre optic Power pole rentals Rentals Realised exchange gain, net Sales and commissions Service and licence fees Training revenue Total other operating revenue 2015 $'000 2014 $' Total revenue 321,866 307,491 6.
PROFIT BEFORE INCOME TAX Profit before income tax has been determined after charging the following expenses: Allowance for doubtful debts Auditors' remuneration for auditing services Bad debts written off Professional fees for other services Directors' fees Depreciation on property, plant and equipment Amortisation of intangible assets Insurance Personnel costs Unrealized foreign exchange loss, net (130) 34 - 488 51 37,714 180 7,264 19,975 1,673 197 22 33 701 50 36,178 390 7,609 17,628 1,026 Page 53 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FIJI ELECTRICITY AUTHORITY Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 18 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 2015 $'000 2014 $'000 7. a) INCOME TAX EXPENSE The prima facie income tax on the pre-tax profit reconciles to the income tax expense as follows: Profit before income tax 45,354 1,113 Prima facie income tax payable at 20% 9,070 223 Tax effect of amounts which are not taxable in calculating taxable income: - Employee taxation scheme - Deferred income - Fuel Economy Investment Allowance - Tax effect of non - deductible items - Over provision in prior year (24) (171) (3,459) 264 (16) (9) (171) - 165 (67) Income tax expense attributable to profit 5,664 141 b) DEFERRED TAX ASSET The deferred tax assets consist of the following at future tax rates: Tax losses Provision for doubtful debts Unrealized exchange losses 1,064 6,211 96 122 849 620 c) DEFERRED TAX LIABILITY 2,009 6,953 The deferred tax liabilities consist of the following taxable temporary differences at future tax rates: Property, plant and equipment Unrealized exchange gain 40,111 39,490 508 607 40,718 39,998 Income tax expense comprises movements in: Deferred tax assets Deferred tax liabilities 4,944 3,207 720 (3,066) 5,664 141 8.
CASH AND CASH EQUIVALENTS Short term deposits (a) Cash at bank and on hand - FEA operation USD project bank account - off-shore (b) Project bank account - on-shore (b) Cash Security Letter of Credit 20,000 20,000 2,350 538 2,930 8,812 32,063 21,835 7,338 - Total cash and cash equivalents 57,343 58,523 (a) The short term deposit amounting to $20M with Westpac Banking Corporation (WBC) matures in three months.
Accordingly, this deposit has been considered as cash and cash equivalents for the purpose of the statement of cash flows.

(b) The off-shore and on-shore project bank accounts are in respect to funds committed to projects that are still Work-in-Progress (WIP) at year end.
Page 54 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FIJI ELECTRICITY AUTHORITY Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 19 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 9.
RECEIVABLES AND PREPAYMENTS Electricity debtors (a) Other debtors Prepayments and deposits Allowance for doubtful debts - Electricity debtors Total receivables and prepayments (net) 2015 $'000 2014 $'000 32,785 3,199 4,081 31,165 881 2,987 40,065 35,033 (478) (608) 39,587 34,425 (a) Electricity debtors include receivable from Government of Fiji amounting to $3.32M (2014: $3.46M).

(b) The terms of trade for electricity debtors are 14 days from the date of billing.
(c) Electricity debtors that are less than 3 months past due are not considered impaired.

As at 31 December 2015, electricity debtors of $31.74M (2014: $30.05M) were not considered impaired.

As of 31 December 2015, the amount of electricity debtors impaired was $477,590 (2014: $607,829) net off deposits held.

The individual receivables are mainly customers, who have defaulted in payments.

It was assessed that a portion of the receivables are expected to be recovered.
Movements in the provision for impairment of electricity debtors and other debtors are as follows: Balance as at 1 January Amounts allowed/(recovered) during the year, net Balance as at 31 December 608 (130) 478 411 197 608 in the The creation and releasing of provision for impaired receivables has been included in "Other operating expenses" statement of comprehensive income.

Amounts charged to the allowance account are generally written off, when there is no ex- pectation of recovering the debt.
The other classes within receivables and prepayments do not contain impaired assets.
As at 31 December, the ageing analysis of trade receivables is as follows: Current (F$'000) 26,020 24,212 < 15-30 Days (F$'000) 4,019 3,863 30-45 Days (F$'000) 744 597 45-60 Days (F$'000) 790 520 60-90 Days (F$'000) 171 856 over 90 Days (F$'000) 1,041 1,117 Total (F$'000) 32,785 31,165 2015 2014 The maximum exposure to credit risk at the reporting date is the fair value of each classes of receivables mentioned above less electricity deposits.
The Authority generally obtains security deposits in the form of bank guarantees and cash deposits from all electricity customers which is estimated based on two months electricity consumptions.

The total carrying amount of security deposits in relation to the above trade receivables carried by the Authority is $40,051,166 (2014: $36,876,963).

The rest are secured through bank guarantees maintained by the Authority.

A portion of this security deposit is refunded to customers on a daily basis.

10.
10.

INVENTORIES Consumables - at cost Goods in transit Total inventories 28,777 789 29,566 27,982 1,059 29,041 Page 55 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 11.
PROPERTY, PLANT AND EQUIPMENT Freehold land At cost Leasehold land At cost Accumulated depreciation Buildings and improvements At cost Accumulated depreciation Dam, tunnels, water conductor At cost Accumulated depreciation Plant, equipment and transmission assets At cost Accumulated depreciation Furniture and fittings At cost Accumulated depreciation Wind mill At cost Accumulated depreciation Motor vehicles At cost Accumulated depreciation Capital spares At cost Capital works in progress - Wainisavulevu Weir Raising Project - Vuda Waqadra 33kV Double Circuit Line - 35MW Kinoya HFO Project - Rural and Urban Reticulation Projects -Switchgear Upgrade (Suva, Labasa and Hibiscus Park) -Momi Bay Project -Tavua Volivoli Grid Extension Project -Underground Cabling Project - Others Total - At cost - Accumulated depreciation Closing net book value Page 56 2015 $'000 2014 $'000 28,943 28,952 13,960 (1,907) 13,910 (1,761) 12,053 12,149 82,267 (18,292) 82,159 (17,234) 63,975 64,925 537,265 (65,342) 494,024 (56,022) 471,923 438,002 587,096 (214,747) 491,031 (192,059) 372,349 298,972 28,315 (17,118) 25,593 (15,879) 11,197 9,714 34,393 (14,573) 34,393 (12,837) 19,820 21,556 17,017 (15,075) 16,763 (13,757) 1,942 3,006 4,430 3,970 - - - 8,496 8,135 3,057 4,854 6,287 12,287 37,790 5,497 33,635 3,197 - - - - 17,502 43,116 97,621 1,376,802 (347,054) 1,288,416 (309,549) 1,029,748 978,867 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 o f t h e F E A D e p o t a t T a v u e n i $ 6 8 , 4 5 4 .
o f i n s u r a n c e c o v e r i s i s g n i f i c a n t .
i l C e r t a n p r o p e r t y , , c y c o n e l , f l o o d n g i , , t h e t o t a l i b o r r o w n g c o s t s o f 1 , 9 2 8 , 5 0 6 w e r e c a p i t a l i s e d a s f o l l o w s : ( - $ 6 7 0 , 1 8 8 , K n o l l y S t r e e t - $ 2 6 6 2 1 , , , K H F O $ 1 1 6 3 , , 9 4 3 1 2 , 0 5 3 6 3 , 9 7 5 4 7 1 , 9 2 3 3 7 2 , 3 4 9 1 1 , 1 9 7 1 9 , 8 2 0 1 , 9 4 2 4 , 4 3 0 4 3 , 1 1 6 1 , 0 2 9 , 7 4 8 - - ( 9 ) - ( 1 4 7 ) 5 1 - - ( 1 , 0 5 8 ) 1 0 8 - - ( 9 , 3 2 0 ) 4 3 , 2 4 1 - - ( 2 2 , 6 8 8 ) ( 1 , 2 3 9 ) ( 1 , 7 3 6 ) ( 1 , 3 1 8 ) 9 6 , 2 0 0 2 , 7 2 2 ( 1 3 5 ) - - - - - - 3 2 7 ( 7 3 ) - ( 2 0 8 ) ( 1 5 6 ) 8 2 4 - ( 1 4 2 6 4 9 ) , - ( 1 5 6 ) ( 2 1 7 ) 8 8 , 1 4 4 8 8 , 9 6 8 - ( 3 7 , 7 1 4 ) 2 8 , 9 5 2 1 2 , 1 4 9 6 4 , 9 2 5 4 3 8 , 0 0 2 2 9 8 , 9 7 2 9 , 7 1 4 2 1 , 5 5 6 3 , 0 0 6 3 , 9 7 0 9 7 , 6 2 1 9 7 8 , 8 6 7 - 3 3 4 ( 1 7 ) - ( 1 4 7 ) ( 1 , 0 5 9 ) ( 9 , 2 7 9 ) ( 2 1 , 0 1 5 ) ( 1 , 1 9 9 ) ( 1 , 7 3 9 ) ( 1 , 5 1 5 ) - - - 3 7 - - - - - 4 5 , 1 3 0 1 , 6 6 0 - - - - - - - 3 3 8 - - ( 2 2 5 ) ( 5 4 5 ) - - 2 8 , 6 3 5 1 2 , 2 9 6 6 5 , 9 4 7 4 4 7 , 2 8 1 2 7 4 , 8 5 7 9 , 2 5 3 2 3 , 2 9 5 4 , 1 8 3 4 , 7 4 0 ' $ 0 0 0 l a n d F r e e h o d l L e a s e - B u i l i d n g s h o d l l a n d & i m p r o v e m e n t s ' $ 0 0 0 ' $ 0 0 0 ' $ 0 0 0 D a m , t u n n e l s c o
0 0 ' $ 0 0 0 ' $ 0 0 0 D a m , & P l a n t , a s s e t s ' $ 0 0 0 & f i t t i n g s F u r n i t u r e i W n d m i l l ' $ 0 0 0 ' $ 0 0 0 v e h i c l e s M o t o r ' $ 0 0 0 s p a r e s C a p i t a l ' $ 0 0 0 ( 4 7 , 4 9 6 ) , 9 9 2 2 2 4 5 , 8 9 5 ' $ 0 0 0 - C a p i t a l w o r k i n p r o g r e s s ( 5 4 2 ) ( 1 7 ) 9 9 , 2 2 2 9 1 6 , 3 8 2 ' $ 0 0 0 T o t a l - ( 3 6 , 1 7 8 ) 1 1 .
P R O P E R T Y , P L A N T A N D E Q U P M E N T ( I C O N T D ' ) , : Page 57 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 FIJI ELECTRICITY AUTHORITY 22 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 2015 $'000 2014 $'000 12.
HELD-TO-MATURITY FINANCIAL ASSETS Term deposits with banks 12,468 11,642 During the year, the Authority reinvested USD$5.86M as term deposits with ANZ bank at an interest rate of 0.20% per annum.

This term deposit will be used to repay the balance of the Sinohydro Corporation offshore contract project retention in US dollars for the construction of the Nadarivatu Renewable Hydro Power Project.

This amount will be fully paid in 2016.

13.
13.

INTANGIBLE ASSETS Software License Gross carrying amount: Balance as at 1 January Additions Balance as at 31 December Accumulated amortisation: Balance as at 1 January Amortisation for the year Balance as at 31 December Net book amount 6,490 - 6,490 6,490 - 6,490 (5,528) (180) (5,138) (390) (5,708) (5,528) 782 962 Software license are made up of the Authority's Financial Management Information System, Payroll System, Billing System and other specialized Energy Monitoring Information System.
The software license has been valued at cost and amortised by an impairment charge over its remaining life to arrive at the carrying amounts.

14.
TRADE AND OTHER PAYABLES Current Trade creditors Other creditors and accruals VAT payable Accrued interest Customer security deposits General extension refundable deposits Total current trade and other payables Non-Current Other creditors and accruals Customer security deposits General extension refundable deposits Total non-current trade and other payables 4,857 40,313 1,224 679 1,896 319 1,658 28,330 956 1,314 1,896 419 49,288 34,573 6,988 38,155 39,114 13,360 34,981 31,736 84,257 80,077 The fair value of trade and other payables equals their carrying amount, as the impact of discounting is not significant.
The customer security deposits relates to the mandatory cash deposit which is equivalent to two months electricity consumptions in accordance with the Electricity Act.

This is refunded to the customer when the electricity account is permanently closed.

The general extension refundable deposits are the capital contribution from prospective customers or developer for the supply of electricity from the Authority’s newest grid in accordance with the General Extension Policy.
The amount is refunded to the customer over a period of 5 and 8 years.

Page 58 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 15.

EMPLOYEE BENEFIT LIABILITY Annual leave Performance pay Total employee benefit liability Balance as at 1 January Additional provisions provided during the year, net Carrying Amount as at 31 December Employee numbers Number of full-time equivalent employees as at 31st December 16.
INTEREST BEARING BORROWINGS Current Term Loans - ANZ Bank (b) Term Loan - Suva City Council (c) Term Loans - FNPF (d) Total current interest bearing borrowings Non-Current Bonds (a) Term Loans - ANZ Bank (b) Term Loan - Suva City Council (c) Term Loans - FNPF (d) Total non-current interest bearing borrowings Total interest bearing borrowings (a) Bonds 2015 $'000 2014 $'000 899 1,566 2,465 2,328 137 2,465 2015 725 851 1,477 2,328 2,302 26 2,328 2014 703 20,176 46 3,753 18,054 43 - 23,975 18,097 37,250 212,845 5,100 61,459 62,500 238,514 5,147 30,507 316,654 336,668 340,629 354,765 The Reserve Bank of Fiji offers, manages and carries out registry services on behalf of the Authority.
The Authority's bonds are issued in competitive tenders.

The bonds are recorded at cost which reflects the face value of the bonds.

Bonds worth $25.25 million were early redeemed during the year.

The maturing terms of the bonds range from 5 to 8 years, whilst the interest rates vary from 6.80% to 7.19% per annum.

The bonds are guaranteed by the Government of Fiji.
(b)Term loans - ANZ Bank The interest bearing borrowings from ANZ Bank are at an agreed interest rate ranging from 2.65% to 2.70% per annum and are repayable on monthly instalments.

The term loans from ANZ Bank are secured by the guarantee given by the Government of Fiji.

(c) Term loan - Suva City Council The term loan from Suva City Council (SCC) is subject to interest at the rate of 3% per annum and is unsecured.
The loan is repayable over a period of 86 years in equal instalments of $200,000 on 25th July each year until July 2065.

(d) Term loan - FNPF The interest bearing borrowings from FNPF are at an agreed interest rate ranging from 3.25% to 3.85% per annum and are repayable on monthly instalments.

During the year the Authority borrowed FJ$10 million from FNPF to partially fund the establishment of the FEA Depot at Tavueni and the construction of a 33kV substation, off Knolly Street in Suva.
The term loans from FNPF are secured by the guarantee given by the Government of Fiji.

Page 59 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FIJI ELECTRICITY AUTHORITY Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 25 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 17.
DEFERRED INCOME EEC Grant In Aid EEC Grant in Aid Less: accumulated amortisation Closing balance - 31 December Government Grant For Rural Electrification Government Grant for Rural Electrification Less: accumulated amortisation Closing balance - 31 December Total deferred income (net) 18.
CONTINGENT LIABILITIES (a) Miscellaneous claims 2015 $'000 2014 $'000 12,330 (8,226) 4,104 9,342 (6,166) 3,176 7,280 12,330 (7,743) 4,587 9,342 (5,792) 3,550 8,137 No provision has been recorded in the accounts for unsecured contingent liabilities mainly in respect of sundry court actions against the Authority.

The Authority estimates such liability, if any, to be immaterial.

(b ) Contingent liabilities exist with respect to the following: Letter of credit Immigration bond Litigation claims - others 19.
COMMITMENTS 1,836 - 419 2,255 1,367 25 804 2,196 Estimated amounts of lease expenditure committed at balance date but not provided for in the financial statements: (a) Operating lease expenditure commitments Native and Crown leasehold land and other premises Later than one year Later than one year but not later than five years Later than five years 1,580 5,861 111,442 1,274 4,721 89,839 Total operating lease expenditure commitments 118,883 95,834 The Native and Crown leasehold land includes the lease obtained for the Monasavu land.
The settlement signed with Monasavu land owners and the iTaukei Land Trust Board commits FEA to the following future payments: Later than one year Later than one year but not later than five years Later than five years 840 2,700 49,780 620 2,480 50,400 (b) Operating lease revenue commitments Operating leases contracted for the rental of fibre optic and power poles by the Authority with the lessees are receivable as follows: Later than one year Later than one year but not later than five years 967 1,261 956 966 Total operating lease revenue commitments 2,228 1,922 Page 60 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FIJI ELECTRICITY AUTHORITY Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 26 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 20.
CAPITAL EXPENDITURE COMMITMENTS Capital expenditure contracted for at balance date but not otherwise provided for in the financial statements.
2015 $'000 2014 $'000 8,573 40,836 Projects approved by the Board but not contracted for at balance date 112,519 108,177 The projected Capital expenditure for 2016 of around $113 million comprises of the 6.6kV ring main system upgrade to 11kV in Suva, Korovou-Tavua Grid Extension Project, Construction of Tavua 33kV Substation, construction & commissioning of the new 33kV substation at Volivoli in Rakiraki, construction of the new 132kV and 33kV transmission lines and substation to evacuate power from FSC Rarawai, Construction of Momi Bay 33kV Zonal Substation, Waqadra–Nawai-Momi 33kV Transmission Line Project, Construction of 11kv/33kV Switching Station at Nawai, Vatuwaqa 33kV Substation Building and associated electrical equipment upgrade, 33kV/11kV Switchgear Upgrade projects, Land acquisitions, development of the Qaliwana Hydro Project, Taveuni power reticulation, development of Lower Ba Hydro, Rural Electrification Projects, Network Urban Reinforcement Projects, Purchase of Electricity Meters and Vehicle Replacements.
21.

EVENTS OCCURRING AFTER BALANCE DATE a) During the 2016 National Budget announcement, the Government of Fiji announced an increase in the electricity subsidy threshold from 85kWh to 95kWh per month for domestic customers.

This will be tested and confined to households with a combined income of $30,000 per annum or less.

There will be no financial implication of the increase in the electricity subsidy to the Authority.
b) The Ministry of Finance and FEA signed the Government Guarantee Agreement on 23rd December 2015 that effective from 2016 onwards the Government Guarantee fee will be 0.75% per annum based on the guaranteed amount and this will be paid semi-annually.

c) A sum of $7.2M will be provided by the Government of Fiji towards the establishment of the FEA depot in Tavueni and the purchase and installation of two 1MW generators.

This is to assist power reticulation for Stage 1 in Tavueni.
d) Tropical Cyclone Winston struck Fiji on 20th February 2016 and caused extensive damages to the FEA Power System infrastructures.

The estimated total cost of repairs and to restore power supply to the affected areas in Fiji is estimated to be around $20M.

This cost will be incurred in 2016.


There were no other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Authority, the results of those operations, or the state of affairs of the Authority in future financial years.

22.

SIGNIFICANT EVENTS DURING THE YEAR During the year: a) FEA officially opened the Wainisavulevu Weir raising project in November 2015.
This project will increase the height of the existing weir by an additional 8 meters to store more water.

This project is expected to increase the energy output from the two existing hydros namely Wainikasou and Monasavu Hydro Schemes.

b) FEA completed the installation and commissioned the new 35MW Heavy Fuel Oil (HFO) Power Station at Kinoya at a total cost of $70.3M.
c) The Fiji Commerce Commission (FCC) approved revision to the Regulatory Fees and Charges which was implemented effective from 10th August 2015. d) FEA signed a Cooperation Agreement with the European Investment Bank (EIB) for a grant funding towards the detailed feasibility study for the lower Ba hydro development.

The total value of the grant funding is around Euro 4.5M.

This work is expected to commence in early 2016.

23.
23.

PRINCIPAL ACTIVITIES AND PRINCIPAL PLACE OF BUSINESS The principal activities of the Authority are the generation, transmission, distribution and sale of electricity on Viti Levu, Vanua Levu and Ovalau as governed by the Electricity Act and Regulations.

The address of Fiji Electricity Authority’s registered office and principal place of business is 2 Marlow Street, Suva, Fiji Islands.
Page 61 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 FIJI ELECTRICITY AUTHORITY Notes To And Forming Part Of The Financial Statements For The Year Ended 31 December 2015 27 Notes to and Forming Part of the Financial Statements for the Year ended 31 December 2014 24.
RELATED PARTY TRANSACTIONS a) The Authority is a statutory body constituted by an Act of Parliament and the transactions with the Government of Fiji during the year are as follows: Government guarantee fee capitalized during the year 2015 $'000 150 2014 $'000 263 The Government of Fiji also provides guarantees on the bonds and loans issued by the Authority.

As at balance date, the Authority had borrowed funds amounting to $335.5 million under this guarantee.
b) Directors The names of persons who were directors of the Authority during the year 2015 are as follows: Nizam-ud-Dean (Chairman) Gardiner Henry Whiteside (Deputy Chairman) Alipate Naiorosui (Appointed, 8th May 2015) Francis Kean Isikeli Voceduadua Hasmukh Patel (Ex-officio Member) The directors fees paid during the year were $51,542.
(c) Key Management Compensation The aggregate remuneration and compensation paid to key management personnel were: Salary, performance pay and allowances Superannuation Other benefits Total 2015 $'000 2014 $'000 1,383 138 21 1,386 111 21 1,518 1,542 (d) During the year, the Authority supplied electricity to the Government of Fiji, other Government owned entities, directors, related entities and executives at normal commercial rates, terms and conditions.
(e) Receivable/payable to related parties have been disclosed in respective notes to the financial statements.
Page 62 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statistics 2015 TRANSMISSION & SUB-TRANSMISSION CENTRAL 132kV O/H Line (km) 33kV O/H Line (km) 33kV U/G Cable (km) Substations Transformer MVA 2014 2015 2014 2015 2014 2015 2014 62 2015 62 DISTRICT Wailoa - Cunningham Cunningham - Kinoya 'A' Cunningham - Kinoya 'B' Cunningham - Vatuwaqa Cunningham - Hibiscus Park 'A' Cunningham - Rokobili Rokobili - Hibiscus Park Cunningham - Sawani Vatuwaqa - Suva Vatuwaqa - Knolly Knolly - Suva Kinoya - Vatuwaqa Kinoya – Nausori Nausori – Sawani Hibiscus Park - Wailekutu Hibiscus Park - Suva Wailekutu - Deuba Cunningham - Komo Komo – Hibiscus Park TOTAL TRANSMISSION & SUB-TRANSMISSION NORTHERN DISTRICT Labasa Labasa - Seaqaqa Seaqaqa - Dreketi TOTAL 132kV O/H Line (km) 33kV O/H Line (km) 33kV U/G Cable (km) Substations Transformer MVA TRANSMISSION & SUB-TRANSMISSION WESTERN DISTRICT Wailoa Wailoa - Nadarivatu Nadarivatu - Vuda Nadarivatu SS to PS Vuda - Pineapple Corner A Vuda - Rarawai Rarawai - Vatukoula Vatukoula - Tavua Vuda - Waqadra A Vuda - Waqadra B Vuda - Waqadra C Vuda - Waqadra D Waqadra - Sigatoka Qeleloa Maro Sigatoka - Nococolevu Nococolevu-Korolevu Vuda - Rarawai Tee-off to Pineapple Corner Wailoa - Wainikasou Nagado - Sabeto Maro-Natadola TOTAL 132kV O/H Line (km) 33kV O/H Line (km) 33kV U/G Cable (km) Substations Transformer MVA 30
Page 63 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015 Statistics 2015 DISTRIBUTION NETWORK CENTRAL DISTRICT High Voltage Low Voltage High Voltage Low Voltage OVERHEAD LINES (km) UNDERGROUND CABLES (km) SUBSTATIONS INSTALLED KVA Deuba Lami Suva Kinoya Nausori Korovou Levuka Wailoa Navua TOTAL Increase % Increase 8.233 1% 12.361 1% 7.512 2.0% 1.404 1.14% 29 2% 11275 3% DISTRIBUTION NETWORK - NORTHERN DISTRICT High Voltage Low Voltage High Voltage Low Voltage OVERHEAD LINES (km) UNDERGROUND CABLES (km) SUBSTATION INSTALLED kVA Labasa Seaqaqa Dreketi Savusavu TOTAL Increase % Increase DISTRIBUTION NETWORK - WESTERN DISTRICT High Voltage Low Voltage High
 Voltage Low Voltage OVERHEAD LINES (km) UNDERGROUND CABLES (km) Sigatoka 2014 366.279 2015 368.157 2014 527.21 2015 530.515 2014 6.38 2015 6.41 Nadi - Tavua 1352.694 1358.631 1850.306 1857.583 164.882 172.328 220.862 229.171 220.238 220.238 4 4 2014 10.083 76.685 1 2015 10.113 76.855 1 1939.835 1955.959 2597.754 2608.336 175.262 182.738 87.768 87.968 SUBSTATION INSTALLED kVA Rakiraki TOTAL Increase % Increase GENERATION STATISTICS ( EXCLUDING INDEPENDENT POWER PRODUCERS) Years 2008 2006 2007 2009 2010 2011 2012 2013 2014 2015 315,569 481,098 462,986 436,081 382,963 424,818 466,765 420,195 314,341 320,875 Total Generated Thermal MWh 394,363 255,989 269,745 Units Generated Wailoa Hydro Mwh Units Generated Wainiqeu Hydro Mwh Units Generated Wainikasou Hydro Mwh Units Generated Nagado Hydro Mwh Units Generated Nadarivatu Hydro Mwh Total Generated Hydro MWh Units Generated in VLIS Diesels MWh Units Generated Diesel Others MWh Units Generated HFO Kinoya & Vuda Unit Generated from Butoni Wind Farm Units Generated from Solar panel Mwh Total Generated Wind & Solar MWh Total FEA Generation (MWh) Made up of Total VLIS Generation ( MWh) Total Other Generation (MWh) Station Auxilliary usage MWh Auxilliaries as % of Generation % contribution from Hydro % contribution from Thermal % contribution from Wind & Solar % increase / (decrease ) in Hydro Generation % increase / (decrease) in Thermal VLIS Generation % increase / (decrease) in Total Thermal Generation % increase / (decrease ) in Total Generation Maximum Dam Level ( AMSL) Minimum Dam level (AMSL) Page 236,356
-39.51% -35.09% 4.38% 746 728 46,866 9,139 1.19% 64.34% 35.06% 0.60% -2.63% 4.35% 5.37% 0.21% 746 728 43,733 9,050 1.16% 59.20% 39.87% 0.93% -7.05% 19.09% 14.90% 1.03% 742 723 53,435 9,268 1.11% 49.53% 49.71% 0.77% 46,421 8,952 1.12% 56.97% 42.41% 0.62% 49,214 8,343 1.04% 65.38% 33.77% 0.85% -10.12% 10.36% 15.07% 36.18% 33.95% 7.44% 739 727 -18.56% -24.45% -18.16% -20.15% -4.07% 0.27% 743 735 747 731 49,027 9,196 1.07% 61.50% 37.87% 0.62% 0.41% 24.51% 19.71% 6.74% 743 730 50,589 10,130 1.18% 46.66% 52.84% 0.50% -23.97% 45.59% 39.81% 0.21% 736 724 48,092 8,106 0.91% 45.51% 53.85% 0.64% 1.24% 7.10% 5.81% 3.81% 742 734 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015
 FIJI ELECTRICITY AUTHORITY | ANNUAL REPORT 2015