Power Purchase Agreement between EPC & French Company deemed illegal

By Staff Reporters

APIA, SAMOA – 15 FEBRUARY 2023: The Power Purchase Agreement (PPA) between the Electric Power Corporation (EPC) and French Solar Company EDF/Granite has been questioned as illegal.

The PPA was for EDF/Granite to set up a solar plant in Samoa and sell electricity to EPC for national consumers at an agreed price per kW/h under the PPA.

According to sources, the PPA was signed by the EPC Board Chairman, Pepe Christian Fruean and this was later endorsed by Cabinet and the Cabinet Paper was used to get the Regulator to approve and issue the required licenses for the venture.

However, this is the process that has been questioned as illegal. This is because the Electric Power Corporation Act 2010 states that it is the Regulator who approves and issues licenses for such service, not the EPC Board Chairman.

EPC Act 2010, Section 13 Application & Grants of License:

(1) “Any person wishing to generate electricity other than for their own use or to provide electricity network services must apply in writing to the Regulator for a license to do so.

(2) “The Regulator, may upon receiving an application under subsection (i), grant a license to the applicant provided that the applicant meets the prescribed requirements for obtaining a license.” 

Section 30 of the EPC Act 2010 clearly states the Regulator’s prior approval for entering into Power Purchase Agreements with independent power producers.

(1) “An electricity network services licensee who intends to enter into a power purchase agreement with an independent power producer must first apply to the Regulator in writing, for the Regulator’s approval.”

BACKGROUND
The issue with the EDF/Granite goes back to 2020 in which the former Cabinet approved FK (20) 44 based on the Tender’s Board advice, for EPC to go ahead with negotiating the EDF/Granite contract working closely with the Ministry of Finance, Office of the Attorney General and the Office of the Regulator.

However, the negotiation was only between the EDF and EPC without regard to the provisions of the Electricity Act 2010 Part 7 Section 30 – “Regulator’s prior approval for entering into power purchase agreements with independent power producers.”

EDF/Granite, a French Solar Power Company, is one of the Clean Energy projects that GridMarket platform is pushing for Samoa.

MINISTER OF EPC QUESTIONS
In a media statement on Monday this week, the Minister for the Electric Power Corporation, Olo Fiti Vaai continued to question the involvement of the GridMarket platform in the process of acquiring Independent Power Producers (IPP) for Samoa.

The GridMarket platform has positioned itself as the sole source to identify and pursue Clean Energy Initiative and Clean Energy Project(s) and only with solution providers agreed in good faith between the Independent State of Samoa and GridMarket.

“This agreement signed by the previous Government with GridMarket looks very much like a middleman situation to me,” said Olo.

Talamua understands this is not the first time this has been done as the PPA for a company currently selling electricity to EPC had the PPA signed and approved by Cabinet first then an application for a License was sent the Regulator which was contrary to the Act.“This MOU guarantees that they will be the sole middlemen for every single procurement process the Government of Samoa will engage in for more IPPs in the future. Why? For what reason?” asked the Minister.

Olo reiterated that while GridMarket is not directly getting compensation from EPC, he understands that the company will receive a commission from IPPs that intend to engage with Samoa to pursue any Clean Energy Project.

According to the Minister, the deal between GridMarket, EDF and the previous Cabinet proposed to charge .73 sene per kW/h (.252 cents USD) excluding tax, meanwhile, the EPC sells units to customers for .53 sene per kW/h, which Olo said is “clearly a very bad deal.”

The Cabinet approval of EDF-R’s proposal was used to get the Regulators support to issue a license for the PPA despite the requirements of the EPC Act 2010.

According to Talamua sources, this is not the first time this has been done as the PPA for a company currently selling electricity to EPC had the PPA signed and approved by Cabinet first then an application for a License was sent the Regulator which was contrary to the Act.

Meanwhile, EDF/Granite is not registered in Samoa and still waiting for the approval by the Regulator of the appropriate tariff of the PPA and a Generation License as per the Electricity Act 2010.