Govt ‘has no say’ in Commerce Commission
www.fijilive.com - - 06 JUN 2008
The Fiji Government has no say in the decisions of the Commerce Commission, says chairman Charles Sweeney.However, in the case of the Fiji Electricity Authority, the statement by the interim Finance Minister was made in government’s capacity as owner of FEA.Sweeney says Mahendra Chaudhry’s decision to halt the increase in fuel tariffs was not an indication of the government having authority over the Commission.“In a price control matter, such as the FEA matter, a company subject to price control is entitled to make a request for an increase if, for example, its costs are increased by an event outside its control,” he explained.“This is what FEA has done. The first application for an increase was refused by the Commission because it had been caused by the government's decision to increase the tariffs which FEA had to pay on its petroleum purchases.”He said the Commission considered that since this was a decision of the government and since the government was the owner of FEA, FEA should be left to work through the consequences of a decision of its owner without being able to pass on the extra costs to electricity consumers.The second application by FEA, he said, was based on an increase in the cost of petroleum arising from the increase in world prices. It was not based upon the tariff change,” said Sweeney.He said it was important to understand that the Commission only authorised FEA to increase its charges to a new maximum price.“The decision whether to do so or not is a decision for FEA. Generally, however, the Commission assumes that firms do not seek price increases unless they intend to actually charge them if permitted to do so,” Sweeney said. He said Chaudhry’s decision to halt the increase was a matter for FEA and its relationship with the Government and that this did not affect the Commission's position.“The government has not made any attempt to influence the Commission in relation to FEA's application for a price rise,” Sweeney said.“The Commission is extremely careful to preserve its independence. That independence is the cornerstone of the Commission's credibility as an economic regulator.”
The Fiji Government has no say in the decisions of the Commerce Commission, says chairman Charles Sweeney.However, in the case of the Fiji Electricity Authority, the statement by the interim Finance Minister was made in government’s capacity as owner of FEA.Sweeney says Mahendra Chaudhry’s decision to halt the increase in fuel tariffs was not an indication of the government having authority over the Commission.“In a price control matter, such as the FEA matter, a company subject to price control is entitled to make a request for an increase if, for example, its costs are increased by an event outside its control,” he explained.“This is what FEA has done. The first application for an increase was refused by the Commission because it had been caused by the government's decision to increase the tariffs which FEA had to pay on its petroleum purchases.”He said the Commission considered that since this was a decision of the government and since the government was the owner of FEA, FEA should be left to work through the consequences of a decision of its owner without being able to pass on the extra costs to electricity consumers.The second application by FEA, he said, was based on an increase in the cost of petroleum arising from the increase in world prices. It was not based upon the tariff change,” said Sweeney.He said it was important to understand that the Commission only authorised FEA to increase its charges to a new maximum price.“The decision whether to do so or not is a decision for FEA. Generally, however, the Commission assumes that firms do not seek price increases unless they intend to actually charge them if permitted to do so,” Sweeney said. He said Chaudhry’s decision to halt the increase was a matter for FEA and its relationship with the Government and that this did not affect the Commission's position.“The government has not made any attempt to influence the Commission in relation to FEA's application for a price rise,” Sweeney said.“The Commission is extremely careful to preserve its independence. That independence is the cornerstone of the Commission's credibility as an economic regulator.”
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