THE board of Solomon Islands National Provident Fund (SINPF) has vigorously defended the decision to jointly loan $70 million to SIEA (Solomon Islands Electricity Authority).
When the Solomon Star asked the board why they chose SIEA and if they could inform and assure members of returns from the investment, Chairman Baoro Laxton Koraua said SIEA has performed financially well.
“If you look at the balance sheet and the profit and loss statements of SIEA over the last two years, they have actually had very good returns.
“They have actually made very good money and I think it is very important that you look at their balance sheet and their profit and loss statement,” Mr Koraua said.
He said SIEA is one of the star performers of statutory organizations right now.
“And obviously when we look at what and where we invest, we also look at their performance.”
Mr Koraua said the new Statutory Act has strengthened a number of State Own Enterprises to perform financially well.
“While in the past, there have been poor investment results from a lot of our statutory authorities, the new SOE Act has strengthened a number of these institutions, and as a result, SIEA is now in its third year of profitability.”
SINPF recently approved a joint loan of $70 million with Westpac Bank for SIEA to purchase new generators.
“It’s a good example of how your board is actively seeking participation in nation building while making returns to our members,” Mr Koraua said.
SINPF General Manager Tonny Makabo also defended the investment, saying SIEA members’ minds should not be with the finances of SIEA during the ethnic conflict period.
“Because of the assistance provided by the World Bank, it has turned SIEA around.
“That is what most people and to some extent the media had imagined. With the intervention by the World Bank, the authority has made a turnaround both financially and operationally,” Mr Makabo said.
He said SIEA went to the extent of making profit with positive liquid cash.
“So when they ask funds for a loan for the purchasing of the generator sets to avoid load shedding, we analysed their finances including assets and what not.
“And of course we requested mortgaging to make sure members’ funds are safe, and with the anticipated rate of returns that we agreed on.
“So that is a well considered, documented and approved loan.”
NPF’s deputy General Manager Michael Wate also contributed saying SIEA is now a different organisation and is a good borrower that all the banks want to lend money to.
“They have improved their finances over the past years and no doubt this investment is a worthwhile cause,” Mr Wate said
The chairman of the board concluded that it is a question of either leaving your finances in a bank and earn 0.1 percent interest or taking an active role in participating in this key infrastructural investment that will not only increase employment and get good returns.
“I’d rather give it to SIEA at five, six or seven percent interest than have it idle in the bank at one percent interest.”
By EDNAL PALMER