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2 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Table of ContentsLetter to the Ministers 12018 Highlights 2Plans for 2019 3About Solomon Islands Electricity Authority 5Members of the Board 6Senior Management 7Chairman’s Letter 9Chief Executive Officer’s Letter 10Engineering Highlights 11Capital Works & Planning Division 17Customer Services Division 19Finance Division 22Corporate Services Division 23Corporate Governance Practices 26Financial Statements 28Glossary 73
Our Vision:Energising our nation.
Our Mission:To provide a safe, reliable, affordable and accessible supply of electricity to the Solomon Islands.
Our Values:• Respectforourcustomersandourpeople• Improvementthroughchangeandinnovation• Meetingourservicequalitycommitments• Carefortheenvironment• Individualresponsibilityforouractions• HonestyandTrust• Teamwork
1Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Letter to the Ministers
27thMarch2019
The Honourable Bradley Tovosia MPCaretakerMinisterofMines,EnergyandRuralElectrificationP O Box G37, Honiara,Solomon Islands
&
The Honourable Manasseh Sogavare MPCaretakerDeputyPrimeMinister&MinisterofFinanceandTreasuryPO Box G26,Honiara,Solomon Islands
DearHonourableMinisters,
SOLOMON ISLANDS ELECTRICITY AUTHORITY (Trading as Solomon Power) ANNUAL REPORT 2018
OnbehalfoftheBoardofDirectorsofSolomonPower,IhavethehonourtosubmittoyouboththeAuthority’sAnnualReport,inaccordancewithsection25(I)oftheElectricityAct,Cap128,andsection14(1)(a)(b)oftheStateOwnedEnterprisesAct2007.
ThereportincorporatesauditedStatementofAccountsandthemajordevelopments,activitiesandachievementsoftheAuthorityforthefinancialperiod.
OnbehalfofSolomonPower,Ithankyoubothforyouron-goingunderstandingandcooperationandlookforwardtoyourcontinuingsupport.
Yours faithfully,
David K.C. Quan MBEChairman
2 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
• SignedthePowerPurchaseAgreement(PPA)forTinaRiverHydropowerProject
• Commenced the Solomon Islands Electricity Access and RenewableEnergyExpansionProject(SIEAREEP)throughWorldBank
• Improvedthereliabilityofelectricitysupply
• G-1operationinHoniarasustained
• Theproject tore-locate feeder12toEastHoniaraSubstationhasbeencompletedandtheupgradeworksatRanadiSubstationareessentiallycomplete
•Works for the new substation at Kola’a Ridge have substantiallyprogressed
• Livenedupconnectionto1160customersundertheOutputBasedAidprogramme
• UndertheWorldBankfundedSISEPprocuredthethird11/33kVpowertransformerforLunggaPowerStation
• Installedandcommissioned600SmartMetersatHoniara
• Commissioned11kVand415Vnetworkextensionsat10locationsinHoniara
• ProgressedtheupgradeworksatHoniaraPowerStation
• StreetlightsinHoniararepairedandreplaced
• The design and construct contract for the conversion of the existingdieselgenerationsystemsatKirakira,Lata,Malu’u,MundaandTulagitohybridgenerationsystemswasexecutedandtheworkshaveprogressed
• Evaluation of tenders for solar hybrid systems at Hauhui, Namugha,SasamungaandVonunuprogressed
• TheBoardapprovedthefollowing:
- Extensiontothe1MWsolarfarmatHendersonbyanother2MW
- Installationofa220kWsolar systemon theroofofourbuildingatRanadi
- SolarHybridsystemsatTingoaandVisale
• CommissionedanewMeterTestBenchcapableoftestingtheaccuracyoften revenue meters simultaneously
• 41personnelfromvariousorganisationsacquiredthegradeAlicensedelectriciancertification,ofwhich25arefromSolomonPower
• Implementedanoperationsandmaintenanceplanforallournetworkand generation assets
• AmajorityofthelogofclaimshavebeennegotiatedsuccessfullywiththeStaffAssociationandapproved.
• Continuedourfocusonsafety,nurturingandmentoringofstaff
• Continuedinternalsafety,linemanandoperatortrainingprogrammes
• Trainingofmetertechnicians,cablejointers,projectmanagerscontinued
• CustomerSurvey2018completed- improvements inmanymetrics incomparisonwith2015Survey
2018 HigHligHTs
2 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
3Solomon ISlandS ElEctrIcIty authorItyannual report 2018
• Achieve the conditions precedent under the PPA for Tina RiverHydropowerProject
• FurtherimprovementinthereliabilityofelectricitysupplyinHoniaraand at the Outstations
• SustainG-1operationinHoniara
• ContinuetheimplementationoftheOutputBasedAid(OBA)programme
• CompletetheRanadiSubstationupgrade,newKola’aRidgeSubstationandtheLunggaPowerStationthirdpowertransformerprojects
• ImplementthedesignandconstructcontractforthehybridgenerationsystemsatKirakira,Lata,Malu’u,MundaandTulagi
• Complete15morenetworkextensionsinHoniaraandattheOutstations
• Progressworkstoupgradethe33kVand11kVswitchboardsatLunggaPowerStation
• ImplementthedesignandconstructcontractatAfio
• ProgressthefollowingunderSIEAREEP
- Extensiontothe1MWsolarfarmatHendersonbyanother2MW
- Installationofa220kWsolar systemon theroofofourbuildingatRanadi
- SolarHybridsystemsatTingoaandVisale
• Executedesignandconstructcontracts for thenewhybridgenerationsystemsatHauhui,Namugha,SasamungaandVonunu
• Progresswithstage1of theSupervisoryControlandDataAcquisition(SCADA)project
• ExecuteadesignandconstructcontractforthehybridgenerationsystematAmbu,Auki
• ProcurelandatTanagaifora1.5MWgridconnectsolarandcommencetender process
• Progressthe“GreenVillage”projectatEastHoniara
• Implementthe24/7CustomerCallCentreproject
• DevelopmorenewnetworkextensionsinHoniaraandattheOutstations
• FurtherdeveloptheprojectfortheinstallationofmoreHybridGenerationSystems
• Developaprojectforbatteryenergystoragesystems(BESS)
• CommencethereviewoftheElectricityTariff2016
• Continueimplementationofthevegetationmanagementplan
• Continueourfocusonsafety,training,nurturingandmentoring
• ContinuewiththeApprenticeshipprogramme
• CommencetheLineMechanicTrainingprogramme
• ConductcampusinterviewsinuniversitiesinHoniara,FijiandPNGtorecruit graduates
• Continue with the Talent Development programme and successionplanning
Plans fOr 2019
3Solomon ISlandS ElEctrIcIty authorItyannual report 2018
4 Solomon ISlandS ElEctrIcIty authorItyannual report 20184 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
5Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Who we are SolomonIslandsElectricityAuthority(SIEA)tradingasSolomonPower(SP)isaStateOwnedEnterprise.
Our objectives UnderSection4oftheStateOwnedEnterprisesAct,theprincipalobjectiveoftheCompanyis‘operateasasuccessfulbusiness’,andtothisend,be:
• AsprofitableandefficientascomparablebusinessesthatarenotownedbytheCrown.
• Agoodemployer.
• Anorganisationthatexhibitsasenseofsocialresponsibility by having regard to the interests of thecommunityinwhichitoperates.
Tomeettheseobjectives,SPstrivestoBe as profitable and efficient as comparable businesses by:
• WithintheElectricityandStateOwnedEnterprisesActs,installing,operatingandmaintainingelectricity supply systems that meet the needs of connected customers.
• Developingandimplementingcapitalinvestmentplans, to improve electricity system performance andincreasethenetworkcoverageofagreedareas.
• Seekingtorecoverefficientcostsoftheserviceprovision.
• Improvingtheefficiencyofservices,whilstimproving asset reliability and availability.
Be a good employer by:
• Maintainingawell-qualifiedandmotivatedstaff.
• AdoptingHRpoliciesthattreatemployeesfairlyandproperly in all aspects of recruitment, retention and employment.
• Promotingahighlevelofsafetythroughouttheorganisation.
Act in a socially responsible manner by:
• Buildingeffectiverelationshipswithlandowners,customer groups and interest groups that are affected by our activities.
• Improvingenvironmentalreportingandperformance on issues that are caused by our electricity supply activities.
• Incorporatingsustainabilityintoourbusinessactivities,andworkingtoimprovesustainableoutcomes in terms of resource management.
Nature and scope of our activities SP’sprincipalcommercialactivities,asdefinedundertheElectricityAct,arethe:
• Generationanddistributionofelectricalsupplytoconnected customers in approved areas,
• Operation,maintenanceanddevelopmentofassetsthat are necessary to achieve these outcomes on a long term, sustainable basis,
• Approvedexpansionofservicestoincreasedareasof operation.
Other regulatory functions TheCompanyisalsomandatedbytheElectricityActtoperformthefollowingregulatoryfunctions:
• BeresponsiblefortheregistrationofElectricalContractors.
• EnsurethatindustriesandcontractorscomplywiththeElectricityActandtheAS/NZSWiringStandards, by inspecting all electrical installations before connecting to SP mains.
• Beresponsibleforthelicensingofstandbygenerators,IndependentPowerProducers(IPPs)andCogenerationofpower.
About Solomon Islands Electricity Authority(trading as Solomon Power)
6 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Members of the Board
David K.C. QuanChairman
John Bosco HouanihauDirector
James ApaniaiDirector
Yolanda YatesDirector
Muriel Ha’apue-DakamaeDirector
Henry KapuDirector
Harry ZolevekeDirector
Sebastian IlalaDirector
Rovaly SikeDirector
7Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Senior Management
Pradip VermaChiefExecutive
Officer
Martin SamChiefEngineer
Jose PoothokarenChiefFinancial
Officer
Arieta CamaGeneralManagerCorporateServices
Jan SangaGeneralManagerCustomerServices
Hemant KumarGeneralManagerCapitalWorks
MathewKorinihona
ManagerDistribution
Atkinson TalvatManagerGeneration
& Outstations
Janendra PrasadManagerElectrical
Engineering
KitioneMalugulevu
RegulatoryManager
Dalton MaesiaManagerLands&
Buildings
Apollos Inasimae
ManagerFinance
Sarah NihoparaManagerBusiness
Performance
Natalie KairiBoard Secretary
Gavin GorazuManagerIT
Levan RespiohManagerHuman
Resources&Administration
DroumandRupert
SeniorHumanResources
Business Partner
Robin SimpsonManagerHealth&
Safety, Security and Environment
8 Solomon ISlandS ElEctrIcIty authorItyannual report 20188 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
9Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Chairman’s Letter2018hasbeenacontinuationofthestrongperformancethatSolomonPowerhasdemonstratedduringtheprevioussevenyears.ItiseightyearsinarowthatSolomonPowerhasmadeaprofit.Furthermore,thelastsevenyear’sstatutoryaccountshaveallbeenunqualified,andsignedoffbytheAuditorGeneralbeforethemandateddateof31stMarcheachyear.
ItispleasingtonotethatSolomonPowerisgoing“Green”.WesignedthePowerPurchaseAgreementfortheTinaRiverHydropowerProject.OnbehalfoftheBoardofSolomonPowerIwouldliketothankourShareholdingMinistersfortheguidanceandsupporttheyprovidedtotheBoardandManagementinthenegotiationsinfinalisingthePowerPurchaseAgreementwithTinaHydropowerLimited.
SolomonPowerinvested$30milliononSIGDomesticDevelopmentbonds.IwouldliketothanktheShareholdersforprovidingthisinvestmentopportunityforSolomonPower.
Thetotalgenerationexperiencedamodestincreaseof2.13%incomparisonwith2017.However,duetoreducedlosseswehaveincreasedoursalesinkWhby3.6%.
ThetenderforthenextlotofHybridsstationsatHauhui,Namugha,SasamungaandVonunuclosedinOctober2018andweanticipateplacingcontractsfortheirdesign,installationandcommissioningbyMarch2019.
ItispleasingtonotetheprogressmadeduringtheyearontheOutputBasedAidprogrammewiththesupportoftheWorldBank.Byyearendwehadlivenedupconnectionto1160customers.Thisprogrammeenvisagesgridconnectionto2500newcustomersandaugurswellforSolomonPowerandisanotherenablertomeetourlongtermobjectiveofdoublingourcustomernumbers.
ThecontinuedsupportoftheWorldBank,AsianDevelopmentBank,JapanInternationalCooperationAgency,NewZealandGovernmentandUnitedArabEmiratesGovernmentandotherdonorstoexploreopportunitiesinrenewableenergy and to drive commercialisation in our operations, is very much appreciated.
IwouldliketothanktheoutgoingDirectorsoftheBoard,Mr.SebastianIlala,Mr.HenryKapu,Ms.YolandeYatesandMr.HarryZoleveke,fortheirexemplarycontributionasBoardmembersofSolomonPower.IalsotakethisopportunitytowelcomeMurielHa’apue-DakamaeandJamesApaniaitotheBoardofSolomonPower.IamconfidentbothMurielandJameswillprovidestronggovernanceandstrategicdirectiontoSolomonPowerthroughthenextphaseofdevelopment.
IalsotakethisopportunitytothanktheShareholdersandmycolleaguesontheBoardandtheManagementTeamforthecontinuedsupportrenderedthroughout2018.
David K.C. Quan MBEChairman
Solomon ISlandS ElEctrIcIty authorItyannual report 2018
10 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
The year in perspective has been another successful oneforSolomonPower(SP)financiallyandoperationally.Wehaveachievedareasonablegrowthingenerationandenergysales.Thenon-technicallosseshavealsobeensteadyat6%.Since2012ithasseenadeclinefrom12%to6%.
DespitesomesystemoutagesinlateNovemberandearlyDecemberthereliabilityinHoniarahasbeengood.TherewasnorotationalsheddinginHoniaraand at the Outstations during the year.
During2018wehavesustainedourfocusoninfrastructureinvestmentswithanannualinjectionof$140million.
Theprogrammetoextendthe11kVand415VnetworksinHoniaraandattheOutstationsmadevery good progress during the year and also the implementationoftheOutputBasedAidprogrammeto subsidise the electricity connection to the grid for thelowincomecustomerssustainedmomentum.TheseprojectsarecomplementaryandareinlinewithourlongtermobjectivetodoubleourcustomernumbersanddriveeconomicgrowthinSolomonIslands.
Thesectionofthe11kVundergroundcablenearthedumpingsiteatNorowhichwaslaidveryshallowandas a result experienced a number of faults over the yearswasbypassedby7spansofoverheadline.ThishasimprovedthereliabilityofpowersupplytoNoroandMunda.
During2018,ourinvestmentinnewequipmentand testing facilities is already bearing fruits. The newequipmentpurchasedin2017wassuccessfullyutilisedonthenetworktopre-locateandpinpoint
faultsonpowercables.TheMeterTestBenchisbeingusedandhasdetectedmanyrevenuemeterswithpoor accuracy.
Theprojecttoinstallandcommission1100SmartRevenueMetersforallCommercialandIndustrialcustomersinHoniarawithremoteconnectivitytoourheadofficeatRanadiisessentiallycomplete.Wearenowabletoremotelymonitor,interrogatethesemetersandalsoabletodisconnectandre-connecttheassociatedcustomers.Theprojecttore-locatefeeder12toEastHoniaraSubstationhasbeencompletedandtheupgradeworksatRanadiSubstationaresubstantiallycomplete.TheconstructionoftheKola’aRidgeSubstationhasprogressedwellwithanticipatedcompletioninMarch2019.
SP is increasingly becoming an employer of choice, attractingnewgraduatesandprofessionalpersonnelalike.DuringtheyearwecementedandfurtherstrengthenedtheexcellentrelationshipbetweentheManagementandtheStaffAssociation.Amajorityofthe log of claims have been negotiated successfully and approved.
Theframeworkforlicensingisnowpayingreturns.Duringtheyear41SolomonIslandersattained“GradeALicensedElectricians”certification.Ofthese25arefrom SP.
Itisalsopleasingtoseethemobiletop-upsreachmorethan1000dailytransactionsonanaverage.During2018weextendedthefacilitytocustomerswithe-walletthroughPanOceanicBankandarenowhavingdiscussionswithotherserviceproviderstoextend the mobile top up arrangement through their different payment platforms.
IwishtothanktheBoardfortheexcellentsupporttheyhaveprovidedtomeandtheSPTeamduring2018.
IthasbeenanotherfruitfulyearandIwouldliketoacknowledgethecontributions-bigandsmall,thateverymemberofTeamSPhasmadeduring2018.CongratulationsTeamSPandallourstakeholdersforeverythingweachievedtogetherin2018.
Pradip VermaChiefExecutiveOfficer
Chief Executive Officer’s Letter
11Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Engineering Highlights
Overview:
OveralltherewasaslightdropinthereliabilityofthepowersupplyinHoniara,comparedtothatin2017.However,thereliabilityduringtheperiod2012to2018hasshownatrendingimprovementinHoniara.AttheOutstationshowever,therewasimprovementonthereliabilityofpowersupplyin2018.OutagerecordstotheendofDecember2018shows24.8millionCustomerMinutesLost(CML)comparedwith20.0millionCMLin2017.TheOutagefigurescomprisesofbothplannedandunplannedsystemoutages.DuringthemonthsofNovemberandDecembertherewasanincreaseinplannedoutagesrequiredforthetestingandcommissioningworksontheupgradedRanadiandnewKola’aRidge33/11kVsubstations.Therewasalsoahighnumberofunplannedoutagesinmid-Decemberduetosystemsprotectionissuesandafaultintheunderground33kVcablethatlinkstheRanadiandHoniaraSubstations.
ThenetworkperformanceindicatorSAIDIhasshownaslightdropinthenetworkperformancein2018with184.40minutesincomparisonwith158minutesin2017.However,therehasbeenaslightimprovementinSAIFIwhichhasreducedfrom1.8timesin2017to1.45timesin2018.
HoniaraMaximumDemandwentupto15.82MWtowardstheendoftheyear.AttheOutstationsAuki,GizoandNorohavealsorecordedincreaseofpower
demand.Theincreaseinpowerdemandwasasaresultofanincreaseinthenumberofnewcustomersconnected and also increase in consumption by large commercialcustomers.InHoniara,theincreaseinthedemandwasalsoasaresultofKingSolomonHotelandpartoftheHeritageParkHotelloadsbeingreconnected on to the grid.
MajorachievementsbytheGenerationandElectricalteamsatLunggawassuccessfulcompletionofthescheduledmajoroverhaulsofthe4xMANDieselsGenerators,L8WartsilaandtheL9Mitsubishigenerators.
AttheOutstationstheteamcompletedthescheduledoverhaulsofGeneratorsK3atKirakiraandLT3atLata.Witholdergeneratorscontinuedtobeoperated,keepingthelightsonhasbeenachallengeatMalu’u,LataandKirakiraStations.
In addition, the team also carried out the planned and unplanned repairs and maintenance of the generation systems.
GenerationofpowerinHoniarawasmainlyfromthefournewMANDieselsgenerators,whicharemorefuelefficient,whilstthebalanceofpowerrequirementwasfromtheoldgeneratorsatLunggaandHoniarapowerstations.TheHoniaragridwasalsosupportedbytheHenderson1.0MWandtheRanadi50kWsolarinstallations during daylight hours.
12 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
TheappointmentofanewSwitchingCoordinatorunder the Technical Section of the Transmission and DistributionDepartment,hasgreatlyimprovedtheefficientandsafeswitchingofthenetworkforprojectsandoperationalrequirements.
TheDistributionteamalsoprovidedUGL,theContractor,terminationandjointingservicesforthe high voltage cables and the coordination of the networkswitchingduringtheconstructionandcommissioningphasesoftheRanadi&Kola’aRidgeSubstationsandtheFeeder12relocationproject.
Particulareffortswerealsoontheimprovingandmaintainingofthereliabilityofthenetworkbyfocusing on vegetation management, upgrading of under rated conductors, transformers, replacing of defectiveequipmentinthenetworkandthetimelyimplementation of planned maintenance.
Despiteofitsoperationalcommitmentsandlimitedresources,theDistributionteamwasabletoprovideboth technical and implementation support to the networkextensionprojects,inparticularthenewlineatKilusakwaloatAuki,theextensionofthenetworkatNgalimeraandLungga,eastofHoniara.
Besides the normal inspections of electrical installationsanditsRegulatoryfunctions,theRegulatoryDepartmentmadeverygoodprogressinthe area of licensing of electricians. By the year end a totalof41electricianswereawardedwithGrade“A”Electrician’slicense.
Generation:
PowergenerationinHoniarawasmainlyfromtheLunggaPowerStationandinparticularfromthe
new10MWplantusingthe4x2.5MWMANDieselsgenerators.ThebalanceofpowerrequirementwasfromtheoldgeneratorsatLunggaandHoniaraPowerStations.
ScheduledmajoroverhaulsonallfourMANDieselsgeneratorswerecompletedtowardstheendoftheyear.Thesewerethefirst20,000houroverhaulsonthemachinesandaftertheirwarrantyperiodhasexpired.OthermajoroverhaulswerecarriedoutonL8WartsilaandL9Mitsubishi4.2MWgenerators.
Other activities carried out by the Generation team includedmonitoringofthepowerplants,attendingtofaultsandbreakdownsbothonthemechanicalandelectricalsystems;andthescheduled1,000hours’service on all generators.
HastingsDeering,alocallybasedCaterpillaragentwasengagedtoprovideweeklymonitoring,scheduledmaintenanceandattendingtofaultsandissuesonH1andH2Caterpillar1.5MWgeneratorsattheHoniaraPowerStation.
Distribution:
TheDistributionDepartmentundertookanumberofmajoractivitiesinHoniaraandattheOutstations.
InHoniara,11kVand415VlineextensionswerecarriedoutatNgalimera,Henderson&LunggaareaandatKombivatu.TheteamwasalsooverseeingallelectricalworkscarriedoutasaresultoftheKukumHighwayProject.Thisincludedtherelocationofstreetlights,transformers,RingMainUnits,Pillarboxesandlayingofanewsectionof300sq.mm33kVundergroundcableandinstallingofnewconduitsfortheproposed33kVundergroundcableworks.
13Solomon ISlandS ElEctrIcIty authorItyannual report 2018
An11kVundergroundcablewasinstalledbetweenKGVIandBurnsCreekSchooleastofHoniaratoprovidealinkbetweenLunggaFeederfromtheHoniaraEastSubstationandtheRanadiIndustrialFeedertoprovideanalternativefeedfromeitherdirection.
TheDistributionteamalsoprovidedtechnicalandswitchingsupporttoUGLduringtheconstructionandcommissioningstagesofFeeder12relocation,theRanadiandKola’aRidgeSubstations.TheworkscarriedoutrelatedtotheseprojectsweretheterminationoftheHVcablesontotheexistingnetworkandontonewtransformersandswitchgear.
AttheOutstations,therelocationofthe11kVlinefromthedumpsiteatNorowascompleted.Anew200kVAtransformerwasalsoinstalledintheNoronetworktoimprovethesystemvoltagetoaccountforincreased demand.
OtherLowVoltage(LV)lineupgradeswerealsocarriedoutinHoniara,Auki,GizoandNoroduringtheyear.
AnumberoftransformerupgradeswerecarriedoutinHoniaraandoneatMunda.Anew500kVAtransformerwasinstalledandcommissionedattheSolomonIslandsNationalUniversity(SINU)compound to support the existing and future load growth.
Furthermore,theDepartmentmaintaineditseffortsinimprovingthereliabilityofthenetworkbycontinuingonwiththevegetationmanagementprogrammeinHoniaraandattheOutstations.
OtheractivitiesweretheconstructionofminorLVextensions,newserviceconnections,inspectionandconditionmonitoringofthenetwork,implementationof planned maintenance activities and attending to networkfaults.
Outstations:
PowergenerationattheOutstationswasreliablethroughouttheyearwithnototaloutagesexperienced.
Buala,Kirakira,LataandMalu’ucontinuedtogeneratepowerfromgeneratorsthatwereinstalledpriorto2013,exceptforthehydroplantatBuala,whichwasre-commissionedin2016.
Thenewhybridmini-gridsatSegheandTarohavealso been operating normally throughout the year withnomajorissues.Tarooperationwasabout80%renewableand20%dieselwhilsttheSegheplantwas100%renewable.
MajoroverhaulswerecarriedoutongeneratorsB3,K3andLT3atBuala,KirakiraandLatarespectively,whilstrebuildingoftheex-Aukigeneratorwasstillinprogress by the year end.
Regulatory:
TheRegulatoryDepartmentcontinuedtocarryoutitsroleasaRegulatorintheElectricityindustryby ensuring the electrical installations are in compliancewiththeAS/NZ3000WiringStandards.TheDepartmentalsoprovidedsupporttoLicensedElectricalContractorsbyprovidingregularupdateson the rules and regulations and also by carrying outprogressiveandfinalinspectionstowiringinstallations.
Anewandmodernmetertestbenchwascommissioned early in the year. The test bench is capableoftestingten(10)energymetersatthesametime.TheequipmenthasenabledSPtotestallnewenergy meters before installing them and also old metersweretestedfortheiraccuraciestoensurethatcustomers are billed correctly and also as a means to minimisenon-technicallossesinthesystem.
Atotalof1,655installationswereinspectedin2018comparedwith1,537in2017.Ofthetotalnumberinspected,909werenormalcustomersand746werecustomersundertheOutputBasedAid(OBA)programme. The total number of customers that werepassedandenergisedwas1,599(855normalcustomersand744OBAcustomers).
Electrical:
The Electrical team continued to provide technical supporttotheHoniaraandOutstationsoperationsandtheCapitalWorksProjectsinparticularduringthetestingandcommissioningstagesofthenewRanadiandKola’aRidge33/11kVSubstations.
Majoractivitiescarriedoutbythedepartmentincludedmaintenanceworksonallelectricalauxiliaries,mainalternatorsandotherelectricalequipmentduringthemajoroverhaulsofallfourMANDiesels,L8WartsilaandtheL9Mitsubishigenerators.
Otheractivitiesweretheplannedpreventivemaintenance on all generators and attending to electricalfaultsinHoniaraandattheOutstations.
Besidesitsnormaloperationalworks,theElectricalDepartmenttooktheleadtoassistwiththedesignandinstallationofthenewAutomaticTransferSwitchforHeritageParkHotelinordertoconnectpartofitsloadbackontothegrid.
14 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
ThedepartmentwasalsoresponsibleforcollatingnetworkoutagereportstodeterminetherootcausesandalsotheCustomersMinutesLost(CML)duringthe outages.
Renewable Energy:
Negotiationsonthe15MWTinaRiverHydropowerProjectinGuadalcanalProvincewerefinallyconcludedinNovember2018andthePowerPurchaseAgreement(PPA)betweenTinaHydropowerLimited,theProjectCompanyandweastheOfftaker,wasexecutedon6thDecember2018.
TheFiuRiverHydroprojectinMalaitaProvincewascancelledlate2017duetoanunresolvedlanddisputeandADBagreedtotransferthefundsforittoaproposed1.44MWSolarFarmatKwainamoronearAukiinMalaita.Unfortunately,thishadtobedroppedaswellduetothedeadlockinthecommercialnegotiationbetweenSolomonPowerandthelandownersatKwainamoro.
AcontractwassignedwithCBSPowerSolution(Fiji)LimitedfortheconstructionoftheADBfunded2MWsolarprojecttoconverttheexistingdieseloperatedoutstationsatKirakira,Lata,Malu’u,MundaandTulagitohybridgenerationsystems.Landacquisitions
forthesesiteshaveprogressedwell.
TheSPfundedhybridmini-gridprojectsatSegheandTaroweresuccessfullyimplementedandcommissionedmid-2017.Bothstationshavebeenoperatingwithnomajorissues.TaroStationisoperatingatapproximately80%solarand20%diesel,whilstSegheisoperatingat100%renewable.
Thefinancialopeningfromthreebiddersforthefour(4)NewZealandGovernmentfundedhybridsitesatHauhui,Namugha,SasamungaandVonunuwasconductedendDecember2018.LandacquisitionsforthesiteswereprogressedandlandtitlesforHauhuihasbeenobtainedwhilstthoseforNamugha,andSasamungaareintheprocess.Vonunulandhoweveris under dispute and is yet to be progressed.
NegotiationsforlandatTanagaiforaproposedsolarfarmarewelladvancedwithimminentprocurementinthefirstquarterof2019.
TheBoardapprovedcapitalfundsforthenewhybridsystemsatTingoainRennellandBellonaProvinceandVisaleinGuadalcanalProvince.Additionally,theBoard also approved capital funds for the design and constructionofa2MWsolarfarmatHendersonand220kWsolarinstallationontheroofofourRanadioffices.
New Zealand Grant signed with Solomon Power.
15Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Power System Reliability:
SolomonPower’sSystemReliabilityinHoniarais measured using the internationally accepted performanceindicatorsasfollows:
The System Average Interruption Duration Index (SAIDI)
SAIDIdefinestheaverageinterruptiondurationpercustomer served per year.
SAIDI=(SumofCustomerInterruptionDurations/Totalnumberofcustomersserved)
ForHoniara,thiswasmeasuredtobe184.4minutes,comparedto155.9minutesin2017.Thisisanincreaseby28.5minutesoverthe2017figure.
The System Average Interruption Frequency Index (SAIFI)
SAIFIdefinestheaveragenumberoftimesacustomer’sservice is interrupted during a year for longer than 2seconds.Acustomerinterruptionisdefinedasoneinterruption to a customer.
SAIFI=(Totalnumberofcustomerinterruptions/Totalnumberofcustomersserved)
ForHoniarathiswasmeasuredtobe1.45timescomparedto1.8timesin2017,adecreaseby0.35times.
The Customer Average Interruption Duration Index (CAIDI)
Thisisameasureoftheaveragetime(minutes)thatacustomeriswithoutpowerperinterruption.
ForHoniarathiswasmeasuredtobe137.45minutesperinterruptioncomparedto90.6minutesin2017,anincreaseby46.85minutes.
Reliability and Efficiency:
PowergenerationinHoniarawasmainlyfromthemorefuelefficientMANDieselsgenerators(4x2.5MW)commissionedin2016.ThebalanceofpowergenerationwasfromtheoldgeneratorsatLunggaandHoniaraPowerStations.Improvedcoolingsystemsand timely maintenances on the old generators have also improved their outputs.
Thede-commissioningofthe1.5MWMirrlees(L5)generator has reduced the available generation capacityfrom29.8to29.0MW,againstapeakdemandof15.82MW.
TheimplementationoftheG-1operationcriteria,theunderfrequencyloadsheddingschemeonthe11kVHoniarafeedersandthereviseddelayedtimesettingon the existing under voltage system protection on the
33kVfeedersatHoniarahasreducedwidernetworkoutageduetofaultsinthe11kVfeeders.However,asaresultoftheoutagesexperiencedtowardstheendofthe year it is proposed to conduct a thorough study to reviewtheexistinggenerationandnetworkprotectionsettings in order to properly coordinate the protection systemstoimprovethesystemreliabilityinHoniara.
Energy Produced:
Energyproducedin2018isshowninthetablebelow.LunggaandHoniaraoperationsproducedatotalof96.285GWh(78.7%)whilsttheOutstations,theRanadiandtheHendersonsolarplantsproduced14.535GWh(21.3%).
GWh GWhStation (2017) (2018)
Lungga 80.73 81.75Honiara 1.65 2.46Outstations 9.73 11.17HendersonSolar(1MW) 1.19 0.89RanadiSolar(50KW) 0.042 0.015IndependentPowerProducer(IPP) 0.94 0Total 94.28 96.285
Maximum Demand:
ThedemandforelectricityinHoniarain2018peakedat15,820kilowattscomparedwithafigureof14,934kilowattsin2017,anincreaseof886kilowatts.
16 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Generation Statistics:
EnergyProducedbyallStationsin2016to2018.
Energy (kWh) Produced by all Stations: 2016 to 2018
JAN FEB MAR JULAPR AUGMAY SEP NOVJUN OCT DEC
10,000,000
2016
all CaiDi all saiDi all saifi
2017 2018
6,000,000
2,000,000
8,000,000
4,000,000
0
Honiara Peak Demand growth from 2001 to 2018
Peak Demand (kW)
1 2 6 10 144 8 12 163 7 11 155 9 13 17 18
20,000
15,000
10,000
5,000
0
System Performance Indicators for Honiara from 2012 to 2018 are in the histogram below.
Annual System Performance Indicators: 2012 to 2017
0
200.0
400.0
600.0
800.0
2012 2013 2014 2015 2016 2017 2018
17Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Capital Works and Planning Division
Capital Works:
During2018,therewere26activecapitalinfrastructureprojectsunderwayand6additionalprojectsintheplanningphasetothevalueof$974million.Ofthesethefollowingwerecompletedandcommissioned during the year.
• Feeder12relocationfromLunggaPowerStationtotheHoniaraEastSubstation.
• EnergisationofthenewRanadiSubstation.
• Ten11kV/415Vlineextensions.
• Phase–2oftheKukumHighwayUpgradeworks.
• TheinstallationofSmartMeters.
Keyprojectswhichhavestartedduring2018andwillbeprogressedtocompletionin2019andbeyondinclude:
• TinaRiverHydroProject–66kVtransmissionlineandterminationequipmentatLungga.
• NewKola’aRidgeZoneSubstation.
• TheinstallationofasecondtransformeratLunggaPowerStation.
• OldLunggaElectricalupgradeproject.
• TheHoniaraPowerStationRedevelopment.
• Fourteen11kV/415VlineextensionsinHoniaraandin the Provinces.
• HousingUpgradeworksinHoniara,NoroandGizo
• DetaildesignandconstructionofGreenVillageatHenderson
• Designandinstallationof5hybridreplacementgeneration systems for the existing Outstations at Kirakira,Lata,Malu’u,MundaandTulagi.
• SolarHybridGenerationSystemProjectatHauhui,Namugha,SasamungaandVonunu.
• SolarHybridgenerationsystematTingoa,Visale,Lambi,SantaAnaandUlawa
• SCADADevelopmentProject(stage1).
• Henderson2MWgridconnectedsolarfarm.
• RanadiRooftopsolarpanels
• OBA(OutputbasedAid)Project.
New Kola’s Ridge Zone Substation.
The team structure for combined Planning and CapitalWorksteamisnowcompleteandhasbeenimplemented.Therecruitmentofkeypositionswithinthereorganisedstructurehasmostlybeenfilled.FourActingManagerpositionswereofferedto experienced local engineers to develop into roles withinthenewstructure.Theserolesarebeingshadowedbyexpatriatesforthequickdevelopmentoflocalresources.This,togetherwiththecontinueddevelopmentofallstaffintheteamwillseethenewteam resourced to appropriate level to manage the planninganddeliveryofover$1billioncaptialworksoverthenext4years.
18 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
OBA Energised Customers Todate - Dec 2018
MONTHS
No
. of E
ner
gise
d C
ust
om
ers
1600
800
1200
400
1400
600
1000
200
0Oct-17
36
240
240331
375 394
427
535
648688
762
853898
937
10661116
1160
312368 390
480
570
657727
786837
897
1017
1145
1260
1360
72 5119 33
108 11340 74 91
45 38
12950 44
Feb-18 Jun-18Dec-17 Apr-18 Aug-18 Nov-18Nov-17 Mar-18 Jul-18 Oct-18Jan-18 May-18 Sep-18 Dec-18
No. of OBA Connections per monthCommulative No. of OBA ConnectionsTargeted Energised OBA Connections
Planning:
Twelve(12)solarhybridhighlevelcommunityconsultationswerecompletedin2018.OfthesesevenareinBina,Dala,Fo’ondo,Kiu,Maoro,RohinariandTalakali,allinMalaitaProvince.TheotherfiveareinIsabelProvincelocatedinBiluro,Kaevanga,Kamaosi,KiaandTatamba.
Eighteen(18)detailedsurveys,mappingandengineeringwerealsocompleted.Ofthesetwoarefortheproposed2MWextensiontothe1MWSolarFarmatFighter1,Hendersonandtheotheroneforthe220kWrooftopsolarinstallationatourRanadiOffices.Tenareforplannednetworkextensionsforatotalof1747potentialcustomers,oneeachatBarana,Aekafo,Okwala,Feraladoa,SopaperaallinHoniara;RaubabateinMalu’u,BuriniasiandKunuinAukiandTitianain
Gizo.Thebalancesix(6)arefortheproposedhybridsystemslocatedatBina,Maoro,Fo’ondo,Dala,KiuandRohinarialllocatedinMalaitaProvinceandtheseintotalhave2848potentialcustomers.
During2018theBoardapprovedcapitalfundingofapproximately$160millionforinfrastructuredevelopmentinHoniaraandtheProvinces.Theseincluded funding for grid connect solar farms, hybrid solarsystems,networkextensions,housingupgradesandotherupgradeworks.
ComputerisedMaintenanceManagementSystem(CMMS)calledCARLisnowbeenusedbyHoniara-basedengineeringteamswiththeintentionofexpanding this to outstations for maintenance management in future.
Capital Works and Planning Team.
TheOutputBasedAid(OBA)programmehasbeenmakingsteadyprogressin2018.Itisdesignedtoprovideaone-offsubsidytoeligiblelow-incomehouseholdstocoveraportion of the upfront cost of electricity serviceconnectionsintheHoniaragrid and the named Outstations of Auki,Seghe,Taro,NoroandMunda.With672connectionstocomefromtheoutstations,theprojectisaimedtoenergiseacombinedtotalof2,488households.Asoff31December,SolomonPowerhasbeenabletoenergiseatotalof1,160connections.ThisprojectisduetobecompletedbyMarch2020.
19Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Customer Services DivisionWithatotalnumberof51permanentstaff,theCustomerServicesDivisionisresponsibleforallcustomerissues,fromcommunityawarenessthroughitsPublicRelationsSection,toreceiving,processingandregistrationofcustomerapplicationsfornewcustomerconnections,customerenquiries,cashiering,administering billing and customer accounts, protection of revenue meters and revenue collection; allcontributingtoSP’svisiontomakeelectricityaffordableandaccessibletoSolomonIslanderswhichisinlinewiththenationalobjectivetoenergiseournationbyyear2050.
Bytheendof2018,SolomonPowerhadregisteredatotalof18,781customersasconnectedtoitsHoniaraandOutstation’snetwork,ascomparedto17,190inDecember2017.16,565(88%)customersareonprepaywhouseCashpowermeterand2,216(12%)areonpost-paywhichareonthenormalkWmeter.
KILOWATT CASHPOWER TOTAL
Honiara 1,586 12,587 14,173Auki 201 1,114 1,315Gizo 109 727 836Noro 87 490 577Munda 36 347 383Tulagi 40 237 277Kirakira 38 235 273Buala 40 211 251Lata 36 224 260Malu’u 24 128 152Taro 16 181 197Seghe 3 84 87TOTAL 2,216 16,565 18,781
TOTAL KWT /CASHPOWER COUNT BY LOCATION -DECEMBER 2018
82%ofcustomersareonthedomesticratewhile18%are on commercial and industrial rates.
Customer by Tariff Category December 2018
Domestic 15,383 82%Commercial 3,370 18%Industrial 28 0%Total 18,781
InadditiontoHoniara,thecapitalcitysituatedontheislandofGuadalcanal,11Outstationsexistontheother island provinces outside of Guadalcanal, namely Gizo,NoroandAukibeingthebiggeroutstations,withthesmallerstationsbeingMunda,Buala,Malu’u,Tulagi,Kirakira,Lata,SegheandTaro.SolomonPowerprovidescustomerservicesfromthese12locationsviaboththepost-paid(kilowatt)andprepaidsystems(Cashpower).
Kilowattcustomersareregisteredonthepost-paybillingsystemcalledUtilityStarPlatinum,asystemputinplaceinJune2014.TheCashpowercustomershoweverareregisteredonthenewlyupgradedSuprimaVersion5.
Theelectricitytariffappliedduring2018isthegazettedElectricityTariff(BaseTariffandTariffAdjustments)Regulation2016whichrepealedTheElectricity(Tariff)(AutomaticBaseTariffandFuelPriceAdjustment)Regulation2005.
TheElectricityTariff(BaseTariffandTariffAdjustments)Regulations2016isavailableonourwebsitewww.solomonpower.com.sb.UtilityStarPlatinumandSuprimaVersion5havebothsuccessfullyintegratedthemajorchangesinthetariffsince1January2017.
SP has progressed its programme to extend the electricitynetworkinHoniaraandattheOutstationsin2018.Networkextensionplansgohandinhandwithcommunityawareness,customerapplicationsandcustomerconnectivity.ApartfromthenormalSPconnections and the connection to the approved sites fornetworkextensions,theWorldBankassistancethroughtheOutputBasedAid(OBA)Programmehasfurtherprogressednewconnectionundertakingsin2018,resultingintheincreaseincustomernumbers.Theincreasefrom5amperesto10amperesconsumptionin2018hadalsoresultedinanincreaseinmonthlysalesonCashpower.TheOBAprogrammeconnectselectricitytolowerincomehouseholds,including community services and microenterprises upto10amperesperinstallation,withthreelightbulbs,twopowerpoints,internalwiring,onepowerpole,upto80metresofservicelineandoneCashpowermetersubstantiallysubsidised.Bytheendof2018,1160installationswereconnectedontoourgridundertheOBAprogramme.
20 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Networkextensionsandincreasingcustomernumbersalsorequiresimprovedreliabilityandbillingconnectivity in terms of system access by the remote Outstationteams.TheongoingeffortsoftheV-SATproject,withSATSOLandgovernmentsupporthasseen our remote Outstations access to both Suprima andUtilityStarsystemsfordailypaymentinputsforpost-paidandpre-paidaccounts.
The above also called for additional recruitments andin-housetrainingtobecarriedoutin2018.AllOutstations’revenuestaffweretrainedonboththeSuprimaCashpowerlivesystemandtheUtilityStarbillingsystem,exceptforLataandMalu’uwhichexperiencedpoorconnectivitywhicharenowplannedforimprovementin2019.Duetotheimprovedrealtimeconnectivityourteamsatthe9OutstationshaveaccesstoboththebillingsystemsandarenowabletoissueCashpowertokenstoourcustomersattheOutstationswithouttheneedtorefertoHoniara.
In terms of recruitments and appointments, the divisionispleasedtoseethreeofitsfemaleofficerspromotedtohigherpositionsofMeterTechnicianTeamLeader,ManagerCustomerServicesandManagerBillingandRevenue.Sevenothernewofficerswererecruitedintothedivisionin2018.
SevenCustomerServicesMeterTechnicianssuccessfullypassedtheirGrade‘A’LicenseHoldersexams for Electricians in Solomon Islands, an excellent achievement. This brings a good number of GradeAelectriciansinSolomonIslands.
Inordertoassistwithcustomerapplicationsfornewservice,frontlinersweretakenthroughaGeographicalInformationSystems(GIS)trainingbythe GIS team.
AspartoftheWakaMereinitiative,twofemalemembers of the team attended a 2 days training on DomesticViolenceandtheWorkplace.ThesetwoarenowhandlingthedomesticviolenceissueswithinthedivisionandassistingtheHumanResourcesSectiondevelop the policy.
Apartfromtraining,thedivision’spoliciesandprocesseswerecontinuallydevelopedandupdated,toensurethatourqualitycommitmentstoourvaluedcustomers are met.
To ensure the accuracy of meters and a reduction ofnon-technicallosses,andcontinuationfromreplacementofcurrenttransformer(CT)meters,thedeploymentofSmartMeterswascompletedforHoniarain2018.TheSmartMetershavebeensuccessfullysetup
21Solomon ISlandS ElEctrIcIty authorItyannual report 2018
inmultidriveandarenowinterfacingwithUtilityStarbillingsystem.ForSmartMeters,reading,disconnectionandreconnectioncannowbedoneremotelyfromourofficesatRanadi.Thishasseenadecreaseincustomercomplaints of meter reading errors.
InadditiontotheSmartMeterproject,3singlephasemetersinHoniaraandattheOutstationswerereplacedwithsingle3phasemeters.Toensurerevenue protection, inspection of meters continued on an annual basis to eradicate illegal bypasses.
In order to gauge our level of customer satisfaction, acustomersatisfactionsurveywascarriedoutin2012and2015,withafollowupstudydonein2018whichprovidedameasureofchangesinperceptionsofSolomonPowerovertime,fromthepreviousbaselinesurveystothepresentday.TheCashpowerDrive-ThroughandWalk-Throughwindows,extendedCashieropeninghoursto8.30pmMondaystoFridaysandthe24hoursCashpowermobiletop-upservicefeaturedwellinthesurvey.Overalltheresultsfrom
the2018surveyhaveshownimprovementonalargenumberofmetricsincomparisonwith2012and2015.
In terms of top up services, a contract for the CashpowermobiletopupwassignedwithPOB,bringingthenumberofbankstotwo.Discussionsareongoingwithotherserviceprovidersincludingbanksto extend the mobile top up arrangement through their different payment platforms.
SPsharedcostswiththeBSPBankforadvertisingtheCashpowermobiletopupduringtheSoccerWorldCupbroadcastin2018.
ThedevelopmentoftheCallCentreprojectcontinuedin2018andwillprogressfurtherinto2019.
2018alsosawthreeofourcommercialcustomers,GizoHotel,KingSolomonHotelandHeritagePark(partly)backonthegrid.
Aspartofcarryingoutoursocialresponsibility,weconductedawarenesssessionsin13communitiesaroundthenationin2018.
22 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Finance DivisionThefiscalpositionofSPcontinuestobestrongandhasshowngrowthinRevenueby6.7%comparedto2017.Thestrongpositionisduetogoodfinancialmanagementandgovernance.Duringtheyear:
• SPpaid$4mfor2017dividendandwillalsodeclareandpaydividendof$4mfor2018oncetheaccountingbookshavebeenaudited.
• NetProfitfortheyearwas$80.1m.
• Returnonequityandreturnonassetshasbeen7.0%and6.2%respectively.
• GenerationcostsperkWhis$2.04(US$0.26perkWh).
• Fuelcost,being48.5%ofourcosts,hasincreasedincomparisonwith2017.
• MonthlykWhsalesreachedtheirhighestever.
• CapitalInfrastructureisbeingfundedusingretainedearnings(Taro&SegheOutstations,Outstations’GenerationUpgrade,networkextensions,etc.).
• SPhasnowcommenceditsWorldBankIDALoanRepaymentstoSIG.
Information, Communications and Technology
TheInformation,CommunicationsandTechnology(ICT)departmentofFinancehasbeenworkingtoupgradesystemsandcommunicationlinksacrossthenetwork.
WehaveimprovedthesecurityandreliabilityoftheOutstationlinks.ThecommunicationstoOutstationshave been upgraded and expanded to facilitate linkstoourbillingsystemsandwehavecompletedconnectionsto7oftheremaining9outstationsforCashpower,kWandworkflow.TheOutstationsofLataandMalu’uwillbeconnectedinthefirsthalfof2019,withLataplannedtobeconnectedinFebruaryandMalu’uinMarch.Furtherimprovementsintheconnectivity of Outstations and the deployment of equipmentupgradesisongoing.
AtRanadiOfficeswehaveupgradedthecablingfromCat5toCat6whichwillalsoallowustocompletetheIPTelephonyrolloutandreconfigureourinternal
networkandserverconnectivityforafaster,morereliable,morerobustbusinessoperationonaday-to-daybasis.Theinternalre-cablingeffortsalsoincludedaddingHDMI,videoandsoundlinksforourBoardRoom,TrainingRoomandMeetingroomontheMezzanineleveltoallowmoreflexibilityinconnections for these spaces as needed.
DuringtheyeartheServerroomhasbeenupgradedwithoverheadcabletrays,improvedpowerandGPOoutlets,additionalrackspace,reinforcedflooringandanupgradedUPSconnection,toallowforthehousingofequipmentinUPSprotectedracksprovidinguswithstablecomputingpowerandapplications.RelocationofexistingequipmentintotheupgradedfacilityisongoingandplannedtobecompletedbyFebruary2019.
AprinterauditwasconductedinNovemberandaproposalfromasupplierwasprovidedinDecember,itisbeingrefinedandcostedtoupgradeandstandardizeourin-houseprinterfleetonaproposedleasingarrangementandthiswillbeconsideredinthefirstquarterof2019.
AfibreupgradeandrolloutplanconnectingfurtherSPsitesandpartnersacrossHoniarahasbeendevelopedandwillbescheduledwithCapitalWorksforimplementationin2019-2020.
AnITStrategyforthenextthreetofiveyearshasbeenestablished and is currently being implemented. SP has recruited an Information Technology Specialist toworkonrefiningtherecommendationsintheITStrategy and commence scoping and construction planningfortheDataCentrespaceatLunggaPowerStation.
Additionalworkisbeingdonetostandardizeour documentation and to propose a document management system to handle future SP online documentstorage,archivalandmanagement.TheICTServicesAgreementwithourexternalsuppliersisalsobeing revised to ensure SP obtains the correct levels of service and support to maintain the environment into the future.
23Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Corporate Services Division
TheCorporateServicesDivisionprovidessupportservices to other divisions through its human resources and administration, training and development, occupational health and safety, securityandcompliance,businessperformance,fleetmanagement and lands and buildings teams.
2017
Executive Planning generation Distribution Outstations regulatory financeCapitalWorks
Customer services
Corporateservices
in service Training
2018 DIVISIONS
Employees by Division
Em
plo
yee
Nu
mb
ers
0
10 69
41
36
25
7 8
50
18
28
95
10
44
38
31
7 6
49
25
37
3
20
30
40
50
60
Thegraphbelow(Figure2)showsthenumberofpermanentemployeesbylocationattheendof2018,comparedtotheendof2017.
Figure 1: Employee Numbers by divisions.
Figure 2: Employee numbers by location.
2017 2018
LOCATIONS
Em
plo
yee
Nu
mb
ers
144
38
4 4 2 2 2 2 29 9
162
82
164
41
4 4 2 2 2 2 329
27
16 4
180
120
40
80
0
160
100
20
140
60
ranadi auki Malu’u Kirakira seghelungga Buala gizo Munda TaroHoniara lata Tulagi noro in service Training
HyundaiMall
Human Resources
Attheendof2018,SPhadatotalnumberof255permanent employees, compared to 237 at the end of 2017.Thisisanincreaseof7%.
Thegraphbelow(Figure1)showsthenumberofpermanentemployeesbydivisionsattheendof2018,comparedtotheendof2017.
Employees by Location
24 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Highlightsin2018included:
• WiththesupportoftheBoardtheManagementandtheStaffAssociationhavecementedaverystrong and positive relationship. The log of claims wasnegotiatedandapprovedandhavebeenimplementedeffectiveNovember;
• Recruitmentforseveralkeyroles,includingthatfortheChiefFinancialOfficer,GeneralManagerCorporateServices,ManagerGenerationandOutstations,ManagerProjects,ManagerManagementAccountingandRegulatoryManager;
• CommencementoftheApprenticeshipprogramme.Underthisprogrammewehaverecruited10apprenticesinMaywhowillundergoonthejobandoffthejobtrainingoveraperiodof4years;
• ApprovaltostartaLineMechanicTrainingprogrammewithaninitialintakeof10traineelinemechanics;
• ContinuationoftheGraduateProgramme;and
• CompletionoftheJobEvaluationExerciseinNovember,implementationoftherecommendationswillcommencein2019.
Training and Development
Tocontinuallydevelopandupdatetheknowledge,skillsandcompetenciesofitsemployees,SPhasinvested extensively in training and development.
Long term training:Threeemployeescontinuedwiththeirlongtermstudyprogrammein2018.TwowereatUSPstudyingtowardsBachelorofCommerceinAccountingandManagementprogramme,whiletheotheronewasatSINU,doingaBachelorofAccountingStudies.
Short term training: Some highlights of short term trainingundertakenin2018:
- 5dayMBA:CertifiedHumanResourcesManager:6officersattendedthetraining
- DirectorsCourse:1officerattendedthetraining
- CableJointerTraining:8officersattendedthetrainingwithEnergexinBrisbane
- Metering:8officersattendedthetrainingwithEnergex in Brisbane
Occupational Health and Safety
SP is committed to the safe supply of electricity to the NationwithitseffectiveandrobustOHSmanagementframework,aimedatprovidingasafeenvironmentforemployees, contractors, customers and the community at large.
OneLostTimeInjurywasrecordedin2018whichincurredseventeen(17)LostDays.TheLostTimeInjuryFrequencyratefor2018closedat1.91.
Anincidentreporting,investigationandactionverificationframeworkwasdevelopedtomanageallSP incidents.
25Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Highlightsin2018include:
• ContinuationofFirstAidTrainingandFireTrainingforemergencywardensandFirstAiders;
• Continuationofelectricpowerlinemantraining;
• OHSawarenesstrainingforstaffandelectricalsafetyawarenessforschoolsandcommunitiesinSPlocations;
• DefensiveDriverandHandsonWheelstrainingwasconductedwithnewlyauthoriseddriverswithrefresher training carried out for other drivers;
• PoleTopRescueandCPRtrainingforlinemen;and
• TheinspectionandtestingoftheFireHydrantSystematLunggaPowerStationwascarriedouttogetherwithtrainingforpowerstationoperatorsandthelocalfirebrigade.
Fleet of vehicles
TotalnumberoffleetasofDecember2018was87.Thisisareductionfrom91in2017.Sevenvehicleaccidentsoccurredin2018atarepaircostof$138,843.Thevehicletrackingsystemcontinuestobeutilisedtoimprovefleetefficienciesandproactivelymanagespeeding and unauthorised use of vehicle.
Land and buildings
Land
SPcontinuedwithitsprogrammeoflandacquisitionsandproperregistrationofitsproperties.NegotiationforlandacquisitionsinAuki,Tanagai,Lata,Kirakira,
Afio,Malu’u,Namugha,Sasamunga,Hauhui,VisaleandTingoawereprogressedduring2018.
Buildings
ApartfromourcommercialpropertiesatRanadi,Lungga,HoniaraandattheOutstations,SPprovidedhousing for employees.
Atotalofthirteen(13)SolomonPowerhouseswereearmarkedforrepairandmaintenancein2018.ByDecember2018,workoneight(8)houseswascompleted,three(3)wereinprogressandexpectedtobecompletedinthefirstquarterof2019,andone(1)hasbeenrescheduledtobeaspartofthe2019HousingRepairandMaintenanceProgramme.
Bypass customers
SPcontinuedwithitsconcertedefforttorecovermoniesowedtoSPby“bypass”anddefaultingcustomers,theeffortswerechallengingyetresultedinprogressofprosecutingof“Bypass”customersandrecoveryfromdefaultingcustomerswithanumberofgoodoutcomesin2018.
Workmen’s compensation
Onecaseofworkmancompensationwasreportedandsettled.
Trade Dispute Panel
Therewerethreecasesthatwereon-goingin2018,andwillcontinueinto2019.
26 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Corporate Governance Practices
Role of the Board
AsrequiredbySection6(4)oftheStateOwnedEnterprisesAct2007,theBoardisresponsibleforchartingtheCompany’sstrategicdirection,forthesettingofobjectives,policyguidelines,goalsmanagement,andformonitoring the achievement of these matters.
TheBoardisalsoresponsibleforreviewingtheBusinessPlan,CorporatePlanandStatementofCorporateObjectives,andapprovestheOperatingandCapitalBudgetseachyear.TheBoardalsoreviewsmattersofamajororunusualnature,whicharenotintheordinarycourseofbusiness.
Composition of the Board
InDecember2018somechangeshavebeenmadebyourShareholderstothecompositionoftheBoard.TheBoardDirectors,appointedundertheStateOwnedEnterprisesRegulation2010,(Part2,PrescribedProcessofAppointmentofDirectors)areasfollows:
Name Position Appointment Term
Mr.DavidK.C.Quan Chairman February2016 3yearsMr.HenryKapu Director 30/6/2012–1/12/2018 RetiredMr.HarryZoleveke Director 30/6/2012–1/12/2018 RetiredMr.SebastianIlala Director 30/6/2012–1/12/2018 RetiredMs.YolandeYates Director 5/9/2014–1/12/2018 RetiredMr.RovalySike Director 5September2014 2yearsMr.JohnBoscoHouanihau Director 5September2014 3years
Name Position Appointment Term
Mr.DavidK.C.Quan Chairman 19February2019 3yearsMs.MurielHa’apueDakamae Director 17December2018 3yearsMr.JamesApaniai Director 17December2018 3yearsMr.RovalySike Director 17December2018 2yearsMr.JohnBoscoHouanihau Director 17December2018 2years
As at 30 November 2018
As at 31st December 2018
Directors’ Duties
TheroleanddutiesoftheDirectorsaredefinedinregulations17to27oftheSOERegulations,2010.AkeyresponsibilityoftheDirectorsistoachievetheprincipalobjectiveoftheAuthority,asstatedinSection5oftheSOEAct:
TheprincipalobjectiveofeveryStateOwnedEnterpriseshall be to operate as a successful business and to this end, to be
(a) AsprofitableandefficientascomparablebusinessesthatarenotownedbytheCrownorestablishedasstatutorybodiesbyanActofParliament,
(b)Agoodemployer,and
(c) Anorganisationthatexhibitsasenseofsocialresponsibility by having regard to the interests of thecommunityinwhichitoperates.
Statutory Duties of the Board
Inadditiontotheaboveduties,theBoardofDirectorsof SP collectively and individually have agreed on the fulfilmentofthefollowingdutiestowardthecompany:
• Whenexercisingpowersorperformingduties,DirectorsmustactingoodfaithandinwhattheDirectorbelievestothebestinterestsoftheStateOwnedEnterprise.
27Solomon ISlandS ElEctrIcIty authorItyannual report 2018
meetings. The regular business of the Board covers corporategovernance,financialperformanceandriskmanagement,businessinvestmentandstrategicmatters.
TherewasalsoaShareholders’meetingonTinaRiverHydropowerProjecton26thNovember2018.
Board Committees
TherearethreeBoardSub-Committees:Audit,Finance,RiskandGovernance;Technical;andHumanResources,that are responsible for deliberating detailed issues and makingsuitablerecommendationstotheBoard.TheSub-Committeesmeetasandwhenrequired.
Board Secretary
MrsNatalieKairi
Audit, Finance, Risk & Governance Sub-Committee
Membership:
1. HenryKapu-Chairman2. DavidK.C.Quan-Member3. SebastianIlala–Member4. YolandeYates–Member
Numberofmeetings:3
HR Sub-Committee
Membership:
1. JohnBoscoHouanihau-Chairman2. DavidK.C.Quan-Member3. YolandeYates-Member
Numberofmeetings:3
Technical Sub-Committee
Membership:
1. RovalySike-Chairman2. DavidK.C.Quan-Member3. HenryKapu-Member4. HarryZoleveke-Member
Numberofmeetings:3
• ADirectorofaStateOwnedEnterprise,whenexercisingapowerasDirector,mustexercisethatpowerforaproperpurpose.
• ADirectorofaSOEmustnot:
(a) AgreetothebusinessoftheSOEbeingcarriedoutonorinamannerlikelytocreateasubstantialriskofseriouslosstotheSOEcreditors or,
(b)CauseorallowthebusinessofaSOEtobecarriedoutonorinamannerlikelytocreatesubstantialriskoflosstotheSOEcreditors.
• ADirectormustnotagreetotheSOEincurringanobligationunlesstheDirectorbelievesatthetime,onreasonablegrounds,thattheSOEwillbeabletoperformtheobligationwhenitisrequiredtodoso.
• ADirectorofaSOE,whenexercisingpowersorperforming duties, must exercise the care, diligence, andskillsthatareasonableDirectorwouldexercisein the same circumstances.
• AnothercontrollingmeasureimposedonDirectorsistherequirementtoenteranyconflictofinterestinaninterests’register.
Fiduciary Duties of Directors
TheDirectorsofSPalsoowethefollowingdutiestothecompany.ThesefiduciarydutiesformthecodeofethicsofSP.AfiduciaryrelationimposesanobligationofutmostgoodfaithonDirectorsbyputtingtheinterestsoftheCompanyfirst,andtheSPDirectorshavepledgedtoupholdthisprincipleatalltimes.TheFiduciaryDutiesoftheDirectorsincludethefollowing:
• Toactingoodfaithinthebestinterestofthecompany,
• Toexercisepowersforaproperpurpose,
• Toretaindiscretion
• Toavoidconflictsofinterest.
Board Meetings
TheBoardheld17meetingsduringthefinancialyear,whichended31stDecember2018.Ofthese6werescheduledmeetingsand11extra-ordinary
28 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
FinancialStatementsfor the year ended 31 December 2018
ContentsDirectors’Report 29-30
IndependentAuditors’Report 31-32
StatementofComprehensiveIncome 33
StatementofFinancialPosition 34
StatementofChangesinEquity 35
StatementofCashFlows 36
NotestotheFinancialStatements 37-69
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
29Solomon ISlandS ElEctrIcIty authorItyannual report 2018
InaccordancewitharesolutionoftheBoardofDirectors,theDirectorsherewithsubmitthestatementoffinancialpositionofSolomonIslandsElectricityAuthority(“SIEA”or“theAuthority”),tradingasSolomonPower,asat31December2018andtherelatedstatementofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsfortheyearendedonthatdateandreportasfollows:
Directors
TheDirectorswhowereinofficeatthedateofthisreportandatanytimeduringthefinancialyearandupuntilthedatethefinancialstatementswereauthorisedforissuewereasfollows:
Name
DavidK.C.Quan–chairman(reappointedDecember2018)HarryZoleveke-(retiredon1December2018)HenryKapu-(retiredon1December2018)JamesApaniai-(appointedon17December2018)JohnBHouanihau-(reappointedDecember2018)MurielHa’apue-Dakamae-(appointedon17December2018)RovalySike-(reappointedDecember2018)SebastianIlala-(retiredon1December2018)YolandeYates-(retiredon1December2018)
State of affairs
IncomplyingwiththeElectricityAct(Cap128)andtheStateOwnedEnterprisesActof2007,theDirectorsherebysubmitthe financial statements of SIEA consisting of the statement of financial position as at 31 December 2018, statement ofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsofSIEAfortheyearthenended.
Principal activity
TheprincipalactivityofSIEAduringtheyearwasthegeneration,distributionandsaleofelectricityintheSolomonIslandsasgovernedbytheElectricityAct(Cap128).
Results
ThetotalcomprehensiveincomefortheyearwasSBD80,080,065(2017restated:SBD77,648,682).
Dividends
TheDirectorshavenotdeclaredadividendforthecurrentyear(2017:SBD4,000,000).
Going concern
TheDirectorsbelievethattheAuthoritywillbeabletocontinuetooperateforatleast12monthsfromthedateofthisreport.
Assets
TheDirectorstookreasonablestepsbeforetheAuthority’sfinancialstatementsweremadeouttoascertainthattheassetsoftheAuthoritywereshownintheaccountingrecordsatavalueequaltoorbelowthevaluethatwouldbeexpectedtoberealisedin the ordinary course of business.
Atthedateofthisreport,theDirectorswerenotawareofanycircumstanceswhichwouldrenderthevaluesattributabletotheassetsinthefinancialstatementsmisleading.
Bad and doubtful debts
TheDirectorstookreasonablestepsbeforetheAuthority’sfinancialstatementsweremadeouttoascertainthatallknownbaddebtswerewrittenoffandadequateprovisionwasmadefordoubtfuldebts.
Atthedateofthisreport,theBoardmembersarenotawareofanycircumstanceswhichwouldrendertheamountwrittenoffforbaddebts,ortheamountoftheprovisionfordoubtfuldebts,inadequatetoanysubstantialextent.
Directors’ Report
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
30 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Directors’ benefits
NodirectoroftheAuthorityhas,sincethelastfinancialyear,receivedorbecomeentitledtoreceiveanybenefit(otherthanbenefitsincludedintheamountofconsultancyfeesanddirectorsfeesandexpensesorshowninthefinancialstatementsunderrelatedpartynote)byreasonofacontractmadewiththeAuthorityorarelatedcorporationwiththedirectororwithafirmofwhichhe/sheisamemberorwithacompanyinwhichadirectorhasasubstantialfinancialinterest.
Unusual transactions
TheresultsoftheAuthority’soperationsduringthefinancialperiodhavenot,intheopinionofthedirectorsbeensubstantiallyaffected by any item, transaction or event of amaterial and unusual nature other than those disclosed in the financialstatements.
Other circumstances
Atthedateofthisreport,theDirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorfinancialstatementswhichrenderamountsstatedinthefinancialstatementsmisleading.
Significant events
Therehasnotarisenintheintervalbetweentheendoftheyearandthedateofthisreportanyotheritem,transactionoreventofamaterialandunusualnaturethatislikely,intheopinionoftheDirectors,tosignificantlyaffecttheoperationsofSIEA,theresultsofthoseoperationsorthestateofaffairsofSIEAinsubsequentfinancialyears.
Datedat_________________this________dayof__________________2019.
SignedinaccordancewitharesolutionoftheDirectors.
_________________________________ _________________________________
Director Director
Directors’ Report (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
31Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Independent Auditor’s Report
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SOLOMON ISLANDS ELECTRICITY AUTHORITY TRADING AS SOLOMON POWER
Report on the Audit of the Financial Statements
Opinion
I have in joint consultation with the Board of the Solomon Islands Electricity Authority (“the Authority”) pursuant toElectricityAct [Cap.128]contractedKPMGFijiwhich ispartof theKPMGInternationalnetwork toassistme toaudit theaccompanyingfinancialstatementsoftheSolomonIslandsElectricityAuthority,whichcomprisethestatementoffinancialpositionasat31December2018,andthestatementsofprofitorlossandothercomprehensiveincome,changesinequityandcashflowstatementsfortheyearthenended,andnotes1to29comprisingofasummaryofsignificantaccountingpoliciesand information.
Inmyopinion,theaccompanyingfinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheAuthorityasat31December2018,andofitsfinancialperformance,itschangesinequityanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards(IFRS).
Basis for Opinion
I conducted my audit in accordance with International Standards on Auditing (ISAs). My responsibilities under thosestandards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of my report. I amindependentoftheAuthorityinaccordancewithInternationalEthicsStandardsBoardforAccountantsCodeofEthicsforProfessionalAccountants(IESBACode)andtheethicalrequirementsthatarerelevanttomyauditofthefinancialstatementsandIhavefulfilledmyotherethicalresponsibilitiesinaccordancewiththeserequirements.IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyopinion.
Responsibilities of Management and Directors for the Financial Statement
Management are responsible for the preparation and fair presentation of the financial statements in accordance withInternational FinancialReportingStandards and for such internal control as themanagementdetermines isnecessary toenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Inpreparingthefinancialstatements,themanagementareresponsibleforassessingtheAuthority’sabilitytocontinueasagoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors andmanagement either intend to liquidate theAuthority or to cease operations, or has no realisticalternative but to do so.
TheDirectorsareresponsibleforoverseeingtheAuthority’sfinancialreportingprocess.
Auditor’s Responsibilities/or the Audit of the Financial Statements
Myobjective is toobtain reasonableassuranceaboutwhether thefinancial statementsasawholeare free frommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditors’reportthatincludesmyopinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithInternationalStandardsonAuditing(ISAs)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.
32 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Independent Auditor’s Report (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
AspartofanauditinaccordancewithISAs,Iexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.Ialso:
• Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisformyopinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfrom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheAuthority’sinternalcontrol.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by management.
• Concludeontheappropriatenessofmanagement’suseofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheAuthority’sabilitytocontinueasagoingconcern.IfIconcludethatamaterialuncertaintyexists,Iamrequiredtodrawattentioninmyauditors’reporttotherelateddisclosuresinthefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifymyopinion.Myconclusionsarebasedontheauditevidenceobtaineduptothedateofmyauditors’report.However,futureeventsorconditionsmaycausetheAuthoritytoceasetocontinueasagoingconcern.
• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.
Icommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatIidentifiedduringmyaudit.
Report on Other Legal and Regulatory Requirements
Ihaveobtainedalltheinformationandexplanationswhich,tothebestofmyknowledgeandbelief,arenecessaryforthepurposes of my audit.
Inmyopinion:
i) properbooksofaccounthavebeenkeptbytheAuthority,sufficienttoenablefinancialstatementstobeprepared,sofarasitappearsfrommyexaminationofthosebooks;and
ii)tothebestofmyknowledgeandaccordingtotheinformationandexplanationsgiventousthefinancialstatementsgivetheinformationrequiredbyElectricityAct(Cap.128),inthemannersorequired
PeterLokay OfficeoftheAuditor-GeneralAuditor-General Honiara,SolomonIslands
Date:
33Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Statement of Comprehensive Income
Restated Note 2018 2017 SBD SBD
Operating incomeElectricitysales 457,156,336 428,039,827Amortisationofdeferredincome 6,395,050 10,393,400Otheroperatingincome 9 5,486,818 2,545,325
Total operating income 469,038,204 440,978,551
ExpensesGenerationanddistribution 10 224,175,081 207,601,960Administration 11 81,605,507 59,683,883Operating 12 22,830,031 31,148,030Depreciationandamortisation 15 56,672,749 53,679,089Allowanceforuncollectability 18 3,714,358 11,396,373Interestexpense 30,434 389,387Inventory&assetwrite-off 92,140 (145,261)
Total expenses 389,120,299 363,753,461
Gain from operations 79,917,905 77,225,091Foreignexchangegain 162,160 423,591
Net profit for the year 80,080,065 77,648,682
Other comprehensive income
Total comprehensive income for the year 80,080,065 77,648,682
For the year ended 31 December 2018
The notes disclosed on pages 37 to 69 are an integral part of the financial statements.
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
34 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Statement of Financial Position
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
Restated Note 2018 2017 SBD SBD
AssetsCurrent assets
Cashandcashequivalents 16 303,524,441 221,808,007Heldtomaturityinvestment - 45,542,195Inventories 17 22,451,241 20,910,019Receivables 18 61,766,690 50,142,206Prepayments 13,755,419 3,042,350
Total current assets 401,497,791 341,444,777
Non-current assetsProperty,plantandequipment 15 859,782,324 793,197,801Receivables 18 798,672 1,660,609Governmentbonds 19 30,000,000 -
Total non-current assets 890,580,996 794,858,410
Total assets 1,292,078,787 1,136,303,187
LiabilitiesCurrent liabilities
Deferredincome 21 6,392,961 6,392,961Tradeandotherpayables 22 40,844,195 32,007,084SolomonIslandsBorrowings 23 3,599,000 2,924,999Employeebenefits 24 6,778,721 193,818
Total current liabilities 57,614,877 41,518,861
Non-current liabilitiesDeferredincome 21 74,065,116 50,801,158SolomonIslandsBorrowings 23 10,928,257 -Employeebenefits 24 10,401,161 -
Total non-current liabilities 95,394,534 50,801,158
Total liabilities 153,009,411 92,320,019
EquityContributedcapital 20 246,933,170 246,933,170Assetrevaluationreserve 384,889,703 384,889,703Accumulatedprofit 507,246,503 412,160,294
Total equity 1,139,069,376 1,043,983,168
Total equity and liabilities 1,292,078,787 1,136,303,187
SignedforandonbehalfoftheBoardofDirectors
_________________________________ _________________________________
Director Director
As at 31 December 2018
The notes disclosed on pages 37 to 69 are an integral part of the financial statements.
35Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Statement of Changes in Equity
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
Note Contributed Asset Accumulated Total capital revaluation retained reserves earnings SBD SBD SBD SBD
Balance at 1 January 2017 246,933,170 384,889,703 338,511,612 970,334,486
Total comprehensive loss for the yearNetprofitfortheyear-restated 14 - - 77,648,682 77,648,682
Transaction with owners of SIEA directlyrecognised in equity
Dividenddeclaredduringtheyear - - (4,000,000) (4,000,000)
Balance at 31 December 2017 - restated 246,933,170 384,889,703 412,160,294 1,043,983,168
Balance at 1 January 2018 - restated 246,933,170 384,889,703 412,160,294 1,043,983,168Impactofchangeinaccountingpolicy 6(b)(iii) - - 15,006,144 15,006,144
Adjusted balance at 1 January 2018 246,933,170 384,889,703 427,166,438 1,058,989,312
Total comprehensive income for the yearNetprofitfortheyear - - 80,080,065 80,080,065
Balance at 31 December 2018 246,933,170 384,889,703 507,246,503 1,139,069,376
The notes disclosed on pages 37 to 69 are an integral part of the financial statements.
36 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Statement of Cash Flows
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
Note 2018 2017 SBD SBD
Operating ActivitiesCashreceiptsfromcustomers 463,137,780 420,124,487Cashpaymentstosuppliersandemployees (311,164,705) (319,714,724)
Net cash provided by Operating Activities 151,973,075 100,409,763
Investing ActivitiesNetredemptionofdebtsecurities 15,542,195 47,305,214Netpaymentsforproperty,plantandequipment (123,060,103) (132,866,048)
Net cash used in Investing Activities (107,517,908) (85,560,834)
Financing ActivitiesDividendpaid (4,000,000) -NetmovementinSIGBorrowings 11,602,259 -Cashreceiptsfromdonorgrants 29,659,008 5,771,599
Net cash provided by Financing Activities 37,261,267 5,771,599
Net increase in cash and cash equivalents 81,716,434 20,620,528Cashandcashequivalentsat1January 221,808,007 201,187,479
Cash and cash equivalents at 31 December 16 303,524,441 221,808,007
The notes disclosed on pages 37 to 69 are an integral part of the financial statements.
37Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
1 Reporting entity
SolomonIslandsElectricityAuthority(SIEAorAuthority)isastateownedenterpriseestablishedundertheElectricityAct (Cap128)1969. SIEA’s registeredofficeandprincipalplaceofbusiness is at theRanadiComplex,EastHoniara,Solomon Islands.
There are no subsidiary companies.
2 Nature of operations
TheprincipalactivityofSIEAisthegeneration,distributionandsaleofelectricityintheSolomonIslands.SIEAistheownerandoperatoroftheSolomonIslands’Governmentownedelectricitysupplysystems.
3 Basis of preparation
ThefinancialstatementshavebeenpresentedinaccordancewiththeState-OwnedEnterpriseAct2007,andinaccordancewithacceptedreportingprinciples.ThefinancialstatementscomplywithInternationalFinancialReportingStandards(IFRS)andotherapplicableFinancialReportingStandards.
This is the first set of the Authority’s annual financial statements in which IFRS 15 Revenue from Contracts withCustomersandIFRS9FinancialInstrumentshavebeenapplied.ChangestosignificantaccountingpoliciesaredescribedinNote6.
a) Presentation of currency
ThefinancialstatementsarepresentedinSolomonIslandDollars(“SBD”),whichisSIEA’sfunctionalandpresentationcurrency.Allfinancial information ispresented inSolomonIslandDollarsandhasbeenroundedto thenearestdollar,exceptwhenotherwiseindicated.
4 Measurement basis
Themeasurementbasisadoptedinthepreparationofthesefinancialstatementsishistoricalcostexceptasmodifiedforcertainnon-currentassetsandfinancialinstrumentsasidentifiedinspecificaccountingpoliciesbelow.
5 Use of estimates and judgments
ThepreparationofthefinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgements,estimatesand assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income andexpenses.Actualresultsmaydifferfromtheseestimates.
Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisiontoaccountingestimatesarerecognisedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.
Information about critical judgments in applying accounting policies that have the most significant effect on theamountsrecognisedinthefinancialstatementsisincludedinthefollowingnotes:
•Note7(c)–Impairmentoffinancialassets •Note7(e)(iii)–Revaluationofnon-currentassets •Note7(e)(iv)–Impairmentofnon-currentassets •Note7(g)–Employeebenefits
38 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
6 New Standards, amendments, annual improvements and interpretations which have been issued but not adopted as at 31 December 2018
ApartfromtheadoptionofIFRS9FinancialInstrumentsandIFRS15RevenuefromContractswithCustomersandIFRS16Leases,anumberofnewstandards,amendmentstostandardsandinterpretationsareeffectiveforannualperiodsbeginningonorafter1January2019,andhavenotbeenappliedinpreparingthesefinancialstatements.NoneofthenewstandardsisexpectedtohaveasignificanteffectonthefinancialstatementsofSIEAexceptforIFRS16“Leases”.
IFRS16‘Leases’,removestheclassificationofleasesaseitheroperatingleasesorfinanceleases–forthelessee–effectivelytreatingall leasesasfinance leases.Short-term leases (less than12months)and leasesof low-valueassets (suchaspersonalcomputers)areexemptfromtheleaseaccountingrequirements.Therearealsochangesinaccountingoverthelifeofthelease.Inparticular,companieswillnowrecogniseafront-loadedpatternofexpenseformostleases,evenwhentheypayconstantannualrentals.Lessoraccountingremainssimilartocurrentpractice–i.e.lessorscontinuetoclassifyleasesasfinanceandoperatingleases.Thestandardiseffectiveforannualreportingperiodsbeginningonorafter1January2019,withearlyadoptionpermitted.TheimpactofthisstandardonthefinancialstatementsoftheAuthorityhas not yet been fully determined.
Change in accounting policies
Exceptforthechangesbelow,theAuthorityhasconsistentlyappliedtheaccountingpoliciestoallperiodspresentedinthesefinancialstatements.
a) IFRS 15 Revenue from Contracts with Customers
SIEAhasadoptedIFRS15RevenuefromContractswithCustomerswithadateofinitialapplicationof1January2018.Asaresult,theAuthorityhaschangeditsaccountingpolicyforrevenuerecognitionasdetailedbelow.
TheAuthorityhasappliedIFRS15usingthecumulativeeffectmethod–i.e.byrecognisingthecumulativeeffectofinitiallyapplyingIFRS15asanadjustmenttotheopeningbalanceofequityat1January2018.Therefore,thecomparativeinformationhasnotbeenrestatedandcontinuestobereportedunderIAS18andIAS11.
Revenue from distribution and sale of electricity
Previously,theAuthorityrecognisedrevenuefromthegeneration,transmission,distributionandsaleofelectricityto domestic, commercial and industrial customers including unbilled revenue from the last billing date to the end of yearandotherelectricityrelatedrevenueupondeliveryofelectricitytothecustomer(point-in-time).Thecustomeraccepted theserviceand therelatedrisksandrewards fromtheserviceat thispoint in time.Revenuewas thusrecognised at this point provided that the revenue could be measured reliably and the recovery of the consideration wasprobable.
UnderIFRS15,revenueisrecognisedbytheAuthoritywhenorasitsatisfiesaperformanceobligationbytransferringaservicetoacustomer,eitheratapointintime(when)orovertime(as).Forthegeneration,distributionandsalesofelectricity,thecustomersimultaneouslyreceivesandconsumesthebenefitsprovidedastheAuthorityrenderstheservice.ThishasresultedinrevenuefromsaleofelectricitybeingrecognisedovertimewhichwaspreviouslyrecognisedatapointintimeunderIAS18.
Thereishowever,noimpactasat1January2018asaresultofchangesinaccountingforelectricityrevenue.Thisisbecauseasat1January2018,therewerenocontractsthatweredeterminedtobenotcomplete.
39Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
6 New Standards, amendments, annual improvements and interpretations which have been issued but not adopted as at 31 December 2018 continued
b) IFRS 9 - Financial Instruments
SIEAhasadoptedIFRS9FinancialInstrumentsissuedinJuly2014withadateofinitialapplicationof1January2018.TherequirementsofIFRS9representasignificantchangefromIAS39FinancialInstruments:RecognitionandMeasurement.
ThenatureandeffectsofthekeychangestotheAuthority’saccountingpoliciesresultingfromitsadoptionofIFRS9aresummarisedbelow.
As a result of the adoptionof IFRS9, theAuthority adopted consequential amendments to IAS1 “Presentationof Financial Statements”which requires impairment of financial assets to be presented in a separate line iteminthestatementofcomprehensiveincome.TheAuthority’sapproachwastopresentimpairmentlossesontradereceivablesas“allowanceforuncollectability”.NochangeisrequiredforthisapproachunderIFRS9.Impairmentlossesrelatingtootherfinancialassetsarepresentedunder‘financecosts’,similartothepresentationunderIAS39,and not presented separately in the statement of comprehensive income due to materiality considerations.
Additionally,theAuthorityadoptedconsequentialamendmentstoIFRS7FinancialInstruments:Disclosuresthatareappliedtodisclosuresabout2018butgenerallyhavenotbeenappliedtocomparativeinformation.
i. Classification of financial assets and financial liabilities
IFRS9containsthreeprincipalclassificationcategoriesforfinancialassets:measuredatamortisedcost,fairvaluethroughothercomprehensiveincome(FVOCI)andfairvaluethroughprofitorloss(FVTPL).TheclassificationoffinancialassetsunderIFRS9isgenerallybasedonthebusinessmodelinwhichafinancialassetismanagedanditscontractualcashflowcharacteristics.IFRS9eliminatesthepreviousIAS39categoriesofheldtomaturity,loans and receivables and available for sale.
ForanexplanationofhowtheAuthorityclassifiesandmeasuresfinancialassetsandaccountsforrelatedgainsandlossesunderIFRS9,seeNote7(b).
ii. Impairment of financial assets
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The newimpairmentmodelappliestofinancialassetsmeasuredatamortisedcost,contractassetsanddebtinvestmentsatFVOCI,butnottoinvestmentsinequityinstruments.
iii. Transition
ChangesinaccountingpoliciesresultingfromtheadoptionofIFRS9havebeenappliedretrospectively,exceptasdescribedbelow.
- Comparativeperiodshavenotbeen restated.Differences in the carrying amountsoffinancial assets andfinancialliabilitiesresultingfromtheadoptionofIFRS9arerecognisedinretainedearningsasat1January2018.Accordingly,theinformationpresentedfor2017doesnotgenerallyreflecttherequirementsofIFRS9andthereforeisnotcomparabletotheinformationpresentedfor2018underIFRS9.
- Thefollowingassessmentshavebeenmadeonthebasisofthefactsandcircumstancesthatexistedatthedate of initial application.
• Thedeterminationofthebusinessmodelwithinwhichafinancialassetisheld;and
• ThedesignationandrevocationofpreviousdesignationsofcertainfinancialassetsandfinancialliabilitiesasmeasuredatFVTPL.
- IfaninvestmentinadebtsecurityhadlowcreditriskatthedateofinitialapplicationofIFRS9,thentheCompanyassumedthatthecreditriskontheassethadnotincreasedsignificantlysinceitsinitialrecognition.
40 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
6 New Standards, amendments, annual improvements and interpretations which have been issued but not adopted as at 31 December 2018 continued
Impact of adopting IFRS 9 on opening balance SBD $000 Retained earnings ClosingbalanceunderIAS39(31December2017) 412,160 ImpactofexpectedcreditlossesunderIFRS9 15,006 OpeningbalanceunderIFRS9(1January2018) 427,166
iv) ClassificationoffinancialassetsandfinancialliabilitiesonthedateofinitialapplicationofIFRS9.
ThefollowingtableandtheaccompanyingnotesbelowexplaintheoriginalmeasurementcategoriesunderIAS39andthenewmeasurementcategoriesunderIFRS9foreachclassoftheAuthority’sfinancialassetsandfinancialliabilitiesasat1January2018.
31-Dec-17 1-Jan-18 Original New carrying Original New carrying amount amount under classification classification under IAS 39 IFRS 9 on under IAS 39 under IFRS 9 31-Dec-17 1-Jan-18 $000 $000
Financial assetsCashandcashequivalents Loansand receivables Amortisedcost 221,808 221,808Receivables Loansand receivables Amortisedcost 51,803 66,809Termdepositinvestments Held-to- Amortisedcost 45,542 45,542Total financial assets 319,153 334,159
Financial liabilitiesTradeandotherpayables Otherfinancial Otherfinancial liabilities liabilities 32,007 32,007Borrowings Otherfinancial Otherfinancial liabilities liabilities 2,925 2,925Total financial liabilities 34,932 34,932 SIEA’s accounting policies on the classification of financial instruments under IFRS 9 are set out inNote 7(b). Theapplicationofthesepoliciesresultedinthereclassificationssetoutinthetableaboveandfurtherexplainedbelow.
1. Debtandinvestmentsecuritiesthatwerepreviouslyclassifiedasheld-to-maturityarenowclassifiedatamortisedcost.TheAuthorityintendstoholdtheassetstomaturitytocollectcontractualcashflowsandthesecashflowsconsist solely of payments of principal and interest on the principal amount outstanding. No allowance forimpairmentwasrecognisedinopeningretainedearningsat1January2018ontransitiontoIFRS9.
2. TradeandotherreceivablesthatwereclassifiedasloansandreceivablesunderIAS39arenowclassifiedatamortisedcost.Adecreaseof$15,006,144intheallowanceforimpairmentwasrecognisedinopeningretainedearningsat1January2018ontransitiontoIFRS9.
41Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
6 New Standards, amendments, annual improvements and interpretations which have been issued but not adopted as at 31 December 2018 continued
3. CashandcashequivalentsthatwereclassifiedasloansandreceivablesunderIAS39arenowclassifiedatamortisedcost.Noallowanceforimpairmentwasrecognisedinopeningretainedearningsat1January2018ontransitiontoIFRS9.
ThefollowingtablereconcilesthecarryingamountsoffinancialassetsunderIAS39tothecarryingamountsunderIFRS9ontransitiontoIFRS9on1January2018.
carrying IFRS 9 amount at 31 carrying December Re-measurement amount at 1 2017 January 2018 $000 $000 $000
Financial assetsAmortised costCashandcashequivalents:
Broughtforward:Loansandreceivables 221,808Carriedforward:Amortisedcost 221,808
Tradeandotherreceivables:Broughtforward:Loansandreceivables 51,803Re-measurement 15,006Carriedforward:Amortisedcost 66,809
Debtsecurities:Broughtforward:Loansandreceivables 45,542Carriedforward:Amortisedcost 45,542
7 Summary of significant accounting policies
a) Revenue
Revenueismeasuredbasedontheconsiderationspecified inacontractwithacustomerandexcludesamountscollectedonbehalfofthirdparties.SIEArecognisesrevenuewhenittransferscontroloveraproductorservicetoacustomer.
Nature and timing of satisfaction of performance obligations and significant payment terms
ThereisanimpliedcontractbetweenacustomerandtheAuthorityforthepurchase,delivery,andsaleofelectricity.This represents a promise to transfer a series of distinct goods that are substantially the same and that have the samepatternoftransfertothecustomer.Thecustomerobtainscontrolofthegood(electricity)whendeliveredandconsumed by them over time.
Invoicesareissuedmonthlyandareusuallypayablewithin14daysthusthereisnosignificantfinancingcomponent.Additionally,discountisprovidedtosomecustomersagainsttheapprovedtariffrates.
Contractwith customers permit quantities of electricity consumed to be estimated based on previousmonths’averageconsumptionintheeventtheAuthoritycouldnotconductthemonthlymeterreadings.
42 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
Revenue recognition under IFRS 15 applicable from 1 January 2018
RevenueincludingupfrontfeesisrecognisednetofGSTanddiscountovertimeandtheprogressisdeterminedbasedonkilowatts(units)consumed.ThisprovideafaithfuldepictionofthetransferofthegoodasthecustomersimultaneouslyreceivesandconsumesthebenefitsprovidedbytheAuthority’sperformanceoftheelectricityrevenuecontract.
Thetransactionprice isdeterminedbasedontariffsapprovedbyMinistryofMines,EnergyandRuralElectrificationatthetimetheservicehadbeenrenderedandunitsofkilowattsconsumedbythecustomers.Thetransactionpriceisconsideredtobevariableduetothefollowing:
-Tiered-pricingforcustomers;and -Estimateofunbilledelectricitysuppliedtocustomers.
The variable consideration is included in the transaction price only to the extent that it is ‘highly probable’ that asignificantreversal intheamountofcumulativerevenuerecognisedwillnotoccurwhentheuncertaintyassociatedwiththevariableconsiderationisresolved.Inrespecttotheconsiderationsfrom:
a) Readmetercustomers,thesearenotconstrainedbecauseitiscalculatedbasedonactualunitsconsumedduringtheperiod,thusvariabilityduetotiered-pricingonconsiderationfortheperiodisknown.
b) Unreadmetercustomers, theunbilledelectricity suppliedatperiodend isestimatedbasedonpreviousperiods’averageconsumption(expectedvalue).Similarly,themonthlybilledconsiderationisestimatedaswell.Managementconsider this to be best estimate of the transaction pricewithout incurring undue cost and time and thus notnecessaryforSIEAtoquantifyallpossibleoutcomesusingcomplexmodelsandtechniques.Additionally,thefulltransactionpricenotconsideredconstrainedasthelikelihoodandpotentialmagnitudeoftherevenuereversalisnotconsideredbymanagementtobesignificant.
SIEAhadappliedthepracticalexpedientinparagraph121ofIFRS15anddidnotdiscloseinformationaboutremainingperformance obligations that have an original expected duration of one year or less.
Revenue recognition under IAS 18 and IAS 11 applicable before 1 January 2018
SIEA recognises revenue as it provides services or delivers products to customers and the consideration becomesrecoverable.Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.
b) Financial instruments
i) Recognition and initial measurement
Tradereceivablesanddebtsecuritiesissuedareinitiallyrecognisedwhentheyareoriginated.AllotherfinancialassetsandfinancialliabilitiesareinitiallyrecognisedwhentheAuthoritybecomesapartytothecontractualprovisions of the instrument.
Afinancialasset(unlessitisatradereceivablewithoutasignificantfinancingcomponent)orfinancialliabilityisinitiallymeasuredatfairvalueplus,foranitemnotatFVTPL,transactioncoststhataredirectlyattributabletoitsacquisitionorissue.Atradereceivablewithoutasignificantfinancingcomponentisinitiallymeasuredatthe transaction price.
43Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
ii) Classification and subsequent measurement
Financial assets – policy applicable from 1 January 2018
Oninitialrecognition,afinancialassetisclassifiedasmeasuredat:amortisedcost;FVOCI–debtinvestment;FVOCI–equityinvestment;orFVTPL.
FinancialassetsarenotreclassifiedsubsequenttotheirinitialrecognitionunlesstheAuthoritychangesitsbusinessmodelformanagingfinancialassetsinwhichcaseallaffectedfinancialassetsarereclassifiedonthefirstdayofthefirstreportingperiodfollowingthechangeinthebusinessmodel.
AfinancialassetismeasuredatamortisedcostifitmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:
− itisheldwithinabusinessmodelwhoseobjectiveistoholdassetstocollectcontractualcashflows;and
− itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandintereston the principal amount outstanding.
AdebtinvestmentismeasuredatFVOCIif itmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:
− itisheldwithinabusinessmodelwhoseobjectiveisachievedbybothcollectingcontractualcashflowsandsellingfinancialassets;and
− itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandintereston the principal amount outstanding.
Oninitialrecognitionofanequityinvestmentthatisnotheldfortrading,theAuthoritymayirrevocablyelecttopresentsubsequentchangesintheinvestment’sfairvalueinothercomprehensiveincome(OCI).Thiselectionismade on an investment by investment basis.
All financial assets not classified asmeasured at amortised cost or FVOCI as described above aremeasured atFVTPL.Oninitialrecognition,theAuthoritymayirrevocablydesignateafinancialassetthatotherwisemeetstherequirementstobemeasuredatamortisedcostoratFVOCIasatFVTPLifdoingsoeliminatesorsignificantlyreducesanaccountingmismatchthatwouldotherwisearise.
Financial assets: Business model assessment – Policy applicable from 1 January 2018
TheAuthoritymakesanassessmentoftheobjectiveofthebusinessmodelinwhichafinancialassetisheldataportfoliolevelbecausethisbestreflectsthewaythebusinessismanagedandinformationisprovidedtomanagement.Theinformationconsideredincludes:
− thestatedpoliciesandobjectivesfortheportfolioandtheoperationofthosepoliciesinpractice.Theseincludewhethermanagement’s strategy focuses on earning contractual interest income,maintaining a particularinterestrateprofile,matchingthedurationofthefinancialassetstothedurationofanyrelatedliabilitiesorexpectedcashoutflowsorrealisingcashflowsthroughthesaleoftheassets;
− howtheperformanceoftheportfolioisevaluatedandreportedtotheAuthority’smanagement;
− therisksthataffecttheperformanceofthebusinessmodel(andthefinancialassetsheldwithinthatbusinessmodel)andhowthoserisksaremanaged;
− howmanagersofthebusinessarecompensated–e.g.whethercompensationisbasedonthefairvalueoftheassetsmanagedorthecontractualcashflowscollected;and,
− thefrequency,volumeandtimingofsalesoffinancialassetsinpriorperiods,thereasonsforsuchsalesandexpectations about future sales activity.
44 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
Transfersoffinancialassetstothirdpartiesintransactionsthatdonotqualifyforde-recognitionarenotconsideredsalesforthispurpose,consistentwiththeAuthorityrecognitionoftheassets.
FinancialassetsthatareheldfortradingoraremanagedandwhoseperformanceisevaluatedonafairvaluebasisaremeasuredatFVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest – Policy applicable from 1 January 2018
Forthepurposesofthisassessment,‘principal’isdefinedasthefairvalueofthefinancialassetoninitialrecognition.‘Interest’isdefinedasconsiderationforthetimevalueofmoneyandforthecreditriskassociatedwiththeprincipalamountoutstandingduringaparticularperiodoftimeandforotherbasiclendingrisksandcosts(e.g.liquidityriskandadministrativecosts),aswellasaprofitmargin.
Inassessingwhetherthecontractualcashflowsaresolelypaymentsofprincipalandinterest,theAuthorityconsidersthecontractualtermsoftheinstrument.Thisincludesassessingwhetherthefinancialassetcontainsacontractualtermthatcouldchangethetimingoramountofcontractualcashflowssuchthatitwouldnotmeetthiscondition.Inmakingthisassessment,theAuthorityconsiders:
− contingenteventsthatwouldchangetheamountortimingofcashflows;
− termsthatmayadjustthecontractualcouponrate,includingvariableratefeatures;
− prepayment and extension features; and,
− termsthatlimittheAuthority’sclaimtocashflowsfromspecifiedassets(e.g.nonrecoursefeatures).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepaymentamountsubstantiallyrepresentsunpaidamountsofprincipalandinterestontheprincipalamountoutstanding,whichmayincludereasonableadditionalcompensationforearlyterminationofthecontract.Additionally,forafinancialassetacquiredatasignificantdiscountorpremiumtoitscontractualparamount,afeaturethatpermitsorrequiresprepaymentatanamountthatsubstantiallyrepresentsthecontractualparamountplusaccrued(butunpaid)contractualinterest(whichmayalsoincludereasonableadditionalcompensationforearlytermination)istreatedasconsistentwiththiscriterionifthefairvalueoftheprepaymentfeatureisinsignificantatinitialrecognition.
Financial assets: Subsequent measurement and gains and losses – Policy applicable from 1 January 2018
Financial assets at FVTPL Theseassetsaresubsequentlymeasuredatfairvalue.Netgainsandlosses,includinganyinterestordividendincome,arerecognisedinprofitorloss.
Financial assets at amortised cost Theseassetsaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognisedinprofitorloss.Anygainorlossonde-recognitionisrecognisedinprofitorloss.
Debt investments at FVOCI These assets are subsequently measured at fair value. Interest incomecalculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gainsand losses are recognised in OCI. On de-recognition, gains and lossesaccumulated inOCI are reclassified to profit or loss. These include shortterminvestments(termdeposits).
45Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends arerecognisedasincomeinprofitorlossunlessthedividendclearlyrepresentsa recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. TheAuthority’sequityinvestmentsrelates(ifany)wouldrelatetoinvestmentsin listed securities.
Financial instruments – policy applicable before 1 January 2018
i) Non-derivative financial assets
SIEAinitiallyrecognisesloansandreceivablesonthedatethattheyareoriginated.Allotherfinancialassetsarerecognisedinitiallyonthetradedate,whichisthedatethatSIEAbecomesapartytothecontractualprovisionsofthe instruments.
SIEAderecognisesafinancialassetwhenthecontractualrightstothecashflowsfromtheassetexpire,orittransferstherightstoreceivethecontractualcashflowsonthefinancialassetinatransactioninwhichsubstantiallyalltherisksandrewardsofownershipofthefinancialassetaretransferred.AnyinterestintransferredfinancialassetsthatiscreatedorretainedbySIEAisrecognisedasaseparateassetorliability.
Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,SIEAhasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisorrealisetheasset and settle the liability simultaneously.
SIEAclassifiesnon-derivativefinancialassetsintoloansandreceivables.
Loans and receivables
Loansandreceivablesarefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Suchassetsarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequentto initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.
Cash and cash equivalents
Cashandcashequivalentscomprisecashonhandandcashatbankbalance.
Accounts receivables
Accounts receivable are recorded initially at fair value and subsequentlymeasured at amortised costusing theeffective interest rate method, less any provision for doubtful debts.
Subsequently, appropriate allowances for estimated irrecoverable amounts are recognised in the statement ofcomprehensiveincomewhenthereisobjectiveevidencethattheassetisimpaired.
46 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
Other financial assets at fair value through statement of comprehensive income
SIEAhasnootherfinancialassetssuchasderivativesorhedginginstruments.Thesemaybedevelopedinthefuturetoprovidebettermanagementofelectricitypricefluctuations.Iftheyareusedinthefuture,therealisedandunrealisedgainsandlossesarisingfromchangesinthefairvalueswillbeincludedinthestatementofcomprehensiveincomeintheperiodinwhichtheyarise.
Held-to-maturity investments
SIEAhas“heldtomaturity”investmentsthataremeasuredinitiallyatfairvalue.TheseinvestmentsareheldtoprovidesecurityforLetterofCreditgiventosuppliersforvariouscapitalprojectsbeingconstructedforSIEA.Thelengthoftimetomaturityismatchedtothekeymilestonesofthesecapitalprojectsandareusuallylessthanayear.Anominalinterestrateof0.5%perannumisearnedontheseinvestments.
Subsequenttoinitialrecognition,theyaremeasuredatamortisedcostusingtheeffectiveinterestmethod.
ii) Non-derivative financial liabilities
Allfinancialliabilitiesarerecognisedinitiallyonthetradedate,whichisthedatethatSIEAbecomesapartytothecontractualprovisionsoftheinstrument.SIEAderecognisesafinancialliabilitywhenitscontractualobligationsaredischarged, cancelled or expire.
Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,SIEAhasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisortorealisethe asset and settle the liability simultaneously.
SIEAclassifiesnon-derivativefinancialliabilitiesintotheotherfinancialliabilitiescategory.Suchfinancialliabilitiesarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,thesefinancialliabilitiesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.
Otherfinancial liabilities comprise tradeandotherpayables, andSolomon IslandsGovernment loanwhicharecarried at amortised cost.
iii) Contributed capital
ContributedcapitalrepresentsfundscontributedbytheGovernmenttoestablishSIEAasastatutoryenterpriseandanyothersubsequentcontributionsbyGovernment.
47Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
c) Impairment
i) Non-derivative financial assets
Policy applicable from 1 January 2018
Financial instruments:
SIEArecogniseslossallowancesforexpectedcreditlosses(ECL)onfinancialassetsmeasuredatamortisedcost.
SIEAmeasureslossallowancesatanamountequaltolifetimeECL,exceptforthefollowing,whicharemeasuredas12monthECL:
− debtsecuritiesthataredeterminedtohavelowcreditriskatthereportingdate;and
− otherdebtsecuritiesandcashatbankbalancesforwhichcreditrisk(i.e.theriskofdefaultoccurringovertheexpectedlifeofthefinancialinstrument)hasnotincreasedsignificantlysinceinitialrecognition.
Lossallowances for trade receivables isalwaysmeasuredatanamountequal to lifetimeECLas itdoesnotincludesignificantfinancingcomponent.
WhendeterminingwhetherthecreditriskofafinancialassethasincreasedsignificantlysinceinitialrecognitionandwhenestimatingECL,theAuthorityconsidersreasonableandsupportableinformationthatisrelevantandavailablewithoutunduecostoreffort.Thisincludesbothquantitativeandqualitativeinformationandanalysis,basedontheAuthority’shistoricalexperienceandinformedcreditassessmentandincludingforward-lookinginformation.
SIEAassumesthatthecreditriskonafinancialassethasincreasedsignificantlyifitismorethan30dayspastdue.
SIEAconsidersafinancialassettobeindefaultwhen:
− theborrowerisunlikelytopayitscreditobligationstoSIEAinfull,withoutrecoursebytheAuthoritytoactionssuchasrealisingsecurity(ifanyisheld);or
− thefinancialassetismorethan90dayspastdue.
SIEAconsidersadebtsecuritytohavelowcreditriskwhenitscreditriskratingisequivalenttothegloballyunderstooddefinitionof‘investmentgrade’.TheAuthorityconsidersthistobeBaa3orhigherperratingagencyMoody’sorBBB-orhigherperratingagencyStandards&Poor’s.
LifetimeECLs are the ECLs that result from all possible default events over the expected life of a financialinstrument.
12-monthECLsaretheportionofECLsthatresultfromdefaulteventsthatarepossiblewithinthe12monthsafterthereportingdate(orashorterperiodiftheexpectedlifeoftheinstrumentislessthan12months).
ThemaximumperiodconsideredwhenestimatingECLsisthemaximumcontractualperiodoverwhichSIEAisexposedtocreditrisk.
MeasurementofECLs:
Trade receivables
SIEAusesaprovisionmatrixtodeterminethelifetimeexpectedcreditlosses.ItisbasedontheSIEA’shistoricalobserveddefaultrates,andisadjustedbyaforward-lookingestimatethatincludestheprobabilityofaworseningeconomicenvironmentwithinthenextyear.Ateachreportingdate,theAuthorityupdatestheobserveddefaulthistoryandforward-lookingestimates.
48 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
Debt securities including cash at bank and term deposit investments
ECLsareaprobability-weightedestimateofcreditlosses.Creditlossesaremeasuredasthepresentvalueofallcashshortfalls(i.e.thedifferencebetweenthecashflowsduetotheentityinaccordancewiththecontractandthecashflowsthatSIEAexpectstoreceive).
ECLsarediscountedattheeffectiveinterestrateofthefinancialasset.
Credit-impaired financial assets:
At each reportingdate, theAuthority assesseswhetherfinancial assets carried at amortised cost are credit-impaired.Afinancialassetis‘credit-impaired’whenoneormoreeventsthathaveadetrimentalimpactontheestimatedfuturecashflowsofthefinancialassethaveoccurred.
Evidencethatafinancialassetiscredit-impairedincludesthefollowingobservabledata:
− significantfinancialdifficultyoftheborrowerorissuer;
− abreachofcontractsuchasadefaultorbeingmorethan90dayspastdue;
− itisprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation;or
− thedisappearanceofanactivemarketforasecuritybecauseoffinancialdifficulties.
Presentation of allowance for ECL in the statement of financial position:
Lossallowancesforfinancialassetsmeasuredatamortisedcostaredeductedfromthegrosscarryingamountofthe assets.
Write-off:
Thegrosscarryingamountofafinancialassetiswrittenoff(eitherpartiallyorinfull)totheextentthatthereisnorealisticprospectofrecovery.ThisisgenerallythecasewhenSIEAdeterminesthatthedebtordoesnothaveassetsorsourcesof incomeoradequatecustomerdeposits thatcouldgeneratesufficientcashflows torepaytheamountssubjecttothewrite-off.However,financialassetsthatarewrittenoffcouldstillbesubjecttoenforcementactivitiesinordertocomplywiththeAuthority’sproceduresforrecoveryofamountsdue.
Policy applicable before 1 January 2018
Afinancialassetnotcarriedatfairvaluethroughprofitorlossisassessedateachreportingdatetodeterminewhether there is objective evidence that it is impaired. A financial asset is impaired if objective evidenceindicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.
Objectiveevidencethatfinancialassetsareimpairedcanincludedefaultordelinquencybyadebtor,restructuringofanamountduetoSIEAontermsthatSIEAwillnotconsiderotherwise,indicationsthatadebtororissuerwillenterbankruptcy,adversechangesinthepaymentstatusofborrowers,economicconditionsthatcorrelatewithdefaultsorthedisappearanceofanactivemarketforasecurity.
ii) Loans and receivables
SIEAconsidersevidenceofimpairmentforloansandreceivablesatbothaspecificassetandcollectivelevel.Allindividuallysignificantreceivablesareassessedforspecificimpairment.Allindividuallysignificantloansandreceivablesfoundnottobespecificallyimpairedarethencollectivelyassessedforanyimpairmentthathasbeenincurredbutnotyetidentified.
49Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
In assessing collective impairment SIEA uses historical trends of the probability of default, the timingof recoveries and the amount of loss incurred, adjusted formanagement’s judgment as towhether currenteconomicconditionsandcreditconditionsaresuchthattheactuallossesarelikelytobegreaterorlessthansuggested by historical trends.
Animpairment loss inrespectofafinancialassetmeasuredatamortisedcost iscalculatedas thedifferencebetweenitscarryingamountandthepresentvalueoftheestimatedfuturecashflowsdiscountedattheasset’soriginaleffectiveinterestrate.Lossesarerecognisedinstatementofcomprehensiveincomeandreflectedinanallowanceaccountagainstloansandreceivables.Whenasubsequenteventcausestheamountofimpairmentloss to decrease, the decrease is reversed through statement of comprehensive income.
d) Inventories
Inventoryisrecordedatthelowerofcostandnetrealisablevalueafterdueconsiderationforexcessandobsoleteitems.Thecostofinventoriesisbasedonaweightedaveragebasisandincludesexpenditureincurredinacquiringthe inventories and other costs incurred in bringing them to their existing location and condition.
e) Property, plant and equipment
Property,plantandequipmentareinitiallyrecognisedatcostlessaccumulateddepreciationandimpairmentlosses.Costisdeterminedbyincludingallcostsdirectlyassociatedwithbringingtheassetstotheirlocationandconditionfortheirintendeduse.Therecognitionthresholdis$5,000.
Purchaseditemsincludingsoftwarethatisintegraltothefunctionalityoftherelatedequipmentiscapitalisedaspartofthatequipment.Whenpartsofanitemofproperty,plantandequipmenthavemateriallydifferentusefullives,theyareaccountedforasseparateitems(majorcomponents)ofproperty,plantandequipment.
Thegainsandlossesondisposalofanitemofproperty,plantandequipmentaredeterminedbycomparingtheproceedsfromdisposalwiththecarryingamountofproperty,plantandequipmentandisrecognisednetwithinotherincome/otherexpensesinstatementofcomprehensiveincome.Whenrevaluedassetsaresold,anyrelatedamount included in the asset revaluation reserve is transferred to retained earnings.
i) Subsequent expenditure
Thecostofreplacingpartofanitemofproperty,plantandequipmentisrecognisedinthecarryingamountoftheitemifitisprobablethatthefutureeconomicbenefitsembodiedwithinthecomponentwillflowtoSIEAanditscostcanbemeasuredreliably.Thecostsoftheday-to-dayservicingandmaintenanceofproperty,plantandequipmentarerecognisedinprofitorlossasincurred.
ii) Depreciation
Depreciation is based on either the cost or revalued amount of an asset less its residual value. Significantcomponents of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.
Depreciationofproperty,plantandequipmentiscalculatedusingthestraightlinemethodtowritedownthecostorrevaluedamountofproperty,plantandequipmentto itsestimatedresidualvalueover itsestimateduseful life.
50 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
ThestandardestimatedusefullivesanddepreciationratesforSIEAassetclassesareasfollows:
Land-Freehold-unlimited Land-Leasehold-50or75yearsaspertheleaseagreements Buildings-Operationalincludingpowerstations-20to30years Buildings-Non-operational-15to50years Generators-10to40years Plant&equipment-10to25years Distributionnetwork-20to60years Furniture&equipment-5years Furniture&equipment-Informationtechnology-3to5years Motorvehicles-5years Tools-3to5years
Theusefullivesandresidualvaluesarereviewedateachreportingdateandadjustedifappropriate.
iii) Revaluation of property, plant and equipment
Land, property, plant and buildings are shown at fair value, based on valuations by external independentvaluers,lesssubsequentdepreciationofassets.ThefairvaluesarerecognisedinthefinancialstatementsofSIEA,andarereviewedattheendofeachreportingperiodtoensurethatthecarryingvalueofassetsisnotmateriallydifferent to their fair values.
The primary valuation methodologies used in valuing land and buildings are the direct comparison and incomecapitalisationapproachescrosscheckedwithcostapproach.Thesemethodologiesusemarketderivedassumptions, including rents, capitalisation and terminal rates, and discount rates obtained from analysed transactions. The adopted methodologies are considered to provide the best estimate of value.
TheDirectorsproposetohavesuchassetrevaluationseverythreeorfiveyears.
Electricity infrastructureassets arevaluedonanoptimiseddepreciated replacement cost (ODRC)approach.TheODRCvaluationofelectricityassetsisgenerallyconsideredtorepresenttheminimumcostofreplacingorreplicatingtheservicepotentialembodiedinthenetworkwithmodernequivalentassetsinthemostefficientwaypossible fromanengineeringperspective,giventheservicerequirements, theageandconditionof theexisting assets and replacement in the normal course of business.
Anyrevaluationincreasearisingontherevaluationofassetsiscreditedtotheassetrevaluationreserve,exceptto the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in profitorloss,inwhichcasetheincreaseiscreditedtotheprofitorlosstotheextentofthedecreasepreviouslycharged.Adecreaseincarryingamountarisingontherevaluationofassetsischargedasanexpenseinstatementof comprehensive income to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.
Depreciationonrevaluedassetsischargedtoprofitorloss.Onthesubsequentsaleorretirementofarevaluedasset, the attributable revaluation surplus remaining in the asset revaluation reserve, is transferred directly to retained earnings.
51Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
e) Property, plant and equipment continued
iv) Impairment of non-financial assets
Ateachreportingdate,SIEAreviewsthecarryingamountsofitstangibleandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheasset isestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Wheretheassetdoesnotgeneratecashflowsthatarelargelyindependentfromotherassets,thecompanyestimatestherecoverableamountofthecashgeneratingunittowhichtheassetbelongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested forimpairmentannuallyandwheneverthereisanindicationthattheassetmaybeimpaired.
Recoverableamountisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimated future cashflowsarediscounted to theirpresentvalueusingapre-taxdiscount rate that reflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimatesoffuturecashflowshavenotbeenadjusted.
Iftherecoverableamountofanasset(orcashgeneratingunit)isestimatedtobelessthanitscarryingamount,thecarryingamountoftheasset(orcashgeneratingunit)isreducedtoitsrecoverableamount.Animpairmentlossisrecognisedinprofitorlossimmediately,unlesstherelevantassetiscarriedatfairvalue,inwhichcasetheimpairment loss is treated as a revaluation decrease.
Whereanimpairmentlosssubsequentlyreverses,thecarryingamountoftheasset(orcashgeneratingunit)isincreased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheasset(orcashgeneratingunit)inprioryears.Areversalofanimpairmentlossisrecognisedinprofitorlossimmediately,unlesstherelevantassetiscarriedatfairvalue,inwhichcasethereversaloftheimpairmentlossistreatedasarevaluationincreasethroughOCI.
v) Intangible assets
Thecostofacquiringanintangibleassetisamortisedfromthedatetheunderlyingassetisheldreadyforuseonastraightlinebasisovertheperiodofitsexpectedbenefit,whichisasfollows:
Software-3to7years Easements-indefinite
Easementsaredeemedtohaveanindefiniteusefullife,asthecontractsdonothaveamaturitydateandSIEAexpects to use the easements indefinitely. Therefore, easements are not amortised. Their value is assessedannually for impairment, and their carrying value iswritten down if found impaired. SIEA capitalises thedirectcostsassociatedwithputtingtheeasementsinplace.Thesecostsincluderegistrationandassociatedlegalcostsandalsoanyinjuriousaffectionpayments.WhereSIEAbuyslandandthenestablishesaneasement,avaluationisobtainedfortheeasement.Thisvaluationisusedasdeemedeasementcostandcapitalised,withacorresponding reduction in the land valuation.
CertaineasementsmayhavebeendonatedbytheCrown.Thesearerecognisedatcost($nil)plusanydirectcostassociatedwithputtingtheeasementinplace.
Forintangibleswithafinitelife,wheretheperiodsofexpectedbenefitorrecoverablevalueshavediminishedduetotechnologicalchangeormarketconditions,amortisationisacceleratedorthecarryingvalueiswrittendown.
52 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
f) Capital work in progress
Capital work in progress is recorded at cost. Cost is determined by including all costs directly associatedwithbringingtheassetstotheirlocationandcondition.Financecostsincurredduringtheperiodoftimethatisrequiredtocompleteandpreparetheasset for its intendedusearecapitalisedaspartof thetotalcost forcapitalworkinprogress.Thefinancecostscapitalisedarebasedonthecompany’sweightedaveragecostofborrowing.Assetsaretransferredfromcapitalworkinprogresstoproperty,plantandequipmentastheybecomeoperationalandavailableforit’sintendeduse.
g) Employee benefits
Provisionismadeforbenefitsaccruingtoemployeeswhenitisprobablethatsettlementwillberequiredandtheyare capable of being measured reliably.
Short-term benefits
Short-termbenefits comprisesof accrued salaries andwages,bonus, annual leave, andentitlement toSolomonIslandsNationalProvidentFundareexpensesastherelatedserviceisprovided.
Provisionsmadeinrespectofemployeebenefitsexpectedtobesettledwithin12months,aremeasuredat theirnominal values using the rate expected to apply at the time of settlement.
Long-term benefits
Aearlyretirementschemeisalong-termbenefitprovidedbySIEAtoitsemployees.
Provisionsmadeinrespectofemployeebenefitsthatarenotexpectedtobesettledwithin12monthsaremeasuredatthepresentvalueoftheestimatedcashflowstobemadebySIEAinrespectoffuturebenefitsthatemployeeshaveearned in return for their services in the current and prior periods.
h) Taxation
UndertheElectricityAct,SIEAisexemptfromincometax.
i) Foreign currency transactions
Transactions denominated in a foreign currency that are not hedged are converted at the Solomon Islands exchange rate at the date of the transaction. Foreign currency receivables and payables at balance date are translated atexchange rates prevailing at balance sheet date. Exchange differences arising on the translation or settlement of accounts payable and receivable in foreign currencies are recognised in the statement of comprehensive income.
j) Cash flow statement
For thepurposes of the cashflow statement, cash is considered tobe cashheld inbankaccounts (net of bankoverdrafts)plushighlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcash,whicharesubjecttoaninsignificantriskofchangesinvalue.Cashflowsfromcertainitemsaredisclosednet,duetotheshorttermmaturities and volume of transactions involved.
53Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
7 Summary of significant accounting policies continued
k) Grants
Anunconditionalgrantrelatedtoanassetisrecognisedinstatementofcomprehensiveincomeasotherincomewhenthegrantbecomesreceivable.
OthergrantsarerecognisedinitiallyasdeferredincomeatfairvaluewhenthereisreasonableassurancethattheywillbereceivedandSIEAwillcomplywiththeconditionsassociatedwiththegrantandarethenrecognisedinstatement of comprehensive income as other income on a systematic basis over the useful life of the asset. Grants thatcompensateSIEAforexpensesincurredarerecognisedinstatementofcomprehensiveincomeasotheroperatingincomeinthesameperiodsinwhichtheexpensesarerecognised.
l) Provisions
SIEArecognisesprovisionswhenthereisapresentobligation,thefuturesacrificeofeconomicbenefitsisprobable,and the amount of the provision of the provision can be measured reliably. The amount recognised is the best estimateof theconsideration required to settle thepresentobligationat reportingdate, taking intoaccount therisksanduncertaintiessurroundingtheobligationatreportingdate.Whereaprovisionismeasuringthecashflowsestimatedtosettlethepresentobligation,itscarryingamountisthepresentvalueofthesecashflows.
8 Financial risk management
Overview
SIEAhasexposuretothefollowingrisksfromitsuseoffinancialinstruments:
i)Creditrisk ii)Liquidityrisk iii)Marketrisk iv)Interestraterisk
This note presents information about SIEA’s exposure to each of the above risks and SIEA’s objectives, policies andprocessesformeasuringandmanagingrisk.Furtherquantitativedisclosuresareincludedthroughoutthesefinancialstatements.
Risk management framework
TheBoardofDirectorshasoverallresponsibilityfortheestablishmentandoversightofSIEA’sriskmanagementframework.SIEA’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbySIEA,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagementpoliciesandsystemsarereviewedregularly to reflect changes inmarket conditions and SIEA’s activities. SIEA, through its training andmanagementstandardsandprocedures,aimstodevelopadisciplinedandconstructivecontrolenvironmentinwhichallemployeesunderstand their roles and obligations.
SIEA’sBoardoverseeshowmanagementmonitorscompliancewithSIEA’sriskmanagementpoliciesandproceduresandreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbySIEA.TheBoardisassistedintheiroversightrolebyinternalaudit.Internalauditundertakesbothregularandad-hocreviewsofriskmanagementcontrolsandprocesses,theresultofwhichisreportedtotheBoard.
TheaboverisksarelimitedbySIEA’sfinancialmanagementpoliciesandproceduresasdescribedbelow:
54 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
8 Financial risk management continued
i) Credit risk
CreditriskistheriskoffinanciallosstoSIEAifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligationsandarisesprincipallyfromSIEA’sreceivablesfromcustomers,investmentindebtsecurities, and cash and call deposits.
SIEA’sexposuretocreditriskisinfluencedmainlybytheindividualcharacteristicsofeachcustomer.However,managementalsoconsidersthedemographicsofSIEA’scustomerbase,includingthedefaultriskoftheindustryasthesefactorsmayhaveaninfluenceoncreditrisk.
Thecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.
Expected credit loss assessment for trade and other receivables as at 1 January 2018 and 31 December 2018
SIEAusesanallowancematrixtomeasuretheECLsofTradereceivablesfromindividualcustomers,whichcomprise a large number of balances.
Lossratesarecalculatedusinga‘rollrate’methodbasedontheprobabilityofareceivableprogressingthroughsuccessivestagesofdelinquencytowrite-off.
ThefollowingtableprovidesinformationabouttheexposuretocreditriskandECLsfortradereceivablesandcontractassetsfromindividualcustomerscategorisedintokwhdebtorsandcashpowerdebtorsasat:
Kwh debtors: Gross Weighted carrying Loss average loss amount allowance Credit rates SBD SBD impaired
1-Jan-18 Current-30dayspastdue 11.96% 19,826,714 2,370,857 No 30-59dayspastdue 23.53% 14,237,418 3,350,258 No 60-89dayspastdue 45.15% 7,073,262 3,193,918 No 90ormoredaysinpastdue 61.39% 12,110,651 7,435,110 Yes 53,248,045 16,350,144
31-Dec-18 Current-30dayspastdue 12.19% 25,748,106 3,138,423 No 30-59dayspastdue 23.99% 12,297,105 2,949,588 No 60-89dayspastdue 46.03% 7,665,957 3,528,433 No 90ormoredaysinpastdue 62.58% 11,477,661 7,182,651 Yes 57,188,829 16,799,096
55Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
8 Financial risk management continued Gross Loss Weighted carrying allowance Credit average loss SBD SBD impaired
Cash power debtors: 1-Jan-18 Current-30dayspastdue 5.13% 31,571 1,620 No 30-59dayspastdue 6.25% 46,944 2,934 No 60-89dayspastdue 6.54% 5,071,352 331,485 No 90ormoredaysinpastdue 6.93% 7,891,869 547,013 Yes 13,041,735 883,051
31-Dec-18 Current-30dayspastdue 9.70% 111,682 10,832 No 30-59dayspastdue 11.81% 51,469 6,081 No 60-89dayspastdue 12.36% 65,630 8,109 No 90ormoredaysinpastdue 13.10% 10,280,322 1,346,999 Yes 10,509,105 1,372,022
Lossratesarebasedonactualcreditlossexperiencedoverthepasttwoyears.factorstoreflectdifferencesbetweeneconomicconditionsduringtheperiodoverwhichthehistoricdatahasbeencollected,currentconditionsandtheAuthority’sviewofeconomicconditionsovertheexpectedlivesofthereceivables.ScalarfactorsarebasedonactualandforecastGDPgrowthratesorinflationrates.
Themovementintheallowanceforimpairmentinrespectoftradereceivablesandotherreceivablesduringtheyearisdisclosedinnote18.Comparativeamountsfor2018representtheallowanceaccountforimpairmentlossesunderIAS39.
ImpairmentonotherreceivablesfromSolomonIslandsGovernmentandstate-ownedentitieshasbeenmeasuredonthe12monthexpected lossbasis,andtheresulted impairment losseswasand isnotconsideredmaterialbymanagementondateofinitialapplicationofIFRS9andreportingdaterespectively.
Cash and cash equivalents
SIEAheldcashatbankof$221,808,007at31December2018(2017:$201,187,479).Thecashisheldwithdifferentbanks,whoseratingsrangedfromAa3toCaa1basedonMoody’screditratings.
Impairmentoncashandcashequivalentshasbeenmeasuredonthe12monthexpectedlossbasisandreflectstheshort maturities of the exposures.
SIEAusesasimilarapproachforassessmentofECLsforcashandcashequivalentstothoseusedfordebtsecurities.
Accordingly,duetoshortmaturitiesoninitialapplicationofIFRS9,theAuthoritydidnotrecogniseanimpairmentallowanceagainstcashandcashequivalentsasat1January2018.Theamountoftheallowancedidnotchangeduring2018.
56 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
8 Financial risk management continued
Debt investment securities
SIEAhelddebtinvestmentsecuritiesof$75,872,816at31December2018(2017:$45,542,195).Thedebtinvestmentsecurities are heldwith institutionswhich are rated Aa3 to B3 based onMoody’s credit ratings. In relation todebtinvestmentsecuritiesheldwiththeseinstitutions,theAuthoritymonitorschangesincreditriskbytrackingpublishedexternalcredit ratingsbutwhenexternalcredit ratingsarenotavailableorpublished,SIEAmonitorschangesincreditriskbyreviewingavailablepressandregulatoryinformation.
ImpairmentondebtinvestmentsecuritiesheldwithbanksandSolomonIslandsGovernmenthasbeenmeasuredonthe12monthexpectedlossbasis.
OninitialapplicationofIFRS9,theAuthoritydidnotrecogniseanimpairmentallowanceagainstdebtinvestmentsecuritiesasat1January2018.Theamountoftheallowancedidnotchangeduring2018.
Credit risk under IAS 39
SIEAestablishesanallowanceforimpairmentthatrepresentsitsestimateofincurredlossesinrespectoftradeandother receivables. Themain components of this allowance are a specific loss component established for groupsofsimilarassetsinrespectoflossesthathavebeenincurredbutnotyetidentified,andacollectivecomponentinrespectofestimatedlossesincurredbutnotyetidentified.
SIEA’smaximumexposuretocreditriskisasfollows:
2017 SBD
Cashatbank 221,765,007 Termdepositinvestments 45,542,195 Receivables-currentReceivables 82,420,732 -non-current 1,660,609 351,388,543 Receivablesaredeterminedimpairedasfollows:
Trade and other receivables Grossreceivables 82,420,732 Provisionforimpairment (32,278,526) 50,142,206
ii) Liquidity risk
LiquidityriskistheriskthatSIEAwillencounterdifficultyinmeetingtheobligationsassociatedwithitsfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.SIEA’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetoSIEA’sreputation.
SIEAensuresthatishassufficientcashonhandtomeetoperationalexpensesincludingtheservicingoffinancialobligations but this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
57Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
8 Financial risk management continued
Thefollowingarethecontractualmaturitiesoffinancialliabilities:
31 December 2018
Carrying 6 months 6-12 Greater amount or less months than 1 year Total SBD SBD SBD SBD SBD Financial liabilities
Tradeandotherpayables 38,661,806 38,661,806 - - 38,661,806 SolomonIslandsGovernmentloan 14,527,257 2,090,045 2,054,055 11,702,423 15,846,523 53,189,063 40,751,851 2,054,055 54,508,329
31 December 2017
Carrying 6 months 6-12 Greater amount or less months than 1 year Total SBD SBD SBD SBD SBD Financial liabilities Tradeandotherpayables 32,007,084 32,007,084 - - 32,007,084
SolomonIslandsGovernmentloan 2,924,999 3,087,019 - - 3,087,019 34,932,083 35,094,103 - 35,094,103
iii) Market risk
Marketriskistheriskthatchangesinmarketprices,suchasfuelprices,foreignexchangeratesandinterestrateswillaffectSIEA’sincomeorthevalueofitsholdingsoffinancialinstruments.Theobjectiveofmarketriskmanagementistomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimisingthereturn.
Fuel price risk
SIEA is subject to a monthly tariff review. The tariff is based on The Electricity Tariff (Base Tariff and TariffAdjustments)Regulation2016which isadjustedeverymonth for theHoniaraConsumerPrice Index(CPI), theProducersPriceIndex(PPI,USA),theexchangeratebetweentheUS$andSBDandthefuelpricemovements.Fuelcostsof$180,667,381(2017:$137,645,095)comprises47%oftheexpenditureofSIEA,somovementsinfuelpricesarecriticaltotheprofitabilityofSIEA.Fortunately,themonthlytariffreviewconsidersthefuelpricemovements,theCPI,PPIandexchangeratechanges,thereforethereisanaturalhedgeagainstmarketmovements.
Achangeof100basispoints(bp)ininterestratesatthereportingdatewouldhaveincreased/(decreased)profitorlossbyamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticularforeigncurrencyrates,remain constant.
Profit or loss 100bp 100bp increase $000 $000 Revenue 447,900 490,300 Expenditure 370,928 407,128
NetProfit 76,972 83,172
58 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
8 Financial risk management continued
iv) Interest rate risk
Interestrateriskistheriskthatachangeininterestrateswillimpactnetinterestcostsandborrowings.
SIEAhas investedindebtsecuritiesandhas interest-bearingborrowingfromtheSolomonIslandsGovernment.Theseareatafixedinterestrateduringthetermoftheinstruments.
Giventhefixednatureofinterestratesdescribedabove,theAuthorityhasahighlevelofcertaintyovertheimpactoncashflowsarisingfrominterestincomeandinterestexpenses.Accordingly,SIEAdoesnotrequiresimulationstobeperformedoverimpactonnetprofitsarisingfromchangesininterestrates.
Furthermore, for thosefinancialassetsandfinancial liabilitieswhicharenotcarriedat fairvalue, theircarryingamount is considered a reasonable approximation of fair value.
v) Currency risk
TheAuthorityisexposedtocurrencyrisktotheextentthatthereisamismatchbetweenthecurrenciesinwhichpurchases,andborrowingsaredenominatedandtherespectivefunctionalcurrencies.TheAuthoritydoesnothavesignificantexposuretocurrencyrisk.
Note 2018 2017 SBD SBD
9 Other operating income Communityserviceobligation 1,500,000 - Other 1,926,230 2,540,795 Reconnections 3,200 4,530 Gainondisposaloffixedassets 196,773 - Unconditionalgrantincome 1,860,615 - 5,486,818 2,545,325
10 Generation and distribution Boughtinelectricity - 3,561,954 Fuel 180,667,381 137,645,095 Lubricatingoil 3,888,180 4,590,875 Other 4,010,500 4,460,864 Personnel 13 23,828,353 25,407,717 Repairsandmaintenance 11,780,667 31,935,454 224,175,081 207,601,960
59Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
Note 2018 2017 SBD SBD
11 Administration
Advertising 1,682,314 2,430,499 Bankfees 257,000 319,713 Computerbureaucharges 1,659,243 1,865,089 Consultancyfees 11,273,094 18,089,604 Directorsfeesandexpenses 451,588 627,570 Electricity 2,969,773 2,949,745 Electricityrebate 5,080,129 4,632,483 Freight 505,717 205,032 Insurance 2,558,392 2,338,014 Personnel 13 39,187,093 10,202,013 Printingandstationery 1,829,337 2,146,769 Professionalfees 1,504,846 1,080,046 Propertyexpenses 4,895,004 4,628,537 Telecommunications 3,631,425 3,372,687 Travelandaccommodation 4,120,552 4,796,083 81,605,507 59,683,883
12 Operating expenses
Customshandlingcharges 4,948,308 5,945,648 Personnel 13 12,030,377 17,866,359 Repairsandmaintenance 1,909,207 3,882,631 Vehiclecosts 3,942,139 3,453,391 22,830,031 31,148,030
13 Personnel expenses
Salariesandwages 45,429,198 41,573,283 Superannuation 3,046,477 2,749,261 Retirementbenefitexpense 15,833,287 - Others 10,736,861 9,153,545 75,045,823 53,476,089
Personnelexpensesclassedbyfunctionisasfollows:
Generationanddistribution 23,828,353 25,407,717 Administration 39,187,093 10,202,013 Operatingexpenses 12,030,377 17,866,359 75,045,823 53,476,089
60 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
14 Prior period adjustments
DuringthefinancialyearitwasidentifiedthattheleaseholdlandrevaluedinDecember2016andincludedinproperty,plantandequipmenthadbeenerroneouslydepreciatedbasedonitscostandnotontherevaluedamount.
Statement of financial position
Impact of restatement Previously Adjustment Restated reported As at 31 December 2018 2017 2017 2017
Property,plantandequipment 795,429,205 (2,231,404) 793,197,801 Totalnon-currentassets 797,089,814 (2,231,404) 794,858,410 Totalassets 1,138,534,591 (2,231,404) 1,136,303,187 Retainedearnings 414,391,698 (2,231,404) 412,160,294 Totalequity 1,046,214,572 (2,231,404) 1,043,983,168 Totalequityandliabilities 1,138,534,591 (2,231,404) 1,136,303,187
Statement of comprehensive income
Impact of restatement Previously Adjustment Restated reported As at 31 December 2018 2017 2017 2017
Depreciationandamortisation 51,447,685 2,231,404 53,679,089 Totalexpenses 361,667,318 2,231,404 363,898,722 Operatingprofits 79,456,495 (2,231,404) 77,225,091 Netprofit 79,880,086 (2,231,404) 77,648,682 Totalcomprehensiveincomefortheyear 79,880,086 (2,231,404) 77,648,682
61Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
15 P
rope
rty,
plan
t and
equ
ipm
ent
Land
Bu
ildin
gs
Gene
rato
rs
Plan
t and
D
istr
ibut
ion
Furn
iture
&
Mot
or
Tool
s W
ork
in
Tota
l
equi
pmen
t ne
twor
k eq
uipm
ent
vehi
cles
prog
ress
SBD
SB
D
SBD
SB
D
SBD
SB
D
SBD
SB
D
SBD
SB
D
Cost
/ Re
valu
atio
n
Bala
nce
as 1
Janu
ary
2017
53
,831
,179
15
7,54
8,12
0 19
0,16
6,76
9 49
,998
,834
20
0,31
0,57
1 21
,120
,828
24
,395
,595
6,
487,
235
76,8
78,8
24
780,
737,
955
Ad
ditio
ns
4,112
--
-668,067
--
-132,193,868
132,866,048
Disposals
--
(1,843,635)
--
(280,347)
--
-(2,123,982)
Workinprogressc
apita
lised
1,296,071
9,791,803
52,781,356
10,006,546
22,784,409
3,739,609
722,680
1,485,646
(102,60
8,119)
-
Ba
lanc
e at
31
Dec
embe
r 201
7 55
,131
,363
16
7,33
9,92
2 24
1,10
4,49
0 60
,005
,380
22
3,76
3,04
8 24
,580
,090
25
,118
,275
7,
972,
881
106,
464,
573
911,
480,
021
Ad
ditio
ns
--
--
-
-
123,570,342
123,570,342
Disposals
(4,112)
--
-(227,976)
-(958,867)
(53,449)
-(1,244,404)
Workinprogressc
apita
lised
1,039,783
16,812,269
23,720,404
15,426,561
70,118,198
7,054,773
3,307,460
2,835,278
(140,314,726)
-
Ba
lanc
e at
31
Dec
embe
r 201
8 56
,167
,034
18
4,15
2,19
1 26
4,82
4,89
4 75
,431
,941
29
3,65
3,26
9 31
,634
,863
27
,466
,868
10
,754
,710
89
,720
,189
1,0
33,8
05,9
59
Br
eakd
own
of co
st/r
eval
uatio
n
2011Valua
tion
--
--
--
1,172,968
249,941
-1,422,910
2013Valua
tion
564,117
6,658,552
171,550
17,130,540
25,668,207
--
--
50,192,966
2016Valua
tion
49,751,225
61,916,918
93,373,939
30,899,771
168,190,283
--
-
404,132,137
Co
st5,851,691
115,576,721
171,279,404
27,401,631
99,794,780
31,634,863
26,293,899
10,504,769
89,720,189
578,057,947
Ba
lanc
e at
31
Dec
embe
r 201
8 56
,167
,034
18
4,15
2,19
1 26
4,82
4,89
4 75
,431
,941
29
3,65
3,26
9 31
,634
,863
27
,466
,868
10
,754
,710
89
,720
,189
1,0
33,8
05,9
59
Dep
reci
atio
n an
d im
pair
men
t los
s
Bala
nce
as 1
Janu
ary
2017
3,
703,
995
1,03
7,08
9 17
,107
,540
5,
511,
731
8,52
0,16
9 11
,031
,057
15
,605
,099
4,
183,
305
- 66
,699
,983
De
preciatio
n-
8,169,065
21,566,588
1,579,051
8,859,808
4,139,523
4,255,485
1,643,499
-50,213,020
Am
ortisationofleaseholdlan
d-restated
3,466,069
--
--
--
--
3,466,069
De
preciatio
non
disp
osedas
sets
--
(1,843,635)
--
(253,218)
--
-(2,096,853)
Ba
lanc
e at
31
Dec
embe
r 201
7 - r
esta
ted
7,17
0,06
4 9,
206,
154
36,8
30,4
93
7,09
0,78
2 17
,379
,977
14
,917
,362
19
,860
,583
5,
826,
804
- 11
8,28
2,22
0
Depreciatio
n-
8,954,942
20,280,128
5,327,358
10,542,195
3,410,849
3,096,065
1,564,988
-53,176,524
Am
ortisationofleaseh
oldland
3,496,225
--
--
--
--
3,496,225
De
preciatio
non
disp
osedas
sets
--
--
(2,850)
-(927,320)
(1,164)
-(931,334)
Ba
lanc
e at
31
Dec
embe
r 201
8 10
,666
,289
18
,161
,096
57
,110
,621
12
,418
,140
27
,919
,322
18
,328
,211
22
,029
,328
7,
390,
629
- 17
4,02
3,63
5
Carr
ying
am
ount
s
At31De
cember2
016
50,127,184
156,511,031
173,059,229
44,487,104
191,790,402
10,089,772
8,790,496
2,303,930
76,878,824
714,037,972
At31De
cember2
017-restated
47,961,298
158,133,768
204,273,996
52,914,598
206,383,071
9,662,728
5,257,691
2,146,077
106,464,573
793,197,801
At
31
Dec
embe
r 201
8 45
,500
,745
16
5,99
1,09
5 20
7,71
4,27
3 63
,013
,802
26
5,73
3,94
7 13
,306
,652
5,
437,
540
3,36
4,08
2 89
,720
,189
85
9,78
2,32
4
62 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
15 Property, plant and equipment continued
SIEAhasapolicytorevalueinfrastructureandpropertyassetsevery3or5years.Thelastsuchrevaluationwascompletedin2016.SIEAisoftheopinionthattherehasbeennomaterialchangeinthecarryingvalueoftheseassetssincethatrevaluation.
In2016SIEAengagedSinclairKnightsMerz(SKM)tocarryoutanindependentvaluationofthefollowingclassesofassets:
Generators
Distributionnetwork
Plantandequipment
ThevaluationmethodologyutilisedbySKMwastheoptimiseddepreciatedreplacementcost(ODRC)approachwhichisgenerallyconsideredtorepresenttheminimumcostofreplacingtheservicepotentialembodiedinthenetworkwithmodernequivalentassetsinthemostefficientmannerfromanengineeringperspectivegiventheservicerequirements,the age and condition of the existing assets.
In 2016 SIEA also engagedValue SolutionsAppraisal (VSA) to carry out an independent valuation of all land andbuildings. Theywere valued at fair value, basedonmarket based evidenceusingDiscountedCash Flowsupon theappraisalofaprofessionallyqualifiedvaluer.
ThesevaluationswerecompletedinJanuaryandDecember2016bySKMandVSArespectivelyandbookedintotheaccountsfromthosedatesandareaccordinglyreflectedinthefinancialstatementsasat31December2016.
In2016thecombinedresultsofthisvaluationprocesswasanincreaseinfixedassetsandtheassetrevaluationreserveof$85,414,971.However,thisincreaseinvaluewaspartiallyoffsetbyanimpairmentlossof$158,334whichwasexpensedin the statement of comprehensive income.
SIEAholdsbothPerpetualEstateLandandLeaseholdLand.In2014,itwasagreedwiththeAuditorGeneralthatleaseholdlandshouldbeamortised,asshownbelow.
2018 2017 SBD SBD
PerpetualEstateLand 11,506,500 3,194,989 LeaseholdLand 44,660,534 51,936,373 AmortisationofLeaseholdLand (10,666,289) (7,170,064) 45,500,745 47,961,29816 Cash and cash equivalents Short-termdeposits 45,749,190 - Cashonhand 45,030 43,000 Cashatbank 257,730,221 221,765,007 303,524,441 221,808,007
Theshort-termdepositsamounting$45,731,711werere-investedwithANZBankingGroupLimited-SolomonIslandsBranch at the rate of 0.5%. The short-term deposits have amaturity term of amonth from the date of inception.Accordingly, these short- term deposits have been considered as cash and cash equivalents for the purpose of thestatementofcashflow.
17 Inventories Electricalandmechanical 22,451,241 20,910,019 22,451,241 20,910,019
Fuelandlubricantsarepaidforonconsumptionfromsuppliesheldonsiteonconsignmentbasisfromthesupplier,SouthPacificOilLtd,throughacontractsignedin2012.Therefore,nofuelandlubricantsarenotrecordedinSIEA’sinventory.
63Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
2018 2017 SBD SBD
18 Receivables
Current Tradereceivables-kilowatt(Kwh) 57,188,829 53,221,567 Allowanceforimpairment-kilowatt(Kwh) (16,799,096) (19,276,118) Tradereceivables-CashPower 10,509,105 13,041,735 Allowanceforimpairment-CashPower (1,372,022) (12,963,221) Relatedparty-SolomonIslandsWaterAuthority 937,500 937,500 Relatedparty-SolomonIslandsBroadcastingCorporation 353,131 891,426 Staffadvances 248,589 312,409 Allowanceforimpairment-staffadvances (25,033) (39,187) Unreadmeters 10,025,866 13,847,290 Otherdebtors 699,821 168,804
61,766,690 50,142,206 Non-current
Relatedparty-SolomonIslandsWaterAuthority 937,500 1,875,000 Deferredincome-SolomonIslandsWaterAuthority (138,828) (273,049) Relatedparty-SolomonIslandsBroadcastingCorporation - 61,705 Deferredincome-SolomonIslandsBroadcastingCorporation - (3,047)
798,672 1,660,609
Total receivables 62,565,362 51,802,815
On31May2012anagreementwassignedbetweentheSolomonIslandsGovernment(SIG),SolomonIslandsWaterAuthority(SIWA)andSIEAwherebythedebtowedbySIWAof$7,500,000wasconvertedintoaloanwitha0%interestrateforatermof8yearscommencingon1January2013.Thedeferredincomerelatestothenotionalinterestexpenseonthisdebtusingtheeffectiveinterestmethodandisbasedupondiscountedfuturecashflows.
On8May2013 an agreementwas signedbetween theSolomon IslandsBroadcastingCorporation (SIBC) andSIEAwherebythedebtowedbySIBCof$3,661,381wasconvertedintoa loanwith0%interestrate foratermof5yearscommencing on 31May 2013. The deferred income relates to the notional interest expense on this debt using theeffectiveinterestmethodandisbasedupondiscountedfuturecashflows.
Allowance for impairment Balanceatthebeginningoftheyear 32,278,526 29,342,815 TransitionadjustmentontheinitialapplicationofIFRS9 (15,006,144) - Balanceat1January2018 17,272,382 29,342,815 Impairmentrecognised 3,714,358 11,396,373 Baddebtswrittenoffduringtheyear (2,790,589) (8,460,662) Balanceat31December 18,196,151 32,278,526
64 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
2018 2017 SBD SBD
19 Government bonds
Governmentbonds 30,000,000 - On1December2018SIEApurchaseddomesticdevelopmentbondswithafacevalueofSBD$30MfromtheSolomon
IslandsGovernment.Thebondshaveaninterestrateof5%perannumwhichistobepaidsemi-annually.Thebondshaveamaturitydateof1December2028andthereisa3yeargraceperiodbeforeprincipalrepaymentscommence.
20 Contributed capital
Contributedcapital 246,933,170 246,933,170
CapitalrepresentstheGovernment’scontributiontotheestablishmentofSIEA.Thisisnotintheformofshares.
21 Deferred income
Balanceat1January 57,194,119 61,815,920 Additionaldeferredincome 29,659,008 1,771,160 Deferredincomerecognisedduringtheyear (6,395,050) (6,392,961) Balanceat31December 80,458,077 57,194,119
Thedeferredincomeisshownonthestatementoffinancialpositionasfollows:-
Current 6,392,961 6,392,961 Non-current 74,065,116 50,801,158 80,458,077 57,194,119
In2007,theGovernmentofJapanenteredintoanagreementwithSolomonIslandsGovernmenttofundtheconstructionoftheLunggaGeneratorandPowerStationonbehalfofSIEA.Thefundingofthesecapitalworksisanon-reciprocalgrant.Thevalueof thecapitalworkswasapproximately$48millionandhasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensiveincomeoverthelifeofthepowerstation.
In2014,agrantofapproximately$3.2millionwasreceivedfromtheJapaneseInternationalCorporationAgency(JICA)tofunda50KWsolargridattheRanadiHeadquartersinHoniara.ThevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortised to the statement of comprehensive income over the life of the solar grid.
In2013,agrantofapproximately$3,058,000wasreceivedfromtheWorldBankthroughtheSolomonIslandsSustainableEnergyProject(SISEP)tofundtheinstallationofa33kvcableinHoniara.ThisprojectwascompletedinMay2015andthevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakento deferred income. The deferred income is being amortised to the statement of comprehensive income over the life of the cabling.
In2013,agrantofapproximately$1,493,000wasreceivedfromtheWorldBankthroughtheSolomonIslandsSustainableEnergyProject(SISEP)tofundtheinstallationof11kvswitchgearinHoniara.ThisprojectwascompletedinJanuary2015andthevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensiveincomeoverthelifeoftheequipment.
65Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
21 Deferred income continued
In2013,agrantofapproximately$839,000wasreceivedfromtheWorldBankthroughtheSolomonIslandsSustainableEnergy Project (SISEP) to fund the installation of cooling radiators at the Lungga Power Station. This project wascompleted in June2015and thevalueof the capitalworkshasbeenaccounted forbySIEAas anon-current assetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensive income over the life of the radiators.
In2015,agrantofapproximately$765,000wasreceivedfromtheAsianDevelopmentBanktofundtheconstructionofaCoconutOilConditioningUnitonAuki.ThevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementof comprehensive income over the life of the unit.
In2015,agrantofapproximately$1,015,000wasreceivedfromtheAsianDevelopmentBanktofundtheprocurementof aGenerator Set onAuki. The value of the capitalworkshas been accounted for by SIEA as anon-current assetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensive income over the life of the generator.
In2015,agrantofapproximately$867,000wasreceivedfromtheAsianDevelopmentBanktofundtheprocurementof11kVand415vDistributionEquipmentfortheAukiPowerGenerationandDistributionPilotProject.Thevalueofthecapitalworkshasbeenaccounted forbySIEAas anon-current assetwitha correspondingamount taken todeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensiveincomeoverthelifeoftheequipment.
In2016,agrantofapproximately$32,500,000wasreceivedfromtheUnitedArabEmiratesPacificPartnershipFundtofunda50KWsolargridatHendersoninHoniara.ThevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatement of comprehensive income over the life of the solar grid.
In2016,agrantofapproximately$1,627,000wasreceivedfromtheItalianMinistryfortheEnvironment,LandandSeatofundsimulationsoftwaretoenableSIEAtocarryoutelectricitynetworkplanningtogetherwiththenecessarytrainingandconsultingservices.ThedeferredincomewillbeamortisedtostatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegranthasbeenutilisedandcapitalisedtotheFixedAssetregister.
In2017,($1,465,000)and2018($3,888,000)initialgrantswerereceivedfromtheGlobalPartnershiponOutput-BasedAidtosubsidisethecostofprovidingelectricitytolowincomehouseholds.Thedeferredincomewillbeamortisedtothestatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegrant(approximately$17,000,000)hasbeenutilisedandtheassetcapitalisedtotheFixedAssetregister.
In2017,($306,000)and2018($5,476,000)initialgrantswerereceivedfromtheAsianDevelopmentBank(ADB)tofundtheconstructionoffivegridconnectedsolarpowerplantsinanefforttoincreasethesupplyofreliable,cleanelectricity.Thedeferredincomewillbeamortisedtothestatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegrant(approximately$17,000,000)hasbeenutilisedandtheassetcapitalisedtotheFixedAssetregister.
In2018,agrantofapproximately$9,778,000wasreceivedfromtheNewZealandMinistryofForeignAffairsandTradeto expand the access to affordable, reliable and clean energy in rural areas of the Solomon Islands. The deferred income willbeamortisedtostatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegranthasbeenutilisedandcapitalisedtotheFixedAssetregister.
In2018,grants totallingapproximately$10,516,000were received fromtheWorldBank through theSolomon IslandsSustainableEnergyProject(SISEP)tofundconstructionofpowersubstationsandtheinstallationoftransformersatRanadi,KolaRidgeandLungga.TheprojectshavebeenpartiallycompletedandwhereapplicablethevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincome is being amortised to the statement of comprehensive income over the life of the substations and transformers.
66 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
2018 2017 SBD SBD
22 Trade and other payables
Current Tradecreditors 1,222,550 1,722,699 Otherpayablesandaccruals 32,931,424 26,388,552 Contractualliabilities 2,182,389 - Consumerdeposits 4,507,832 3,895,832 40,844,195 32,007,084
23 Solomon Islands Government loan agreement
UnderanagreementsignedwiththeSolomonIslandsGovernmentinJune2014,SIEAhasbeengrantedaloanfacilityofupto$81,883,440toassistinthefinancingoftheSolomonIslandsSustainableEnergyProject(SISEP),ataninterestrateof4%perannum.UnderthetermsoftheagreementthefundswillbemadeavailablebytheGovernmentinatimelymannertofacilitatetheimplementationofSISEPandwillberepaidbySIEAover28semi-annualpaymentsofprincipalandinterestwhichcommencedfromDecember2015.Todatethefollowingprincipalamountshavebeenborrowedandrepaid under this loan agreement.
Balanceat1January 2,924,998 4,252,283 Borrowings 15,201,259 13,294,758 PrincipalRepayments (3,599,000) (14,622,043) Balanceat31December 14,527,257 2,924,998
Analysis of borrowings expected to be settled within one year and more than one year:
Current 3,599,000 2,924,999 Non-current 10,928,257 - 14,527,257 2,924,99924 Employee entitlements Current 6,778,721 193,818 Non-current 10,401,161 - 17,179,881 193,818 Movementismadeupofthefollowing: Openingbalance 193,818 391,109 Provisionsmadeduringtheyear 18,493,772 611,811 Provisionsutilisedduringtheyear (1,507,709) (809,102) Closingbalance 17,179,881 193,818
25 Related parties
a) Directors TheDirectorsinofficeduringthefinancialyearwereasfollows:
Name DavidK.C.Quan–chairman(reappointedDecember2018) HarryZoleveke-(retiredon1December2018) HenryKapu-(retiredon1December2018) JamesApaniai-(appointedin17December2018) JohnBHouanihau-(reappointedDecember2018) MurielHa’apue-Dakamae-(appointedon17December2018) RovalySike-(reappointedDecember2018) SebastianIlala-(retiredon1December2018) YolandeYates-(retiredon1December2018)
Directors’feesandexpensesaredisclosedinNote11.
SIEA’stransactionswithDirectorswereatarmslength.
67Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
25 Related parties continued
b) Identity of related parties
SIEAbeingastate-ownedentityisthesoleproviderofelectricityinSolomonIslands.Asaresult,GovernmentofSolomonIslandsandothergovernment-relatedentitiesareitsrelatedparties.OtherrelatedpartiesincludedirectorsandkeymanagementpersonnelofSIEA.
c) Amounts receivable from related parties
Includedintradereceivablesarethefollowingamountsreceivablefromrelatedentities:
2018 2017 SBD SBD
CentralBankofSolomonIslands 350,507 168,464 CentralProvincialGovernment 47,940 16,920 ChoiseulProvincialGovernment 43,981 - CommodityExportMarketingAuthority 20,079 -
HomeFinanceCorporation 38,408 38,354 HoniaraCityCouncil 871,766 818,911 Makira/UlawaProvincialGovernment 28,439 26,250 MalaitaProvincialGovernment 134,915 82,443 MinistryofFisheriesandMarineResources - 2,686,345
ProvincialHospital 1,053,182 61,132 SolomonAirlinesLimited 210,225 218,035 SolomonIslandsBroadcastingCorporation 681,621 1,114,805 SolomonIslandsGovernment 17,816,845 16,174,509 SolomonIslandsNationalUniversity 1,190,823 576,469 SolomonIslandsPortsAuthority 449,711 392,944 SolomonIslandsPostalCorporation 79,825 143,966 SolomonIslandsTouristAuthority 23,968 - SolomonIslandsWaterAuthority 4,816,982 3,355,717 TemotuProvincialGovernment 71,649 8,691 WesternProvincialGovernment 90,151 307,712 IsabelProvincialGovernment 41,365 117,724 28,062,383 26,309,390
ReceivablesforSolomonIslandsWaterAuthorityandSolomonIslandsBroadcastingCorporationincludestheTradeReceivables-kilowattthatrelatestoeachoftheseorganisations.
d) Transactions with key management personnel
Keymanagement personnel comprises of theChief ExecutiveOfficer, Chief FinancialOfficer, GeneralManagerCapitalWorks,ChiefEngineer,GeneralManagerCorporateServices,ManagerCustomerServices,ManagerElectricalEngineering,ManagerFinance,RegulatoryManager,ManagerLand&Buildings,ManagerHumanResourcesandAdministration,ManagerGenerationandOutstations,ManagerDistribution,ManagerGeneration,ManagerProjects,ManagerHealthSafetyandEnvironment,InformationTechnologySpecialist,ProjectEngineerandthedirectorsaslistedinnote21(a).
Inaddition to their salaries,SIEAalsoprovidesnon-cashbenefits tokeymanagementpersonneland their totalcompensationcomprisedofthefollowing:
Short-termemployeebenefits 15,527,096 13,064,624 15,527,096 13,064,624
Transactionswithkeymanagementpersonnelarenomore favourable than thoseavailable,orwhichmightbereasonably be expected to be available on similar transactions to third parties at arms length.
68 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
26 Commitments and contingencies
Capital commitments
SIEAundertakes capitalworks and purchases assets according to an approved budgetwhenmanagement considerthat sufficient funds are available.Capital commitments as at 31December2018amounted to$710,000,000 (2017:$863,000,000).Thesecommitmentsareinrelationtoproperty,plantandequipment.
2018 2017 SBD SBD
LessThan1Year 287,000,000 208,000,000 Between1yearand5years 850,000,000 655,000,000 1,137,000,000 863,000,000
Contingent liabilities
Apartfromlegalworkundertakeninthenormalcourseofbusiness,SIEAwaspartytotwolegalclaims,bothofwhichhave been fully provided for and in the opinion of the directorswill not have amaterial effect on SIEA’s financialposition.Theseclaimsareasfollows:
a) Aclaimbyaformeremployeeforunfairdismissalwhichisintheprocessofbeingsettledforapproximately$33,000;and
b) Aclaimbyamemberofthepublicarisingfromanincidentwherebyachildwaselectrocutedandburnt.Compensationof$1.3millionhasbeendemanded,butthelegaladviceprovidedtoSIEAhasestimatedthatifliabilityisproven,damagesofupto$125,000maybeawarded.
27 World Bank Financing
a) Financial Support Received
SIEAhas receivedfinancial support fromtheWorldBank’s InternationalDevelopmentAssociation(IDA)on theSolomon Islands Sustainable Energy Project (SISEP) since July 2008 to improve operational efficiency, systemreliabilityandfinancialsustainabilityofSIEA.Further,theWorldBank,throughamultidonortrustfund,hasalsoextendedfinancialsupportontheOutput-BasedAid(OBA)programmesinceAugust2016,forincreasingaccessto electricity services in low-income areas of Solomon Islands. In addition to the SISEP andOBAprogrammes,theWorldBankthroughtheIDAhasprovidedfurthersupportundertheSolomonIslandsElectricityAccessandRenewableEnergyExpansionProject(SIEAREEP)sinceOctober2018.SIEAREEP’sobjectiveistoincreaseaccesstogridsuppliedelectricityandincreaserenewableenergygenerationintheSolomonIslands.
b) Grants
SIEAhasreceivedtotalgrantsofUSD6,782,961fromtheseprogrammessincetheircommencement(2017:USD4,886,242).The2017balanceconsistsofthefollowingfunds,IDAH9130–USD550,371,IDAH4150–USD4,146,973andTFA2923-USD188,898.
c) Credit Funds
Thecreditfundsareinterest-bearingloansthatarerequiredtoberepaidandareshowninthecurrentandnon-currentliabilitiesastheyaredrawndown.
69Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Notes to the Financial Statements (Continued)
Solomon Islands Electricity Authoritytrading as SOLOMON POWER
For the year ended 31 December 2018
27 World Bank Financing continued
d) Use of the Proceeds
TheproceedsoftheWorldBankgrantsandcreditshavebeenutilisedinaccordancewiththeirintendedpurposeasspecifiedintheirrespectiveagreements.
Asummaryofthetransactionsthattookplaceduringtheyearisasfollows:
2018 2017 USD USD
Designated Account Balanceat1January 43,661 24,747 Receipts 279,862 195,075 Expenditures 247,905 176,162
75,618 43,661
Grants IDAH4150 - 14,222 IDAH9130 1,403,891 302,249 TFA2923 492,828 188,898
1,896,719 505,369 Credit Funds IDA 53790
Balanceat1January 366,210 551,383 Borrowings 2,078,572 1,748,897 PrincipalRepayments 435,479 1,934,071 Balanceat31December 2,009,303 366,210
28 Capital management
SIEA’spolicyistomaintainastrongcapitalbasesoastomaintaininvestor,creditorandmarketconfidenceandtosustainfuturedevelopmentofthebusiness.TheBoardseekstomaintainabalancebetweenthehigherreturnsthatmightbepossiblewithhigherlevelsofborrowingsandtheadvantagesandsecurityaffordedbyasoundcapitalposition.
Inorder tomaintainoradjust thecapital structure,SIEAmayadjust theamountofdividendspaid toshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.
29 Subsequent events
Therehasnotarisenintheintervalbetweentheendoftheyearandthedateofthisreportanyotheritem,transactionoreventofamaterialandunusualnaturethatislikely,intheopinionoftheDirectors,tosignificantlyaffecttheoperationsofSIEA,theresultsofthoseoperationsorthestateofaffairsofSIEAinsubsequentfinancialyears.
73Solomon ISlandS ElEctrIcIty authorItyannual report 2018
GLOSSARYkV - KilovoltHV - High VoltagekW - KilowattsMW - Megawatt (= 1000 kW)Gwh - Gigawatt-hour (= 1 million kWh)
73Solomon ISlandS ElEctrIcIty authorItyannual report 2018
74 Solomon ISlandS ElEctrIcIty authorItyannual report 2018
Solomon Islands Electricity AuthorityPostal Address: P.O. Box 6, Honiara
Email: [email protected]
Website: www.siea.com.sb
2018AnnuAl RepoRt