Energy Fiji Limited (EFL) and FNPF Share Acquisition Analysis

This report analyzes the acquisition of 20% shares of Energy Fiji Limited (EFL) by the Fiji National Provident Fund (FNPF). The report details the roles of key advisors, including Ashurst, and the implications of the Public Enterprises Act 2019. It explores the financial impact on both EFL and FNPF, including dividend expectations and the influence on shareholders. The report also examines the impact on Section 17 of the Income Tax Act, which addresses business income. Furthermore, the report highlights the strategic importance of EFL in Fiji's energy sector, particularly its involvement in renewable energy, and discusses the potential benefits for shareholders and members of FNPF. The analysis covers the corporatization of EFL, the shift from a public enterprise, and the overall impact on Fiji's economic landscape.

Running head: EFL AND FNPF – A STUDY
EFL AND FNPF – A STUDY
Name of the Student
Name of the University
Author Note

1EFL AND FNPF – A STUDY
Presently, the government of Fiji sold 20% of its shares to Fiji National Provident
Fund (FNPF) from Energy Fiji Limited (EFL). It was a success for FNPF as 20 per cent of EFL
was acquired by the organization which made FNPF a primary shareholder of EFL. FNPF has
acquired the shares for approximately 200 million dollars. The investment made by the fund in
EFL is around 200 million dollars and the expectation is that there will be at least one seat for the
FNPF in the board of management. The chairperson of the Fund, Ajith Kodagoda mentioned that
intercontinental and independent advisors were utilized in the transaction (Chen and Jayaraman
2016). Ashurst is prominent law firm that operates on the global scale. It is an internationally
acclaimed law firm. Its performance as an advisor is trusted by various international
corporations, global financial organizations. This firm acts as advisor to the governments as well
all over the world. Ashurst performed its role as an advisor to the FNPF when it acquired 20% of
the totally distributed normal shares in EFL. The team of Ashurst was spearheaded by Kylie
Lane who is the corporate partner of the law firm. She had the support of Ryan Kabat, an
associate, and John Saunders, a graduate. The individuals who provided guidance regarding
energy and competition were Justin Jones, a partner in the firm, and Felicity Lee, who is a senior
associate of the firm. On the banking structure advice was provided by Mathew Bubb, another
partner of the firm. Regarding insurance, expertise was provided by Rehana Box, a partner, Alex
Nash, a senior associate, and Kirstie Underwood, who is an associate of the law firm. Jeff Lynn,
a partner, and Jane Hall, a senior associate in the firm, were the ones who provided advice in
relation to the ecological facets in case of the acquisition. Legal consultant named Richard
Brooks provided guidance on property and was supported by Tammy Kamil, an associate. In the
intellectual property area, guidance was given by Stuart D’Aloisio, a partner, and Carrick
Brough, an associate. Instructions regarding digital economy was given by Emma Butler, a

2EFL AND FNPF – A STUDY
partner in the firm, and Caroline Hogan, an associate. The aspects in relation to employment
purposes were looked into by Jane Harvey, a partner, and Daniel Fawcett, a senior associate in
the organization. Settlement of the disputes was handled by one of the partners, whose name is
James Clarke, and Nicholas Mills, an associate (Flood 2013). The guidance of an intercontinental
law firm was received in order to ensure a proper, safe and rational advice in the acquisition.
FNPF is considered to be the biggest financial organization of the island nation. It is also
considered to be the only superannuation fund in the country that is authorized by law to
accumulate obligatory superannuation assistances. FNPF is counted among the biggest owners of
property in the nation. The FNPF is basically an employees’ superannuation reserves
arrangement, taking directed offerings from employees and their managers and amassing these
into superannuation. It shares a comparable ethical method in relation to other provident funds
like the Malaysian Employees Provident Fund and the Singapore Central Provident Fund and
similarly functions on an entirely subsidized basis without government funding. The
commencement of FNPF was in the year of 1966 (Mohd 2013).
EFL is the chief electricity organization in Fiji, providing electricity to the major parts of
the country. Several power stations are owned by the EFL that includes thermal fuel stations as
well as hydro stations. EFL is the sole retailer of energy power and possesses and functions the
networks of transmission and distribution in Fiji. Earlier EFL was a statutory body owned by the
government (Sangha et. al. 2019). Presently, EFL has become a part of the corporate structure
and is involved in the alteration of the energy regulations which is very important in relation to
the nation. EFL was created by the Electricity Act of 1966. EFL is accountable for the retail,
generation and transmission of the electricity to the islands of Ovalau, Viti Levu and Vanua

3EFL AND FNPF – A STUDY
Levu. Around 90% of the total populace of Fiji resides in these islands. Therefore, EFL
dominates the energy business in Fiji (Sharma and Ahmed 2016).
The Public Enterprises Act, 2019 was enacted by the Parliament of the Republic of Fiji. It
was given effect after the Bill for Public enterprises was passed in the parliament. The primary
resolution of this Act is to deliver directive and governance of public enterprises in accordance
with the principles of the public enterprise (Nath and Sharma 2014). Application of this Act is
made along with the application of the Companies Act of 2015 in relation to the establishment of
an entity and the public enterprises. However, this Act shall prevail over any other statutes or law
if there is any kind of contradiction with the provisions of this Act. There should be a
consistency between this Act and any other statutes of the nation in relation to public enterprises.
There are certain principles provided by this Act regarding the public enterprises. The first
principle is regarding the commercial objective. According to this principle, public enterprises
must function on a moneymaking foundation, that is, it must be effective and lucrative. The
second principle is known as the measurable performance. In this case, a public enterprise must
recognize its commercial aims. The third principle refers to accountable management. The
management in relation to public enterprise must be capable, truthful and answerable. The fourth
principle is the clear performance. The functioning of the public enterprises and their
performance must be reported completely, openly and always in time. The last principle is
regarding supervised performance. In this case, the public enterprise must be put under rigorous
observing, a public enterprise should require endorsement and be subject to evaluation. This Act
must be in accordance to the above-mentioned principles when applied. Any individual who is
doing any act or utilizing an authority under the Act, must do so in accordance with the
principles.

4EFL AND FNPF – A STUDY
According to the Act, a public enterprise shall be a company or any other entity that is
recognized by an inscribed law. The minister and the Cabinet shall regulate the designation and
revocation of any entity as a public enterprise (Prasad, Bansal and Raturi 2017).
EFL was a body organization of the government. It was a statutory body. Previously it
was known as FEA, that is, Fiji Electricity Authority. Recently, the EFL was out casted from the
list of the Public Enterprises that is provided Schedule 1 of the Public Enterprises Act. The
position of EFL as a public enterprise was revoked by a commencement notice that was issued
on the 27th day of the month of August, that is, Tuesday, in the year 2019. Previously, FEA was
not a body corporate. After the corporatization, the organization came to be known as EFL. The
corporatization of EFL provided a capital structure and the feature of shares to the organization.
The shares were completely owned by the government, hence the organization was completely
controlled by the government. Being a body corporate it is able to enjoy all the opportunities that
a private corporation is able to harness, that is, skill, efficacy and modernization (Chand 2015).
After the corporatization of EFL, the people of the nation were provided the opportunity
to invest in the shares of EFL that were issued in the market. Thus, a primary portion of the
populace of the nation became shareholders in the organization (Sharma and An 2018).
Therefore, the shareholders in the organization received dividends according to the ownership of
the shares. When the organization earns profits, then the shareholders directly earn dividends.
EFL has noted that being involved in the renewable energy business, one can expect huge
investments and profits from such investments. It has been stated that there is a space in the
renewable energy that is worth 500 million dollars, in which investments can be made.
According to EFL chairperson, Dakshesh Patel, the renewable energy is counted among the
untouched economic assets that shall be unlocked by EFL.

5EFL AND FNPF – A STUDY
However, presently the main concern for now is that 20% shares of EFL has been bought
by FNPF; the shares are valued at approximately 220 million dollars. Therefore, FNPF is
presently the owner of 100 million shares out of the 500 million shares that has been issued in
the market. Such acquisition of shares will impact the shareholders of both the organizations.
These kind of deals in relation to buying of shares have a lasting effect on the shareholders and
the members of the company.
According to Ajith Kodagoda, the chairperson of FNPF, the members of the
FNPF shall be benefitted from this investment. According to him, the members of the
organization will benefit from the annual dividends and the appreciation value on the shares. He
stated that there are various chances in renewables and other development prospects that will add
profits regarding this investment. The chairperson added that the Fund was searching for
prospects in the offer provided by the government through its divestment strategy in relation to
shares.
The Attorney-General of Fiji, Aiyaz Sayed-Khaiyum accentuated that EFL is a billion-
dollar organization and the substructure system of Fiji depends on this organization. According
to Khaiyum, the established quality in developing and supervision of an assorted portfolio of
static and development assets, including resorts, investment organizations, telecommunication
corporations, harbor administration and housing and marketable properties across the nation will
enhance the worth to EFL’s already stable and unwavering monetary administration. He urged
the shareholders of EFL and EFL itself to create opportunities for the further investments in the
future (Michalena and Hills 2013).
Therefore, according to the statements made by these officials and personnel, the effects
on the members and the shareholders will be a positive one. EFL is an energy business

6EFL AND FNPF – A STUDY
organization with great prospects in the future. Especially, the prospect in relation to the
renewable energy seems to hold a bright future for the organization. The fund organization, that
is, FNPF, from the beginning is an organization with a steady development. After the acquisition
of the shares by the FNPF of the EFL, the prospects for these two organizations can only be
better. The shareholders of EFL and also the members of FNPF, all these individuals will have
greater opportunities to earn through the investment in securities and shares (Dornan and Shah
2016). However, the removal of EFL from the position of a public enterprise is not a favorable
thing for all the shareholders who already have shares in the organization. Although, there are
various non-public companies who perform well in the market. Though it is a delicate situation
for the shareholders of the organization, what shall be the actual impact of the acquisition is a
question that has to be decided based on the performance of the organizations in relation to the
economic structure of the nation.
Section 17 of the Income Tax Act, will be affected as well. Section 17 in the Act provides
information regarding what shall be comprised in the commercial income of an individual
steering a business. It states that the gross proceeds of business shall be included as business
income. The gross revenue that is received from the investments which includes royalties, rents,
interests and dividends shall also be counted as commercial income. Net gains in relation to the
above-mentioned businesses shall also be counted in the business income.
The purchase of 20% shares by FNPF from the EFL changes and alters the dynamics of
the gross and net income revenue of the shareholders of the organizations. Previously, the EFL
was a public undertaking with many shareholders. However, afterwards, the FNPF bought a
major portion of the EFL, which invites a huge change for the shareholders as well. After such
acquisition, EFL was also removed from the list of public enterprises, as provided in the

7EFL AND FNPF – A STUDY
Schedule 1 of the Public Enterprises Act of 2019. Such amendments in the statute will have its
repercussions on the shareholders of the organization. The members and the shareholders of
these two organizations will have to face new policies and new changes in relation to their
earnings in the form of dividends and interests. This will also affect the provision of section 17
as given in the Income Tax Act in relation to the gross and net income from shares and securities
and other stock holdings.

8EFL AND FNPF – A STUDY
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