Aggregate Performance of Public Enterprises

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Background

The government of the Kingdom of Tonga owns a number of public enterprises on behalf of the people of Tonga. The following is a brief report on the performance of the public enterprises portfolio for over the last two years.

The government appoints independent directors to oversee the operation of these public enterprises in accordance with agreed strategies and business objectives. The board is then held accountable for the operation of the public enterprise and to ensure it meets the business goals agreed with the government.

The Minister of Public Enterprises is the Minister responsible for the public enterprise portfolio and acts as the "owners" representative or shareholder. The Ministry of Public Enterprises advises the Minister.

All of the public enterprises are listed below and comprise a significant proportion of the Tongan economy. Total assets controlled by the public enterprise portfolio were TOP 236 million as at 30 June 2008 and represent 14% to 22% of the total fixed assets within the economy. The total amount of government investment in the public enterprise portfolio or equity is TOP 169 million as at 30 June 2008. Therefore the performance of these public enterprises has a significant impact on the performance of the Tongan economy in general, and an impact on the users or consumers of the goods and services produced by these public enterprises in particular. The government has set a target return for public enterprises at 10% return on equity.

Public Enterprise Performance;

The average return on equity for the year to 30 June 2007 was 4.5%, the return for the same period in 2008 was 3.6%. While the aggregate net profit after tax actually increased from TOP5.54 million in the financial year ending 2007 to TOP5.92 million for 2008, the government's equity investment in the portfolio increased by TOP35 million over the same period, which depressed the average ROE.

The Ministry of Public Enterprises has audited financial results for only three of the Public Enterprises for the financial year ending June 2009, being Tonga Water Board, Tonga Power Limited and Tonga Airports Limited. The results, show that the average return on equity for those three Enterprises was just -1.66%.

The public enterprise portfolio return on equity is well below the government's target of 10% and the government has challenged the boards of the public enterprises to improve overall performance.

Current list of Public Enterprises are as follows: Tonga Communications Corporation, Tonga Broadcasting Commission, Tonga Post Limited, Tonga Development Bank, Tongatapu Market Limited, Tonga Timber Limited, Waste Authority Limited, Ports Authority Limited, Tonga Airports Limited, Tonga Print Limited, Tonga Water Board, Shipping Corporation of Polynesia Limited, Tonga Power Limited, Tonga Investment Limited, International Dateline Hotel.

ENDS

Issued from the: Ministry of Public Enterprises, Government of Tonga, Nuku'alofa

Last Updated ( Friday, 03 August 2012 13:22 )  

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