Enercal worker on power line maintenance job. Photo: ENERCAL
New Caledonia's electricity provider, ENERCAL, has received emergency financial assistance from France to avoid bankruptcy.
The emergency assistance comes in the form of a "refundable advance" to the tune of €14.2 million designed to salvage ENERCAL from dire financial straits.
At the end of June, Enercal was declaring a deficit of €150m.
The company has been in financial trouble over the past few years, mainly due to a local system of subsidised prices for consumers.
But the price difference between the real cost of production and the moderated price, which was supposed to be taken care of by New Caledonia's government, was very rarely reimbursed to Enercal.
"This exceptional assistance will allow the company to continue functioning and therefore to allow electricity to be provided in the coming months, while at the same time reforms are being endorsed in order to allow the company to operate sustainably", the French High Commission in New Caledonia said in a release.
The reforms, scheduled to be endorsed by New Caledonia's Parliament (Congress) in August, would involve a gradual increase of electricity's consumer price, between September 2024 and September 2026.
€150m released on Monday
Meanwhile, the French ministry of finance said on Monday it had brought further financial support to the tune of 150 million Euros to New Caledonia "to allow it to face the economic and social crisis and accelerate infrastructure reconstruction".
Hundred-million euros come directly from the finance ministry and another €50m are provided by the French Bank of Territories to "reinforce (New Caledonia's) financial capacities".
https://presse.economie.gouv.fr/soutien-financier-durgence-pour-la-nouvelle-caledonie/
"The events of the past weeks in New Caledonia had a very strong impact. It was doubly affected by destructions of public and private buildings as well as economic activity coming to a standstill, thus generating a collapse of (New Caledonia's) tax revenues", the ministry explained.
"New Caledonia now finds itself in a critical financial situation which necessitates mobilising urgent external funding to start reconstruction works without delay", it said.
New Caledonia has been gripped by grave civil unrest that began on 13 may and then degenerated into mass destruction, burning and looting by rioters, mostly in the capital Nouméa and its surroundings.
It is currently estimated that as a result of the destruction of over six hundred businesses, over 20,000 employees have lost their jobs.
According to latest estimates, the overall cost of the massive destruction stands at some €2.2 billion.
Letter to Macron
In a letter sent to French President Emmanuel Macron earlier this month, the government of New Caledonia was also requesting that previous loans contracted to assist in the post-Covid recovery efforts be now converted into non-reimbursable grants.
In a letter sent to Macron on 23 July, New Caledonia's four MPs, all in Paris at the time, had invoked the urgent need to address New Caledonia's multiple issues and the "seriousness of our territory's economic situation" and "unprecedented economic collapse".
They were asking the French government to convert two previous loans granted in 2020 and 2022 in the wake of the Covid crisis into grants.
These loans totalled €415m.
"Today, the government of New Caledonia finds itself in great difficulty to repay these loans while it now has to meet the urgent needs for reconstruction and economic recovery. Transforming these loans into grants would allow New Caledonia to regain some kind of investment capacity", they wrote last week.