New Caledonia energy firm receives French financial support to avoid bankruptcy

Electrician working on power line maintenance.
photo: Energy company

New Caledonian electricity supplier ENERCAL has received emergency financial assistance from France to avoid bankruptcy.

The emergency aid comes in the form of a “refundable advance payment” in the amount of 14.2 million euros and is intended to help ENERCAL out of its severe financial difficulties.

Enercal announced a loss of 150 million euros at the end of June.

The company has been in financial trouble for the past few years, largely due to a local system of subsidized consumer prices.

But the difference between the actual production costs and the adjusted price was supposed to be borne by the New Caledonian government, while Enercal received little compensation.

“This exceptional aid will allow the company to continue functioning and provide electricity in the coming months, while also supporting reforms to enable the company to operate sustainably,” the French High Commission in New Caledonia said in a press release.

The reform plan was approved by the New Caledonian Parliament (Congress) in August and includes a gradual increase in electricity consumer prices from September 2024 to September 2026.

150 million euros released on Monday

Meanwhile, the French Finance Ministry said on Monday it had provided New Caledonia with a further 150 million euros in financial aid “to help it cope with the economic and social crisis and accelerate the reconstruction of its infrastructure.”

Of this, 100 million euros will come directly from the Treasury, while a further 50 million euros will be provided by the Banque de France Territoriale to “strengthen (New Caledonia’s) fiscal capacity”.

https://presse.economie.gouv.fr/soutien-financier-durgence-pour-la-nouvelle-caledonie/

“The events of the past few weeks in New Caledonia have had a very strong impact. Public and private buildings have been damaged and economic activity has come to a standstill, resulting in a significant drop in (New Caledonia’s) tax revenues,” the ministry explained.

“New Caledonia currently faces a dire financial situation and needs to urgently mobilize external funds to kick-start reconstruction efforts,” it said.

New Caledonia has been plunged into serious civil unrest, which began on May 13 and has gradually developed into large-scale destruction, burning and looting, mainly in the capital Noumea and its surrounding areas.

According to current estimates, more than 20,000 employees have lost their jobs due to the destruction of more than 600 businesses.

According to the latest estimates, the total losses from this massive destruction were around 2.2 billion euros.

Letter to Macron

In a letter sent to French President Emmanuel Macron earlier this month, the New Caledonian government also requested that a loan previously signed to assist post-COVID-19 recovery efforts be converted into a non-repayable grant.

In a letter to Macron on July 23, four New Caledonian parliamentarians, all in Paris at the time, expressed the urgent need to address New Caledonia’s multiple problems and the “seriousness of the economic situation in our territory” and its “unprecedented economic collapse.”

They are asking the French government to convert two loans issued in 2020 and 2022 following the coronavirus crisis into grants.

The total amount of these loans is EUR 415 million.

“Today, the New Caledonian government finds itself struggling to repay these loans, at a time when it must now meet the urgent needs of reconstruction and economic recovery. Converting these loans into grants would allow New Caledonia to regain some investment capacity,” they wrote last week.