The Asian Development Bank (ADB) has approved US$40.1 million to help Kiribati, Tonga, and Tuvalu manage fuel price volatility as the Middle East conflict raises import costs across the Pacific.
“Pacific island economies have little room to absorb sudden increases in the cost of imported energy,” said ADB President Masato Kanda.
“When supplies are disrupted and prices rise, the impacts are felt across the economy, hitting electricity, essential services, household budgets, and the cost of food. ADB is helping Kiribati, Tonga, and Tuvalu strengthen energy security and protect people from the hardest effects of this crisis.”
The Pacific Regional Energy Security Emergency Assistance Project will provide grants of US$12.77 million to Kiribati, US$15.39 million to Tonga, and US$11.94 million to Tuvalu to manage exposure to fuel price volatility.
It will also help Tonga maintain affordable electricity services through support to Tonga Power Limited and provide targeted assistance in Tuvalu to around 6,000 people from low-income households affected by rising fuel, electricity, and living costs.
Kiribati, Tonga, and Tuvalu depend heavily on imported fuel and face high transport costs because of their geographic isolation.
Recent increases in global fuel and freight prices have heightened the cost of electricity generation and essential goods, disproportionately affecting low-income households that spend a larger share of their income on energy and essential goods and services.
The economic impact of higher fuel prices and related disruptions to energy security across the three countries is estimated at more than US$80 million.
The three governments have already taken proactive measures to protect households and maintain essential services, including absorbing higher energy costs and providing support to electricity consumers.
These measures have increased government spending while reducing utility revenues, putting additional pressure on public finances and the financial sustainability of utilities as fuel prices remain high.
