A Maori company from New Zealand has signed a contract with Government aims to financially bail the Tonga Forest Product Limited from its debt burdened.
The company was recently reported to having financial difficulty with debts up to TOP$1.5 million.
The Hon Minister of the Public Enterprises, Poasi Tei revealed this in Parliament when it discussed his Ministry’s Vote.
He said the agreement includes settling the company’s debts, provide $TOP$1.5 million for purchasing of new machinery and other funded projects as well as getting involved in the replanting process.
According to the contract, the investment also provides job opportunities for the local staff with more employment in the future. There are other packages for the overall good of Tonga as well.
Hon. Tei said the Government’s move was prompted after the Auditor’s Office rejected claims by TFPL it was making profit in the past five years.
He said during the 2013/2014 financial year, all government entities’ debts were amounted to $1.5 million.
“Of the $1.5 million, $1.4 million is TFPL’s debts. The company was in big trouble,” explained the Hon. Minister.
Hon. Tei said Government was seriously concerned about this after it injected about TOP$1 million to rescue the debt burdened TFPL last year.
Government’s subsidy was to purchase new machinery for the company and also to implement restructure reforms.
According to Tei, the business plan from TFPL for the upcoming years has disclosed it needed further financial support from Government in order to stay in business.
Proceeds from the selling of timber is not enough to cover debts. Tei said millions is much needed to replant trees in over 180 hectares from 700 hectares of land in ‘Eua.
TFPL also has loans worth about TOP$5 million including interest at the Development Bank.
Meanwhile police continues probing into TFPL after reports of burning book-keeping records last year.