$1 Sublease on Crown Land Triggers Legal Review
A Crown lease tied to Tonga Power’s headquarters and a financing facility exceeding $58 million is under legal scrutiny after it emerged the Government may be receiving just $1 a year from a sublease involving a state ministry.
The Government has sought legal advice over the arrangement at the Matatoa site, where Tonga Power Limited now operates its headquarters.
Lease No. 8684, issued in 2015, covers approximately 3.238 hectares of Crown land at Matatoa. It runs for 50 years to 2065 and carries an annual rent of TOP $4,000 payable to the Crown.
Since the original mortgage registered in 2017 for approximately $35.8 million, around the time Tonga Power’s new headquarters complex was completed on the site, the lease has become part of a much larger financing structure.
Mortgage records show the financing facility secured against the lease increased from approximately $35.8 million in 2017 to $36.9 million in 2019. The facility was increased again in 2024 to approximately $58.1 million. Tonga Power has since clarified that its audited borrowings as at 30 June 2025 stood at $20.47 million, indicating the $58.1 million figure represents the financing facility secured against the lease rather than debt currently drawn.
The Matatoa complex now houses Tonga Power’s administration and distribution operations, making it a central hub for the country’s electricity network.
The structure surrounding the site is layered. The Crown owns the land. The lease is held by Tonga Power Limited, which operates from the site. The lease itself is mortgaged to ANZ Bank as security for the financing facility.
Tonga Independent has been informed that part of the property was subsequently subleased to the Ministry of Meteorology, Energy, Information, Disaster Management, Environment, Climate Change and Communications (MEIDECC).
It is this arrangement that has prompted concern.
The Government is now examining whether the return from that sublease is effectively $1 a year. The figure stands in stark contrast to the scale of activity taking place on the site and the financing structure linked to the lease.
At issue is whether a Crown asset supporting a major public utility has been structured in a way that limits the return flowing back to the landowner.
The terms under which Tonga Power occupies the site are not fully clear beyond the original lease arrangement. What remains unresolved is how the broader financial structure and the MEIDECC sublease sit alongside that lease, including whether additional rental flows are being generated and how those proceeds are distributed.
Key details also remain unclear. It is not known which ministers approved the sublease or whether Cabinet consent was obtained as required under the original lease conditions.
The respective roles of the boards and management of Tonga Power and MEIDECC in establishing the arrangement have not been publicly outlined.
There are also unanswered questions around the financing structure. While Tonga Power has stated its audited borrowings stood at $20.47 million at 30 June 2025, it remains unclear who may draw upon the $58.1 million facility secured against the lease, whether any government backing is involved, and how the site is being used to support the broader financing arrangement.
The MEIDECC sublease adds another layer of complexity. The rent payable under that agreement, its duration and how any proceeds are distributed are not publicly known.
The issue centres on how public land, a privately held lease and a major utility operation have been brought together within a single structure, with a government ministry now occupying part of the same site.
The Government’s decision to seek legal advice indicates the matter is under active review. Further information is being sought from the agencies involved.
Follow-up reporting will examine the approvals behind the sublease, the financial relationships between the parties, and the implications for the management of Crown land tied to critical infrastructure.
Editor’s Note
After this article was prepared, Tonga Power clarified that its audited borrowings as at 30 June 2025 were TOP $20.47 million. Mortgage records associated with Lease No. 8684 indicate a financing facility of approximately TOP $58.1 million secured against the lease. Tonga Independent understands the larger figure represents the facility limit rather than the amount currently borrowed. Questions regarding the structure of the facility, the associated sublease arrangements and approvals remain under review.
