Palau Senate Moves to Restore PICRC, Power Subsidies Cut From FY2026 Budget

By: L.N. Reklai

Koror, Palau (January 13, 2026) The Palau Senate has approved a bill to restore funding for the Palau International Coral Reef Center and reinstate residential electricity subsidies that were sharply reduced by President Surangel Whipps Jr., sending the measure to the House of Delegates for consideration.

Senate Bill No. 12-46, which passed its second and final readings, amends the Fiscal Year 2026 National Budget Act to restore budget items that the Senate says were duly approved by both chambers of the Olbiil Era Kelulau but later reduced through the president’s item-reduction authority.

The proposed amendment restores funding for the Palau International Coral Reef Center, or PICRC, increasing its allocation from $200,000 back to $400,000. It also restores the residential electricity subsidy to its original level of $1.7 million — the amount previously approved by the Legislature — after President Whipps reduced the subsidy by 75 percent to $425,000.

The Senate Ways & Means and Financial Matters Committee said the restorations reflect clear legislative intent established during the FY2026 budget process. According to the committee, the $400,000 appropriation for PICRC was included in the president’s original budget submission, passed by the House of Delegates in August 2025, and remained unchanged when the Senate returned its version of the bill to the House the following month.

Although the budget bill was later rejected by the House over unrelated policy disagreements, the committee said both chambers consistently supported full funding for PICRC, demonstrating agreement that the amount was necessary for the center’s continued operations.

The committee reached similar conclusions regarding the electricity subsidy. It noted that the $1.7 million residential electricity subsidy was added by the House, concurred in by the Senate, and retained through conference, reflecting bicameral approval. Under the program, residential customers receive a diesel fuel cost offset equal to 10 cents per kilowatt hour for the first 500 kilowatt hours of electricity used each month, with the reduction applied directly to utility bills.

In its report, the committee said President Whipps’ December 2025 reductions — cutting PICRC funding by 50 percent and reducing the electricity subsidy by 75 percent from the amount approved by the Legislature — would significantly affect PICRC’s operations and have a substantial impact on household affordability in 2026. Senators described the electricity subsidy as a targeted and immediate form of relief amid rising living costs.

President Whipps defended the reductions in his signing statement for the FY2026 budget, citing fiscal responsibility and existing revenue sources.

Whipps said PICRC already receives a dedicated share of the Pristine Paradise Environmental Fee, which continues to grow as tourism rebounds and visitor arrivals increase. Because that funding stream is stable and expanding, he said the general fund allocation could be reduced without jeopardizing the center’s mission.

Regarding electricity subsidies, the president said the expanded subsidy approved by the Legislature was not sufficiently targeted to low-income households and was introduced when regional energy prices were significantly higher. With fuel prices stabilizing, Whipps said restoring the subsidy to the full $1.7 million level was not fiscally justified.

Whipps also argued that limited government resources should be directed toward long-term fiscal challenges, including the solvency of Palau’s pension system, rather than broad subsidies that do not prioritize those most in need.

The House of Delegates is now expected to consider Senate Bill No. 12-46, which would restore both PICRC funding and the residential electricity subsidy to the amounts originally approved by the Olbiil Era Kelulau if enacted into law.