Government’s decision not in PNG’s interest

THE Government’s recent decision to increase fuel prices soon after InterOil unilaterally increased its fuel outlet prices is simply not in our national interest. It should have diligently exhausted every avenue to ensure a more positive outcome by negotiating a better deal for consumers.
The Government has so far been reactive in this matter. It has been out-muscled by InterOil without seriously weighing all possible options before compromising its position at our expense.
It failed to find the best way forward with InterOil when it first raised the Government’s attention about losses due to cost escalation in recent weeks. Seemingly, our Government succumbed to undue pressure from InterOil by also approving the decision by InterOil to increase fuel prices.
This decision will have a more far-reaching consequence that will directly affect our economy. Worse, the ordinary people will suffer the most, as they have no real consumer-protection from their own Government.
The Government has clearly done its people a great disservice, when it admitted it has no option. There are always options in any given situation.
We just failed to work hard at it in enabling effective hedging strategies to achieve certain economies of scale to minimise operational costs through some required readjustments within the present pricing arrangements itself.
That is what the bureaucracy is there for, to provide the best technical advice the Government needs for a better informed decision. If we had properly handled this, a more positive outcome would have been arrived at to ensure a win-win situation for all concerned.
Furthermore, it is time we seriously reviewed InterOil’s monopoly. Bringing in other major international energy players to compete with InterOil in a more fair and competitive environment is an option to consider.
This may give us some reasonable level of affordability, and overall ease the pressure on our economy. The Government and InterOil does not want to admit it, but our local refinery has a reduced capacity to break even when subjected to global market forces. More so, it has also proven its inability to provide us with cost-effective energy solutions for the country’s needs in the long term.
If there are no envisaged long term economies of scale for PNG, perhaps the Government should seriously consider the option of doing away with the refinery, if cheaper fuel products from offshore can be imported.
The public should rightly be outraged as this is not the last time we are going to suffer at the hands of InterOil. As long as it has a 30-year monopoly, it does not care much for our Government and will keep using this leverage to continue threatening our economy.
Finally, had we handled this issue properly, a positive trickle-down effect would have been achieved by reducing the adverse impact on key sectors of our economy. The people of PNG will continue to suffer in future because of incompetent Government decision-making process, and poor leadership.
The Government has so far exposed its leadership weakness by dealing with a smart corporate player with mere “kid-gloves”. We need a strong, well-articulate and proactive leader like Don Polye at the helm as our Government trouble-shooter to ensure we do not compromise our position too much in similar circumstances in future.

Reginald Renagi
Gabagaba-Kemabolo
Rigo, CP