Monopolies not good for country

THE Government’s involvement and control of businesses through shareholding or monopoly or a combination of both, has attracted so much attention in public policy and research because it has serious social, economic and political consequences.
When a monopoly is granted or created by the Government, it restricts competition.
As a result, the monopoly uses its market dominance to control the price or quantity of its product (good or service) in a manner that allows it to extract so much money from customers to enable it earn more profit.
A monopoly can control the entire supply chain, creating a serious supply risk for the product, customers, market and the economy.
All Government owned and controlled monopolies in Papua New Guinea have failed to operate as profitable enterprises. Instead of privatising them, the Government continues to manage these major public liabilities by creating and running a dedicated Department of Public Enterprise and Investment, which is headed by a minister.
These public liabilities continue to force the taxpayers of PNG to fund their failed commercial operations.
The Government recently announced that it will bail out the financially-distressed PNG Power Ltd with about K100 million.
This is a waste of taxpayers’ money, which otherwise should be spent on the development needs of the country.
The Government has granted a monopoly to the Puma Energy (PNG) Refining Ltd and Puma Energy (PNG) Ltd, collectively called Puma.
Puma now controls the entire fuel supply chain in PNG, resulting in the creation of a serious supply chain concentration risk.
The concentration risk is now a major threat to the political, economic and social welfare of PNG and its people.
Puma is now threatening the people, Government and economy with a potential reduction in the fuel supply throughout the country, given the recent increase in crude oil prices associated with the current geopolitical tensions emanating from the crisis created by Russia’s invasion of should.
The Government must now learn from its past grave mistakes and immediately revoke the monopoly it had granted to Puma.
This will encourage competition in the fuel supply chain and dilute the supply chain concentration risk PNG is now facing.

Concerned Economist