Paying for services on time

Editorial, Normal

The National – Thursday, December 30, 2010

 OUR front-page story on Tuesday on the withdrawal of services by a catering company at the PNG Defence Force obviously pressed some panic button.

So far, K2.5 million, part of the outstanding K7 million owed to NCS, was paid almost immediately on Tuesday.

The amount had accumulated from April this year and NCS was left with no choice but to withdraw services after both verbal and written demand for payment had fallen on deaf ears.

Obviously, there will continue to be pressure because, each month, new bills will be added to the existing balance.

Unless the total amount outstanding is paid out quickly, there is the risk that it will quickly become untenable again.

Throughout the torturous path of governance in this land, we have seen this delay in payments for legitimate services or budgeted items repeated over and over again. To our eternal shame, such is our legacy.

Four days before Christmas, acting Prime Minister Sam Abal directed that some K89 million in outstanding business development grants held in the Department of Commerce and Industry be paid to the recipients.

By then, Vulupindi Haus, the home of finance and treasury, was besieged by landowning groups and their service suppliers. The number of conmen and women mingling with the throng was about the same as genuine claimants.

The air was palpable with tension and violence so much so that all government workers vacated the building and cheques were paid out from locations all over town, including the March Girls Resort some 15km out of Port Moresby.

A week earlier, Southern Highlands Governor Anderson Agiru had complained of the delay in paying out business development grants. 

He said his people were missing out on business opportunities and running up high costs while waiting for what was rightly theirs and which had been allocated by the government a long time back.

Memorandum of agreement (MoA) funds, about which Southern Highlands and Gulf landowners are fighting over today, have been owed them from as far back as 1992 from the Kutubu oil project.

The Kutubu oil reservoir is almost dry now and funds promised for infrastructure development are still outstanding.

If interests were to be applied, and there is no reason why not, it would put the bill in the billions of kina.

Even after some K300 million in outstanding MoA funds were approved in May 2008, the funds had not been fully paid out.

A company, Downer Constructions, was contracted to seal a stretch of the Madang-Lae highway. The company duly performed its contractual obligations and submitted a bill to the state.

That bill, for K26 million or so, has now gone up to more than K100 million, confirmed in a court award against the state. The amount is rising weekly, we hear, in interest.

And, how many other NCSs or Downer Constructions are out there in the courts claiming their rightful dues, or waiting with bated breath in the fast fading hope that theirs is forthcoming in the next warrant released by Finance Department.

Business throughout the world thrives on one absolute constant: That is the timely payment for goods obtained and services rendered.

If the saying, time is money, is true, it follows that delay in timely payment is money delayed or lost. That is the principle which gives rise to interest charges.

Quite apart from the anger, the anxiety and frustration generated by delayed payment of rightful claims or dues, it is corruptive and criminal.

A long line of people waiting to be paid quite naturally will be willing to do anything, including paying somebody at the pay office, to make sure they get to the line ahead of the others.

People at the pay office realise that they hold a powerful position, indeed, so they drag out payment and start putting out feelers to those standing in line to reward them in order that the payment is processed. There, you have it: A perfect opportunity for corruption to flourish. And, it does.

Earlier this year, the member for Telefomin in West Sepik paid no less than K10,000 and shamelessly admitted doing so in the media, in order that his district services improvement programme funds were released from finance.

A woman of doubtful character was named as having asked the member to pay such an amount in order for his cheque to be printed and delivered.

And the nonsense repeats itself over and over again.