PNG Ports needs reforms

By MALUM NALU
PNG Ports Corporation Ltd (PNGPCL) is the standout performer in the Pacific.
However, a lot of reforms need to be done, according to the Asian Development Bank.
The ADB studied seven Pacific ports – Fiji Port Corporation Ltd (FPCL), Samoa Port Authority (SPA), Solomon Islands Port Authority (SIPA), Marshall Islands Port Authority (MIPA), Port Authority of Tonga (PAT), CentrePort Wellington (New Zealand) and Napier (New Zealand) – in its Finding Balance: Benchmarking the Performance of State-Owned Enterprises in Papua New Guinea.
“PNGPCL is the standout performer, which could be driven by the fact that a number of activities, such as stevedoring are contracted out.”
“This could also explain why PPCL’s cost per unit of cargo processed is US$5.44, second only to Wellington’s CentrePort at US$2.64,” the report said.
“PNGPCL, which processed more than two and a half times the container volume of CentrePort, which is an efficiently-run port with three times the asset size of Fiji Port Corporation Ltd (FPCL), showed only a slightly healthier 4.3% return on assets (ROA) in 2007-08.
However, PNGPCL financial results for 2008 were adversely affected by a significant tax adjustment carried out from the previous financial year.
“Furthermore, PNGPCL operates 14 ports, on which only two, Port Moresby and Lae, are of international scale and profitable in their own right.
“The economic regulator in PNG – the Independent Consumer Competition Commission –  allows PNGPCL to cross-subsidise the smaller uneconomic ports from the profits generated by the two larger ports.”
The report says because the economies in all of the Pacific island countries depend on trade with other countries for virtually everything they consume and much that they produce, high-cost and inefficient ports negatively impacted every sector of the economy and could create a significant drag on growth and productivity.
“Reform, which is therefore crucial, will require a combination of initiatives: improved governance, improved accountability, a great commercial focus with hard budget constraints, sale of non-core assets and business lines, better asset utilisation, and clearer management goals and consequences for non-achievement.”