PNG Power needs competition

 PNG Power Limited has backed off from its most unpopular decision to impose a 5.9 per cent across the board increase in electricity tariffs.

That is indeed good news for customers who were given a rude awakening by the State-owned power utility on New Year’s Day. 

Although the increase has been postponed for only the first quarter, we hope that Public Enterprises and State Investment Minister Ben Micah will keep the smiles on customers’ faces for a longer period.

Micah and Prime Minister Peter O’Neill have pledged K10 million from the government coffers to compensate PNG Power for the anticipated loss of revenue from the tariff increase.

It is the first time the Government, as shareholder, has chipped in some funds to bail out the ailing power supplier. 

We hope it will not be the last as a cash-strapped PNG Power is more than likely to pass on its high operational costs to its so-called valued customers.

As well, the Government should direct the PNG Power board and management to seek domestic or external sources of financing for its operations.

By the same token, additional funding may be a waste of time and money if the state entity continues to be a less than a viable business. 

It may require a complete overhaul of the PNG Power structure and operations to rescue the ailing enterprise.

Nonetheless, we will continue to support the call by the Port Moresby Chamber of Commerce and Industry for the Government to allow competition in the electricity generation and supply industry. 

That is possibly the only way that customers will get value for their money.

Indeed, competition is working wonders in our mobile telecommunications and airline industries and it would not hurt to bring another player into the power sector.

While the proponents will argue that the electricity industry is a different ballgame to mobile phones, the same business practices apply, with customer service being of paramount importance and one of the keys to profitability and ultimate success.

As stated previously, the monopoly that PNG Power and its predecessor, PNG Electricity Commission, had over the past 50 years in the generation, supply and distribution of electricity in this country has had a truly negative effect on the management and operations of the state entity.

We repeat that PNG Power has become one of the most, if not the most inefficient state-owned enterprise in this country and is only surviving because there is no competition. 

That should be reason enough for the Government to allow competition in the industry so that electricity consumers, like mobile phone users, can get the best value for their money.

In the interim, Micah should direct PNG Power to postpone the tariff increase for the rest of the year. 

That decision would be more appropriate as PNG Power chief executive officer John Tangit forecast last week that it would take more than a year to install new equipment and diesel power plants to improve power supply to the nation.

Tangit’s warning to consumers to expect more power cuts this year despite having to foot higher electricity bills was like adding salt to injury. 

Furthermore, his admission of the company’s legacy of having power plant problems merely proved the point that the tariff increase was unjustified.

“We are in a catch-up mode trying to resolve 20 years or more of neglect in the maintenance and replacement programmes for PPL. And it will take some time for customers to notice improvements in the supply of electricity.”

That is an arrogant and insensitive statement from the PNG Power boss who had dropped a bombshell on his valued customers just 12 days ago. 

He now expects them to believe that the decision by his management and board to increase electricity tariffs is justifiably correct.

It would be wise of Tangit to take note of what another senior government minister said about “erratic and insensitive” political leaders whose statements and actions are threatening potential foreign investment.

Just as well, we have a government and certain ministers who will not allow such arrogance to derail their commitment to deliver effective and efficient services to the people of this country.