‘PNG Power under duress over debts’

By DALE LUMA
PNG Power Ltd continues to suffer duress because of the Government’s inability to pay its recurrent expenditure and its debts, according to a reliable source.
It is understood that the total amount is around K460 million comprising outstanding bills and unfulfilled commitments to PNG Power.
“There is funding available and yes, the government continues to make commitments to pay some of its recurrent costs. But unfortunately due to cash constraints, they quite often fail to meet this target,” the source told The National.
“Another major (burden) is the project costs for works that are neither owned, nor driven by PPL. We simply become responsible for managing them after completion – and in some cases these assets erode profitability over the short and medium term, not increase it.”
The source said “settling past debts is work in progress”.
“PNG Power’s only revenue is from the sale of electricity. It is the only SOE (state-owned enterprise) or business in the nation that hasn’t been able to increase its prices in more than seven years,” the source said.
“Power is essentially 30 per cent cheaper than it was at the time of the last increase.
“However like all businesses and households PPL has been subjected to significant price increases across the board, be it money paid to the other State agencies for licenses or permits, cost of stevedoring on imported parts, freight charges or materials.”
The source said the Government was reportedly expediting the recruitment of a new managing director.
“A new managing director is essential to continue rolling out the reform plans (least cost power development) and working with the Apec partners to rehabilitate the grids and supply reliable, affordable energy to more than 70 per cent of our people.”