PPL plan seen as commercial suicide

PLANS by PNG Power Limited to halve tariffs have been described as “commercial suicide” by Independent Consumer and Competition Commission chief executive officer Paulus Ain.
He said the Government through the National Executive Council made a decision in 2013 to stop PPL from increasing the electricity tariff.
“This decision has been in effect since the second quarter of 2013 and has not changed to date,” Ain said.
“However, PPL has the prerogative through its board to request the Government to rescind its decision, if the Government feels that the tariff is burdening PPL’s financial performance.
“The tariff freeze has not been lifted and the current acting managing-director has announced publicly that the tariff will be slashed by half.
“As we all know, most of the core infrastructure around the country are in ‘intensive care unit’.
“We are unsure how the price reduction will resuscitate the electricity network.
“In our humble view, this will be commercial suicide.
“Despite this the ICCC, as the regulator, will work with PPL to ensure that it fully recovers and expands its coverage throughout the country
as required by the Government.”
Ain said PPL had not met most capital investment objectives in the past five years according to its electricity regulatory contract with ICCC.
“The role of the regulator of the electricity supply Industry is to ensure that there is an adequate capital expenditure plan to be rolled out by PPL in a cost-reflective and efficient manner,” he said.
“PPL has not invested in required capital projects planned to be achieved during the 2013 to 2017 regulatory period.
“As a regulator, the ICCC believes that a holistic approach has to be considered for PPL’s financial solvency. Otherwise, a continued freeze or limitation on PPL’s tariffs adjustments, and hence a limitation on its legitimate revenue stream, will constrain PPL from implementing its planned predicts needed to perform competitively in the market and limit further electrification of PNG.”