State must help SOES

 IT is heartening to see that Post PNG has started a sub­sidiary business aimed specifically at handling the movement of medium to large freight throughout the country.  

The creation of Post Logistics, which was formerly the Express Mail Service, re­presents the state’s seriousness about getting the postal system on the track to becoming a leader in the field. 

Post Logistics, is a “re-branding, re-fleeting and repositioning” of a service that covers express courier services, sea, land and air freight, customs clearance and warehousing. 

This is just one positive outcome of last week’s announcement that Post PNG was getting a K40 million injection to pull it back from the brink of bankruptcy and then bolster and expand its operations. 

Minister for Public Enterprises and State Investments Ben Micah, at the launching of the new company last Friday in Lae, said despite the buoyant mood and the hope for a better, prosperous future for this state-owned-enterprise, the sobering fact remained that the onus was now, as it always has been, on the board of directors and chief executive officers to perform to please their paying customers.  

Essentially, that is what businesses are all about – attracting the right type of customer, and in sufficient numbers, to post a profit at the end of the fiscal year. 

With Post PNG being given a new lease on life, it was revealed that another major state-owned enterprise, PNG Power Limited, has not had such an easy ride. 

During a board and management strategy planning workshop in the national capital district last week, PNG Power chairman Larry Andagali made a frank admission that the power generation business had only two profit-making centres in Lae and Port Moresby, while the rest of Papua New Guinea was basically being subsidised by the two cities. 

From a business stand point, if there are areas of a company that are unproductive then they either get built up to standard where they can turn a profit or they get off-loaded. 

According to Andagali, PNG Power spends approximately K200 million annually to support electricity generation for centres around the country as a community service obligation. At what point does the community service obligation override the need to balance the books? 

If a profit could be generated from every province, then PNG Power could conceivably improve greatly the quality of its service and even branch out into other forms of renewable, cost effective and practical forms of power generation. 

Hydro power is the chief source of electricity generation for the two major cities; coming second is electricity derived from diesel-powered generators. 

If PNG Power was not tethered by its obligations, it could look into other sources of power generation such as solar, wind and even gas. 

As it stands with this public utilities company that supplies electricity in each of the 22 provinces, the potential to branch out and diversify its range of products will probably not come to fruition in the near future. 

A big part of the problem is that it will cost a significant amount of money to upgrade the generators, most of which are old and in need of replacing and “performing at 60 per cent of their maximum capacity” because of their condition. 

Perhaps PNG Power is in need of a major cash injection just like Post PNG to get it fully operational. Maybe the reality is that PNG Power will never truly be a proper business with its obligation to serve the whole country. 

Micah said there was money already available for the state companies to tap into but it needed a collaborative approach. 

He estimated that there was K3 billion floating among these companies and it was up to them to partner up and improve their service to the paying public otherwise the need would be met by “foreign companies”. 

Post PNG and PNG Power provide vital services to the people not just those in the major cities but in the provinces as well. 

It is in everyone’s best interest that these two state-owned-enterprises become productive, reliable and prosperous entities. But for that to happen their performance must lift and the national government must give the support needed.