Still in poor shape

Main Stories, National

Then National, Tuesday 11th September, 2012

PUBLIC enterprises are in no better shape than they were 10 years ago, according to Minister for Public Enterprises and State Investments Ben Micah.
He told the Papua New Guinea Advantage 2012 investment conference in Port Moresby yesterday that “the unpalatable fact is that we (government) have injected many hundreds of millions of kina into them (public enterprises) since 2002 for no net benefit”.
These include Independent Public Business Corporation (IPBC), Air Niugini, Eda Ranu, Motor Vehicle Insurance Ltd (MVIL), National Development Bank (NDB), PNG Ports, PNG Power, Post PNG, Telikom and Water PNG.
“In fact, service delivery standards have declined and the extension of services into rural areas has proceeded at an unacceptably slow pace – if at all,” he said.
“Our critical infrastructure – roads and bridges, ports and airports, power stations, the national telecommunications system, water supplies and sewerage systems are crumbling around us because of poor maintenance.
“As an example of the lack of progress within public enterprises, at the start of 2002, Post PNG had only just been rescued from insolvency.
“Today, it is still reliant on IPBC for life support.
“bemobile is also being kept alive by cash injections from its shareholders, including the government.
“MVIL and Ports PNG have lost millions of kina in illegal or foolish investments.
“Some public enterprises have been using debt to finance their daily operations instead of creating revenue-generating assets.
“Others, such as Telikom, have borrowed millions of kina illegally.”
Micah said there was a lack of transparency and accountability within public enterprises, and many were in breach of their statutory obligations.
“They suffer from poor management systems and processes and lack commercial discipline, resulting in high costs and poor delivery to their customers,” he said.
“Each and every public enterprise requires capital injections once again.
“But when we prop up non-performing public enterprises, we do it with money that should be going to where it is needed most – to hospitals, aid posts and clinics, to schools and universities, to law and order, to national security, to advice and assistance to farmers and fishermen, to community development, and so on.
“Our public enterprises are a drag on economic growth in that money spent elsewhere – for example on health and education – brings a higher return.
“It has been estimated by the Asian Development Bank that every kina invested in public enterprises produces seven times less output than the same kina invested in the rest of the economy.”