Time for more electricity suppliers

 ELECTRICITY consumers throughout the country seem to be getting the raw end of the deal from PNG Power Ltd (PPL).

The state-owned power utility gave consumers a rude awakening on New Year’s Day when it announced a 5.9 per increase in electricity tariffs to take effect immediately. It cited increased operational costs to as justification for the hike.

It was more like a slap on the face for consumers, especially in Port Moresby and Lae, who have been denied a reliable power supply on a 24-hour/7 days-a-week basis throughout 2013.

It did not help matters that the Independent Consumer and Competition Commission (ICCC) hastily agreed with PNG Power’s reasons and approved the increase, seemingly with little or no concern for consumers who had suffered from constant power failures in the past year.

The business sector is understandably upset over the power price rise, with Port Moresby Chamber of Commerce and Industry chief executive officer David Conn leading the charge in calling on the Government to relax the rules and allow more electricity suppliers to compete with PNG Power.

We agree with Conn that change is long overdue simply because PNG Power has failed to meet its obligation to supply reliable, clean po­wer on a 24-hour basis.

Furthermore, ICCC needs to be a bit more considerate towards consumers and ensure that PNG Power adheres to its role and responsibilities under its contract.

As a matter of fact, the monopoly that the state utility enjoys in electricity generation and supply has had a somewhat negative effect on its management and operations since its establishment 50 years ago.

While the Government has allowed competition in other industries like airlines and mobile phones, it has not bothered to make the electricity industry more competitive and should therefore take some of the blame for the current scenario. 

Without doubt PNG Power is 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, get the best deal for their money.

How can this power utility justify a tariff increase when it is totally incapable of supplying reliable electricity every day of the year?

The explanation, or rather justification, by its chief executive officer, John Tangit, is hardly convincing to consumers who have been treated with contempt over the years and are now being forced to pay more for PNG Power’s inefficient management and operations.

“This is an annual review in electricity tariffs specifically based on the fluctuations in fuel prices, the consumer price index, exchange rates of the kina and Australian dollar, exchange rate of the US dollar over the 12 months from October 2012 to September 2013,” the CEO said in newspaper advertisements this week.

Consumers would be con­vinced if that statement came from the chief executive of a highly efficient power utility that supplied reliable clean power on a 24-hour basis.  

It would have been appropriate for Tangit to apologise to PNG Power’s valued customers for causing them more inconvenience by increasing the cost of electricity. The new rate means customers will now pay 86 toea more for domestic Easipay use. For example, 19 units cost K14.56 (including VAT) at the old rate. Under the new rate, people will pay K15.42 for the same 19 units.

Residential customers who are in the higher salary brackets will be able afford the tariff increase but those on lower wages will bear the brunt of the power hike. 

On the other hand, all bu­sinesses will be severely affected, especially the manufacturing sector and heavy industry who will see their overheads soar. The industrial hub of Lae is already up in arms with some calling it an unfair and unjustified decision by PNG Power. We couldn’t agree more.

The strong reaction from business and industry suggests that the Government seriously consider options that will drastically improve electricity generation and supply in the country. It’s time for change as PNG Power has been inefficient and complacent for too long.