Energy Reform in Papua New Guinea – reflection on standard practices and way forward
20 March 2023
Francis Odhuno Inquire In f orm In f l uence Why SOEs are Involved in Development Projects • Early stages of a country’s development • Private enterprises are not likely to be profitable • Unless they operate as monopolies; or • Are subsidized by the state • Where large investments need to be made • Investments associated with sunk costs • Costs that cannot be diverted to other purposes • Services. [...] • Must not be interspersed with social policy objectives unrelated to their stated goals • SOEs obliged to contribute to social policy rarely succeed or collapse • Usefulness of SOEs changes, and usually diminish, as a country become highly developed • SOEs become less efficient than comparable private companies • Inefficient SOEs with market power breed discontent and clamour for reforms • Privat. [...] PNG Issues • Overlap in roles and responsibilities with respect to policy and planning • Departments vs. [...] SOEs • Limited accountability mechanisms • Limited funding and institutional capacity • Differing positions on the scope for unbundling and competition Way forward These came from stakeholder consultations in 2019 • PPL to have overriding development objective, vertically integrated structure and responsibility for coordination of investment in relation to the grids. [...] • Pursue the options for competition as set out in the 2011 Electricity Industry Policy – with emphasis on ‘competition for the market’ outside PPL’s exclusive areas.