Cutting tariff will be commercial suicide: ICCC

Cutting the electricity tariff by 50 percent would be commercial suicide for PNG Power Limited (PPL), says the Independent Consumer and Competition Commission CEO and Commissioner, Paulus Ain.

The Commissioner said currently, core PPL infrastructure around the country are on intensive care unit and they are unsure how a tariff reduction will improve PPL’s services.

The comments follow statements by PPL acting managing director, Carolyn Blacklock last month that a reduction to the current tariff by half would make power accessible for many.

Ain said prior to 2001, PPL was effectively in liquidation and under structural reform policies between 2000 and 2001, the Government enacted the ICCC Act 2002, further establishing the ICCC as the regulator of the declared regulated industries and entities.

He said since then the ICCC established sound regulatory frameworks for PPL, guiding its revival from 2002 to a financial viable status in 2013, and with the revenue strength to increase its investment to improve electricity supply services and expand its activities to provide electrification in unreached areas of PNG.

“However, in 2013, the Government made a decision to freeze the increase of electricity tariff charged by PPL. Due to the tariff freeze and the resulting limited revenue returns from PPL’s core business, PPL was unable to roll out its planned capital project, hence leading to PPL facing performance issues and financial constraints,” said Ain

“To date, the tariff freeze has not been lifted and the current acting managing director has announced publicly that the tariff that existed for over five years will be slashed by half.

“As we all know, most of the core infrastructure around the country are on intensive care unit and 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.”

Commissioner Ain said the Government must liaise with relevant government institutions in the electricity industry to design policy frameworks to further develop the industry.

ICCC operates and performs its electricity regulatory functions under the guidance of the ICCC Act 2002 and the Electricity Industry Act (Chapter 78) 2002 (Electricity Industry Act) and subsequent Industry Legislations, Regulatory Contracts, Electricity undertakers Licences and Codes.

(ICCC CEO and Commissioner, Paulus Ain)

Cedric Patjole