Prime Minister Hon. James Marape has outlined the Government’s long-term strategy to revive PNG Power Ltd through structural reforms, provincial partnerships and partial privatisation, describing the state-owned utility as being in a “terminal” financial and operational condition after decades of underinvestment.
Responding in Parliament to a question from West New Britain Governor Hon. Sasindran Muthuvel, Prime Minister Marape said the Government had been pursuing reforms since 2023 aimed at transforming PNG Power into a financially sustainable and more efficient electricity provider while expanding access to reliable power across the country.
The Prime Minister said PNG Power’s difficulties were the result of many years of inadequate maintenance, ageing infrastructure, rising operating costs and poor revenue collection.
“PNG Power is a very sick state-owned enterprise,” Prime Minister Marape said.
“If I were to make an example of cancer, it is in a terminal stage. It is no longer stage one, stage two or stage three. It is in stage four. That is the honest assessment of the company that supplies power to our nation.”
He said independent reviews, including work undertaken by Deloitte, had confirmed the seriousness of the company’s financial and operational challenges.
“For decades, routine maintenance has not kept pace with the ageing assets built from the 1970s, 1980s, 1990s and beyond. This affects generation, transmission, distribution and even billing systems,” he said.
“In one major centre on the Highlands grid, around 80 per cent of customers do not pay for electricity. No utility can remain financially healthy under those circumstances.”
Prime Minister Marape said successive governments had avoided increasing electricity tariffs in an effort to protect consumers, even as the cost of delivering electricity continued to rise.
“There has never really been a tariff increase over many years because we wanted to help our people. Only recently have we allowed a modest increase, but PNG Power continues to struggle under enormous debts and liabilities.”
Despite these challenges, he said the Government had invested almost K1.5 billion in critical electricity infrastructure, including the new 132-kilovolt transmission line linking Edevu to Port Moresby, enabling an additional 54 megawatts of power to be supplied to the National Capital District.
“Our Government has continued investing in infrastructure, but the company now requires decisive structural reform to remove the parts of the business that are no longer sustainable while strengthening those that remain viable,” he said.
Prime Minister Marape said one of the centrepieces of the reform programme would be the gradual transfer of loss-making “C centres” to capable provincial governments and other qualified operators under carefully regulated arrangements.
He stressed that the process would not be a simple sale of assets but a balanced approach designed to protect electricity consumers, maintain service delivery and prevent excessive tariff increases.
“We are looking at provinces that have the capacity to operate their own power companies under licence through the National Energy Authority, which our Government established as part of these reforms,” he said.
“We are already examining proposals involving East and West Sepik, where PNG Power could partner with provincial governments or other qualified operators.”
The Prime Minister pointed to the successful operation of the Ok Tedi power subsidiary as an example of how provincial and resource-sector partnerships could help improve electricity services in other regions.
He said provincial governments with viable energy resources would also have opportunities to develop their own electricity businesses.
“There is nothing wrong with provincial governments owning or partnering in power companies while PNG Power continues as a strategic partner,” he said.
“This reform will allow more power generation and distribution responsibilities to be managed closer to the people while PNG Power concentrates on maintaining the major national grids serving Port Moresby, Lae and the Highlands.”
Prime Minister Marape said further policy details would be released before the Mining, Petroleum and Energy Conference later this year.
“Our objective is to build a stronger, financially sustainable electricity sector that delivers reliable and affordable power to Papua New Guineans while creating opportunities for provinces to participate directly in energy development,” he said.