Bekker Says Contract Reviews Are Important
by PNG Business News - April 19, 2021
According to PNG Power Ltd, renegotiation and reviews of current contracts with independent power producers (IPPs) make the business healthier and more competitive (PPL).
PPL managing director Flagon Bekker made the statement in response to questions raised by IPP industry groups (IP3) about PPL unilaterally reviewing and renegotiating current contracts and contractually negotiated prices to supply electricity to the grid.
IPPs, according to Bekker, must be adaptable enough to evolve as fiscal, technical, and environmental factors change with time.
“We asked IPPs to respond to a survey late last year where we asked them for their suggestions and next steps in dealing with the current commercial status quo,” he said.
“In fact, we offered four or five alternatives to renegotiation. None responded.”
According to Bekker, analysis shows that in terms of pricing, spending, and the overall economy, it is best to keep IPPs' share of the total market minimal.
“Egypt is the best example of countries that have kept IPPs to a smaller share of the total (market) and found it easier to weather macro-economic shock and have greater freedom in deciding where to source finance for power investment in the future,” he said.
“The IPPs not only make the macroeconomy weaker, but they are also the cause of their own problems.
“PPL is leading to change this.
“IPPs should not resist.
“They should partner by suggesting solutions for the future.
“PPL will send the survey out again and we hope they respond this time.”
According to Bekker, there was a lot of analysis and support focused on post-negotiation evaluations, which shows that the renegotiation process contributes to the discovery of lessons and eventually the execution of those lessons.
“Off the top of my head, here is a list of countries that have renegotiated PPAs in full or in part over the years: Philippines, Brazil, India, Argentina, Mexico, Turkey, Poland, China (among others),” Bekker said.
PNG Business News - June 01, 2021
PNG Assets Have Potential To Earn, Says Bekker
PNG Power Managing Director Flagon Bekker said the company's assets have a lot of potential for generating income and maximizing their use to help the country distribute energy more efficiently. PNG Power has the capability and assets to provide that opportunity and needs to look at the best solutions to accomplish this sort of outcome, he said. Electricity markets have altered worldwide and in the region to produce better benefit for the economies of those nations, he said. “Reform is inevitable for the power sector in PNG as it has been and continues to be across the globe. PNG is not unique,” Bekker said. “Reform will consist of a measured, step by step approach by PPL and the other market participants. It will mean lower power prices for the people of PNG through transparent, competitive investment and operating processes in generation, transmission and distribution and retail business units. Reform is about change. Change for a better stronger and more sustainable sector.” He highlighted that, after the recent passage of enabling legislation, the National Energy Authority (NEA) will take over regulatory tasks from PNG Power and the ICCC. He stressed that PNG Power could not be both a regulator and a participant in the business at the same time, that it could not be both the referee and the player, as well as the third umpire. “It must now behave in a more commercial manner to implement the programs necessary to achieve the government’s electrification agenda. PNG Power would become a competitive participant in the market in the future, with a single buyer responsible for power demand throughout the country's electrical infrastructures. “I want all PNG Power staff to understand the vision that we have for the organisation and its important role in achieving the goals of the government; this requires that we must act in a commercial manner, especially in dealing with donors and investment parties. “We should not be afraid of change; we must all embrace it,” Mr Bekker said when responding to the media criticism by the Energy Workers Union about the changes and the reforms initiated at PNG Power.” Reference: Post-Courier (31 May 2021). “Bekker: PNG Power Is Able To Make Money.”
PNG Business News - June 14, 2021
PNG Power Undergoes ISO Certification
PNG Power Limited will be subjected to an evaluation by its asset management standard unit in order to receive ISO 55001 certification. A third party will undertake the assessment and ISO 55001 certification process, which will take 12 to 18 months and include an evaluation of the company's present AM practices and processes, identification of gaps, and development of a roadmap for adoption. This will be the first phase in PNG Power's ISO 55001 accreditation process, which will be supported by USAID's PNG Electrification Partnership (USAID-PEP). The company's old and old infrastructure assets, according to PPL managing director Flagon Bekker, have continued to obstruct the delivery of dependable power to clients across the country. PNG Power has taken the first step forward in commencing the Asset Management Strategy and Framework for Management of PNG Power Infrastructure Assets, he added, under its new asset management (AM) unit. He explained that ISO 55001 accreditation is vital because it ensures that PNG Power has an asset management system (AMS) in place that caters for internal and external challenges influencing asset management in order to meet the company's goals. Risk management, ageing/aged infrastructure, supply chain and spares maintenance, maintenance optimisation, AM performance monitoring, and project/investment lifecycle assessment and planning are the six workstreams that the AM unit will focus on. PNG Power's asset management will be based on these workstreams. On the leadership front, it will be ensured that senior management has accepted responsibility for developing and communicating the AM Policy and Strategic Asset Management Plans to all stakeholders involved. The accreditation will also provide confidence that AM objectives have been defined, recorded, and disseminated within the organization, as well as that adequate planning has been put in place to meet the goals. PNG Power is also sponsored by the World Bank under its Energy Utility Performance and Reliability Improvement Project (EUPRIP) to strengthen infrastructure through rehabilitation and upgrade works, therefore the support from PEP is expected to complement the asset management strategy. PNG Power is also working with USAID PEP Activity to improve grid home connections, and the AM effort will guarantee that quality and dependable power reaches end customers.
PNG Business News - June 28, 2021
PPL MD Resigns, OIC Appointed Amid Power and Union Woes
PNG Power Limited’s Managing Director has been replaced with an Officer in Charge as the power utility continues to face operational challenges. This included a prolonged 16 hours of power outage last week Friday in Port Moresby that saw many business houses resort to generators to keep doors open to customers and deliver services. Earlier that day, it is understood an impending strike by the PPL Union was addressed by the management, led by the now resigned MD. A townhall meeting on Friday at the Airways Hotel in Port Moresby saw the PPL team and the former MD Mr Flagon Bekker address various stakeholders and media about the challenges that they were facing and what they were doing to turn the power company around. It was during question time, that Mr Bekker left after being notified by a staff that he was needed back at the PPL head office at Hohola. In a statement released Sunday, Chairman of PNG Power Limited (PPL) Mr Moses Maladina announced the resignation of the Managing Director, Mr Flagon Bekker, effective immediately on Friday. “Mr Bekker’s decision to leave the organisation after nine months are based on personal reasons,” Mr Maladina said. The Chairman also announced the appointment of Mr Obed Batia as Officer in Charge of PNG Power, whilst a more formal engagement is finalised. Mr Batia has over 30 years of service with the company and has served the Leadership Team with distinction and possesses outstanding credentials. I have every faith in Mr. Batia’s ability to provide much needed stability. The statement assured that the Chairman and Board of PNG Power will provide the new Officer in Charge and the Leadership Team with its full support, during the interim. “We assure all the PNG Power employees and their families, key stakeholders and suppliers, and the valued PPL customers of continued stability during this transition period,” Maladina said. “It remains our key priority, to focus on the objectives of our Annual Operating Plan and to deliver on a promise to provide accessible, affordable and reliable energy services to the people of Papua New Guinea. “I would like to take this opportunity to thank Mr Bekker for his time here at PPL and to wish him well, as he returns to his family in Australia,” the chairman said. Among the issues that need the attention of the new OIC is the cancellation of the Power Purchase Agreement (PPA) signed with Oil Search Limited last year for the Biomass and Solar Farm project located in Markham district of Morobe province. Local landowners have expressed disappointment following the release of a statement by OSL of the negative implications of the recent cancellations of the PPA with OSL for the solar farm and biomass project that was to be an additional source of power supply into the PPL Ramu grid. The company’s challenges include a K25 million monthly loss to power theft and millions owed in outstanding fees, particularly from Government.
PNG Business News - November 28, 2022
Port Moresby Chamber of Commerce and Industry holds 67th Annual General Meeting
The Port Moresby Chamber of Commerce and Industry (POM CCI) held its 67th Annual General Meeting at the Lamana Hotel on the 24th of November 2022 , present to witness the occasion were its members, executives and various stakeholders. The meeting was officially opened by the President and Master of Ceremony Mr. Rio Fiocco who gave his opening remarks and report. He thanked all the POM CCI staff for their hard work this year despite the challenges faced by covid and other changes in the administration. Some of their achievements highlighted included the recruitment of two graduate accountants from the IBS University and the employment of its new membership officer. Mr. Rio Fiocco stated that by 2023 the chamber will be working with Total PNG to pre-qualify its members to be contracted to early works stage of the Papua LNG project . "All members who have issues affecting their business can feel free to come and see us so we can lobby for you through NCD or if it government related we will also lobby for you through the PNG Chamber of Commerce and Industry", said Mr. Rio Fiocco. The treasurer of POM CCI Ms. Akae Beach presented the chambers Financial Report stating that it had made a net surplus of k114,020 which is a 12% net profit margin despite not recouping most of its membership fees. "The Port Moresby Chamber of Commerce and Industry Inc is in good financial position and our net asset stand at K1.49m compared with K1.38m last year , a healthy increase of 8 %. Whilst conditions remain challenging , I am confident that the chamber will continue to be in overall surplus in 2022 as we continue maintaining our current strategy ( with an increase focus on both the Corporate and SME sectors) whilst continuous improvement in our financial systems, increase online and physical marketing efforts and increase member initiatives" stated Ms. Akea Beach. Ms. Akae Beach concluded that she will be leaving the chamber by the end of the year but will still support the chamber within her own capacity.
PNG Business News - November 27, 2022
PM Marape, Ministers and star international business speakers headline PNG Mining & Petroleum Conference in Sydney
Prime Minister Marape headlines a star line-up of speakers at the 16th PNG Mining and Petroleum Conference, in Sydney in December, to promote international investment in PNG. Already over 1000 attendees are registered to attend, as the Conference features a dynamic and engaging program centered around Prime Minister Marape’s announcement of 4 new mega projects and the expected re-opening of Porgera gold mine. Prime Minister Marape will be providing the keynote opening address on Day 1. He will be joined by Australian International Development Minister Pat Conroy. Senior executives of the major international investors in PNG, including Newcrest CEO Sandeep Biswas, Harmony Gold CFO Ms Boipelo Lekubo, TotalEnergies Senior Vice President Mr Julien Pouget, Santos President Upstream Mr Brett Darlie and ExxonMobil PNG Managing Director Mr Peter Larden will be providing a global outlook for their companies’ operations around the world, how they have adapted to emerging trends and how their PNG investments fit into their global portfolios. A highlight will be CEO of Fortescue Future Industries Dr Mark Hutchinson’s presentation of Fortescue’s vision for how green hydrogen can be a gamechanger for the world and PNG’s envisaged role supplying hydrogen to the world. Day 1 concludes with a session featuring former Australian Foreign Affairs Minister, the respected Julie Bishop, presenting her view as to why Australia needs to invest more in PNG, and PNG’s Trade and International Investment Minister Richard Maru outlining the PNG government’s vision for investment and development in non-mining sectors. Each session on Day 1 will feature panels moderated by well-known Australian media personality Ms Ticky Fullerton. Day 2 of the Conference features policy statements by Mining Minister Ano Pala and Petroleum and Energy Minister Kerenga Kua, presentations by Kumul Petroleum and MRDC, project updates on all of PNG’s existing mining and energy projects, and the presentations of the next wave of resource and energy projects – Papua LNG Project, Pnyang LNG Project, Pasca Gas Project and Wafi Gold-Copper Project. Day 3 of the Conference features a unique 3 stream format focused on varied themes including Exploration growth, Climate Change & Energy, Improving Ease of Business, Infrastructure, and Business Success stories. Day 3’s program features a significant list of speakers including heads of government regulatory agencies, CEOs of various PNG and international businesses, and includes international institutions such as the IFC. The Conference concludes with a session that focuses on PNG success stories where resource revenues have been invested for future benefit, and a presentation on the importance of the PNG Sovereign Wealth Fund. “It’s an engaging and dynamic Conference program with a high-profile cast of speakers. I am very grateful for the support that the Prime Minister has provided to the Conference, and the unprecedented participation of Government Ministers and heads of departments and agencies as speakers. Industry and the PNG Government are presenting a united front in promoting PNG as an international investment destination at the Conference. We are pleased that we can work with the Government in this regard. The Prime Minister will be in a unique position in our history by speaking about the advancement of 4 major projects, and the potential doubling of PNG’s GDP in the near future, which can usher in significant economic benefits for our people.” Said Mr Anthony Smaré, President of the Chamber of Mines & Petroleum. “We are also very fortunate that so many high-profile leaders from some of the world’s largest companies have taken time out to come and speak at the Conference to outline why they believe PNG is an important place to invest in. Australian Minister Pat Conroy’s speech will give us an indication of Australia’s view of PNG’s importance. I am personally looking forward to the afternoon session on Day 1 when Julie Bishop will present her view as to why Australia needs to invest more in PNG, and Minister Richard Maru will challenge international companies and countries to invest more into the PNG Government’s investment priority areas such as infrastructure and agriculture.” “Over 1000 people are now registered to attend the Conference, but there is still some seats left, so I encourage business people not already registered, to quickly secure their seats at www.pngconference.com over the next few days. The Conference is unique because you can meet everyone who has a role in PNG’s resources and energy sector - Government policy makers and regulators, the business movers and shakers, landowners, financiers, investors, suppliers and contractors from all over the world – all in one place over three days from 5 to 7 December 2022 at the Sydney Hilton Hotel.”
PNG Business News - November 27, 2022
PM Marape supports development of oil palm industry on a massive scale in PNG
Photo: PM Marape and Governor Bird in discussions with representatives of Pacific Elite Palm Oil Group in Singapore on Monday (November 21, 2022). Prime Minister Hon. James Marape has given his support to development of the oil palm industry in Papua New Guinea on a massive scale. PM Marape gave his support after he and East Sepik Governor, Hon. Allan Bird, met with representatives of Pacific Elite Palm Oil Group in Singapore on Monday (November 21, 2022). The company currently runs an oil palm project in East Sepik, which it wants to emulate in all provinces, saying that it will be an economic gamechanger for the whole country. The company aims to create the largest agriculture-based wealth in the South Pacific, as well as generate electricity for PNG, using oil palm. Governor Bird told PM Marape that if a long-term oil palm development plan was drawn up, with the aim of economic independence for PNG, one million hectares of oil palm grown all over PNG would bring in an extra K100 billion for the country. “We can double our GDP just from palm oil,” he said. “If we go into downstream processing, this K100 billion could double, so that we could be earning K200 billion on top of our current GDP. “The other flow-on to the economy is power production that fits into the grid, carbon credits, increased cattle production, as well as jobs. “Palm oil is amazing because you can do so much with it, including green energy, which can be generated from the waste of palm oil. “If we have 33 operations throughout PNG, similar to what we are doing in East Sepik, 100,000 jobs would be created “This is brilliant.” Governor Bird told PM Marape that oil palm, when made into biofuel, would save the country millions of kina. “If we produce enough palm oil, we don’t need to go out and buy fuel, as we can produce our own,” he said. “It can also bring inflation down as we are no longer importing inflation. “I’m excited because it provides us an escape plan from all these things that are affecting us.” PM Marape welcomed the proposal by Pacific Elite Palm Oil Group and the ideas of Governor Bird, who has helped to grown the vanilla and cocoa industries in East Sepik, and PNG. “As regards expanding nationwide, I invite you to come to Port Moresby, and I will run the investment figures past the super funds and Kumul Consolidated Holdings,” he told the company’s spokesperson Alexander Tho. “A family of investors can easily mobilise the money required for the project. “I also want you to have a stake in the business, and run it, as we cannot do it on our own, in like what Barrick is doing at Porgera Mine.”