PNG Assets Have Potential To Earn, Says Bekker

by PNG Business News - June 01, 2021

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.”



Related Articles

Energy

PNG Business News - April 19, 2021

Bekker Says Contract Reviews Are Important

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.

Energy

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.

Energy

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.


Recent Articles

Tourism

PNG Business News - February 05, 2023

PNG Tourism Promotions Authority (TPA) and Bougainville TPA signs MOU

The Department of Commerce, Trade and Industry reached another milestone recently when it signed a Memorandum of Understanding (MoU) with the Papua New Guinea (PNG) Tourism and Promotions Authority (TPA). The MOU paves the way forward for both parties to continue bilateral partnership based on the understanding of tourism and promotions in Bougainville. The MOU was signed by the PNG TPA and the ABG Department of Commerce, Trade and Industry on the understanding relating to a joint partnership for the protection and preservation of tangible and intangible culture, development and promotion of tourism, contemporary culture and the arts and sustainable tourism in the autonomous region of Bougainville. ABG Vice President and Minister for Commerce Trade and Industry, Hon. Patrick Nisira (MHR) acknowledged the PNGTPA for its tremendous support so far since the first MoU was signed in 2016. The support has cemented many agreements already signed and has proven that Bougainville is truly a tourism destination that is worth investing time and money on. Mr. Nisira acknowledged the PNG TPA officers for their continuous negotiation with the Bougainville partners in pushing for significant income generating programmes to proceed in the region. “Standing here today it gives me great pleasure to witness and participate in this significant event that will go down in history books of this nation to be. We are here today to mark this important event on the signing of the MOU between my ministry and the department of national government and PNG Tourism Promotions Authority (PNG TPA).” This agreement adds value to our collective vision, ideas and consultations that the local tourism and cultural practitioners in both government and private sectors, he said. “As a way forward the agreement presents a realistic and workable approach to tourism development and its sustainability in the region.” “The MOU also sets out a framework for future development for tourism emphasizing on effective and determined and holistic approaches.” He said that the agreement generally outlines the pros and cons of tourism development in Bougainville and the framework and strategy of reaching the targeted goals and vision earmarked to reaching the overarching goals of economic building and development.         Deputy Chief Secretary for Operations Anthony Koiri approved and signed the MOU on behalf of the Bougainville Public Service Chief Secretary who is on sick leave at the moment. The signing was witnessed by the staff of the PNG Tourism Promotions Authority (PNGTPA), Department of Commerce, Trade and Industry, senior officers and a small crowd at the Bel Isi park.

Mining

PNG Business News - February 05, 2023

PNGEITI POSITION ON PORGERA MINE LEGACY TAX ISSUES

The PNGEITI Head of Secretariat Mr. Lucas Alkan says all parties to the Pogera Mine must adhere to rules governing the extractive industry, particularly when dealing with fiscal matters that must be administered and observed according to law. His comments follow a news article on The National citing the Internal Revenue Commission (IRC) that unmet tax obligations of the Pogera mine stood in the way to expedite the mine re-opening process.  Mr. Alkan says a workable and timely strategy that does not impinge on basic laws is a way forward.   Below is the full comment on this issue.  “The Papua New Guinea Extractive Industries Transparency Initiative (PNGEITI) commends The National newspaper for attempting to bring to light what appears to be the final outstanding issue (among others) in the Porgera Mine recommencement negotiations (more on this in footnote). We’ve noted from the reporting that taxation matters are legacy issues that appear to be standing in the way for the multi-million-kina Porgera Gold Mine to re-open. We have observed that the Government was on track to conclude negotiations and re-open the Mine by June last year, however this did not eventuate as anticipated. Attempts to reopening the Mine in the second half of last year was not feasible due to the national general elections and the formation of government. It appeared that all negotiations were concluded and a new Porgera Mining Agreement Framework was in place for the Mine to be re-opened in the first quarter of this year. Surprisingly, we learn that an old Porgera Tax liability dispute is standing in the way for the Mine to be re-opened. The early recommencement of the Mine, preferably within the first quarter of this year is critical for the country as the lead time required for mobilizing resources and the significant start-up capital needed to get the mine back into its full operating capacity would be a significant challenge. On this, we are aware there are also discussions going on with the developer and the government as to who is going to meet the startup cost but we understand Barrick Niugini Limited might meet the full cost of starting up the Mine and government would refund later but unsure as to whether this understanding has been reached or not yet. With regards to the current standoff, the EITI based on its global best practice principles is of the view that the existing law governing taxation matters must dictate or take precedence over any political intervention. We do not know the specifics of the on-going tax matter but understand that it is related to a tax dispute concerning the ‘old Porgera Mine’. If it is a significant amount of tax owed by Barrick to the Government based IRC’s audit in 2013 then it is a legal tax obligation that Barrick and its joint venture partners need to settle as required by law. We fail to understand as to why the old Porgera tax obligation/liability clause was inserted into the new Porgera Mining Framework Agreement making it a condition to resolve this legacy tax issue before reopening the Mine. If whatever was reported and commented by PM Marape recently is true then Barrick Niugini Limited and the State need to speed up the negotiation process and resolve this dispute immediately. Both parties should exercise good faith – Barrick Niugini Limited should not pull strings on this old Porgera tax liability matter and delay the re-opening of the Mine. It is understood the State (IRC) may not easily forego if there is a substantial amount of tax liability to be paid by the operator. Whatever the parties decide to do, they should resolve the tax liability issue through the due process of law but allow the Mine to re-open immediately under the New Porgera Framework Agreement. Political intervention is not recommended to resolve this dispute as this can undermine investor confidence, set bad precedence for the Government and create an uneven playing field for project developers. Barrack Niugini Limited should not put undue pressure on the State to resolve this matter politically in order to re-open the mine as it is not a best business practice. All stakeholders and the citizens have the right to know the specific issues or the nature of this tax liability issue between Barrick Niugini Limited (BNL) and the Internal Revenue Commission (IRC) as the continued delay in re-opening the Mine continues to have negative consequences on the economy.  The prolonged delay has not only resulted in significant revenue loss to the Government (including the provincial and local level governments in the impacted resource area) but also loss of employment, business opportunities and spin-off benefits to the landowners and the wider communities. The shutting down of the Mine 3 years ago has had significant negative consequences on the economy including the current foreign exchange shortage that has constrained business operations in the other sectors of the economy. Porgera Mine had been a good source of foreign exchange inflows and its continued shutdown will definitely not going to contribute to the 4% economic growth (that was largely to be driven by the extractive sector) projected for by the World Bank for last year and the real GDP growth of 4% projected for this year in the 2023 National Budget. PNGEITI commends the transparent negotiation process to date that took substantial amount of time and effort to ensure the interests of all parties were reflected in those agreements. We encourage all parties to continue to respect and observe the laws of the land in this dispute resolution process to address the tax liability issue. We believe that a win-win situation for both parties (Government and Barrick) is to re-open the mine first and work together to resolve the outstanding tax liability dispute later going forward.

Company

PNG Business News - February 02, 2023

Weir Minerals releases the 6th edition of the Warman® Slurry Pumping Handbook, the definitive resource for slurry pumps

Photo: The Warman Slurry Pumping Handbook is the definitive guide for most slurry pumping applications. Weir Minerals, manufacturer of the industry-leading Warman®  slurry pump, has released the latest edition of their coveted Warman® Slurry Pumping Handbook. The 6th edition, compiled by the most trusted name in slurry pumps, features detailed engineering data required for most slurry pumping applications. Drawing on decades of Weir Minerals’ inhouse expertise in innovative engineering and slurry pumping technology, the new handbook has updated reference material based on new learnings, improved understanding and technological developments within the mining industry. With customers always in mind, the handbook aims to empower engineers to achieve optimal performance from their Warman® slurry pumps. An increased global focus on the environment, energy consumption and water conservation will influence slurry pump design and considerations – making this latest handbook an essential tool for all current and future pump engineers. “Pumping slurry has many challenges and I’m excited to publish our latest handbook, packed with fundamental theory, application advice, standard practices and latest Warman learnings from the field; all aimed to help our customers, present and future, deliver with excellence.” Marcus Lane, Director, Slurry Pumping Technology Group Weir Minerals are continually striving to shape the next generation of smart, efficient and sustainable solutions with cutting-edge science and innovation. The comprehensive handbook includes over 140 pages of detailed information, including performance charts, impeller design, part configuration, assembly and slurry considerations – fully supported by accurate technical renders and specifications. “The high quality of the reference material in this essential resource reflects the leading status of the Warman slurry pumps. As the industry leader, we have a responsibility to develop our future engineers; we will make the latest version of the Warman Slurry Pumping Handbook available not only to our customers, but also to the leading schools worldwide, so they can learn from the best in the industry.” John McNulty, Vice President Global Engineering & Technology. As part of Weir Minerals’ commitment to investing in STEM education and developing the next generation of engineers, copies of this essential resource will be gifted to the leading mining and engineering educational facilities around the world, including the winner of the 2022 Warman Design & Build competition, Deakin University in Australia.

Join Papua New Guinea's

Business Community

Be the "First" to get our exclusive Digital Magazine & Weekly Newsletter.