The Mounting Debt Crisis Threatening the Power Sector in Papua New Guinea

By: PNG Business News May 04, 2023

Photo: Chairman David Burbidge 

According to the Independent Power Producers of Papua New Guinea, the debts of PNG Power Limited (PPL) to independent power producers (IPPs) have exceeded K500 million. IPPs are the primary source of electricity for PPL, and the accumulation of arrears has reached a critical level where it cannot continue without severe consequences, including the potential collapse of the power sector in the country.

Chairman David Burbidge expressed concern about the mounting debt, saying, "It remains of concern that PNG Power still has significant arrears in payments to independent power producers (IPPs) who provide the majority of electricity to PNG Power and its customers. This amount exceeds half a billion kina, and this situation cannot continue without significant consequences, which may include a total collapse of the power sector as PNG Power’s creditors see no option but to pursue legal remedies for non-payment of their mounting debts."

Mr Burbidge emphasized that the situation is unsustainable and could have dire consequences if not addressed promptly.

Mr Rio Fiocco, the President of the Port Moresby Chamber of Commerce and Industry, also commented on the issue, saying, "In Moresby, we have been experiencing power blackouts fairly regularly lately. But compared to other centres, we are actually doing well, very well, because in other towns such as Wewak, Vanimo, Kavieng and others, they have blackouts that sometimes last the whole day. That's because for whatever reasons PPL is not supplying diesel for the generators."

Mr Fiocco noted that many businesses have resorted to using backup generators to cope with the unreliable power supply. However, this is not a sustainable solution, and the situation calls for urgent action from all stakeholders to address the mounting debts and ensure a reliable and consistent supply of electricity in the country.

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