Fuel suppliers represented by the Papua New Guinea Chamber of Resources & Energy (PNG CORE) said they would transition to market-based pricing effective May 15 following delays and uncertainty surrounding the government’s fuel subsidy reimbursement program.
In a statement, PNG CORE, which represents the country’s fuel importers and suppliers, acknowledged the government’s efforts to shield consumers from rising global fuel prices driven by geopolitical tensions and international supply disruptions through a fuel subsidy program.
The chamber said fuel prices in Papua New Guinea are regulated by the Independent Consumer and Competition Commission (ICCC) and are based on international market benchmarks, including Singapore fuel prices and applicable market premiums.
While the ICCC announced substantial fuel price increases effective April 8, the government intervened through a subsidy mechanism that allowed retail fuel prices to remain at March levels, PNG CORE said.
However, the industry body said the administration of the subsidy program had presented challenges for suppliers, including reimbursement delays and uncertainty over its continued implementation.
“The administration of the subsidy program has, however, presented challenges, including delays in reimbursement and some uncertainty regarding its ongoing implementation,” PNG CORE said.
According to the chamber, industry participants have been carrying subsidy costs in advance, while delays in reimbursements have contributed to uncertainty surrounding supply arrangements.
PNG CORE said fuel suppliers had “no alternative” but to transition to market-based pricing in line with the May Import Parity Price and applicable product premiums effective May 15.
The chamber said the change could affect the ability of some retail outlets and service stations to maintain continuous fuel supply.
PNG CORE emphasized that the issue was “not a supply availability issue,” but rather the financial pressure associated with supplying fuel below cost without timely reimbursement and certainty around the subsidy mechanism.
“Continuing to supply fuel materially below cost, without timely reimbursement and certainty, places significant pressure on suppliers and creates unacceptable risks to ongoing fuel security,” the statement said.
The chamber noted that fuel importation involves significant upfront financial commitments, including foreign exchange requirements secured months in advance.
PNG CORE said industry participants remained committed to working with the government toward a long-term solution that would provide greater certainty for consumers, suppliers and the state.
“The industry remains committed to supporting the people and government of Papua New Guinea,” the chamber said.
