Prime Minister James Marape has outlined a long-term plan to revive PNG Power Ltd through structural reforms, provincial partnerships and partial privatisation, describing the state-owned electricity utility as being in a “terminal” financial and operational condition.
Responding in Parliament to a question from West New Britain Governor Sasindran Muthuvel, Marape said the Government had been pursuing reforms since 2023 to make PNG Power financially sustainable, improve efficiency and expand reliable electricity access nationwide.
He said the utility’s problems reflected decades of inadequate maintenance, ageing infrastructure, rising operating costs and poor revenue collection.
“PNG Power is a very sick state-owned enterprise,” 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.”
Marape said independent reviews, including work by Deloitte, had confirmed the severity of PNG Power’s financial and operational problems.
He said routine maintenance had failed to keep pace with ageing assets built from the 1970s onwards, affecting generation, transmission, distribution and billing systems.
“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,” he said.
Structural reform
Marape said successive governments had also kept electricity tariffs largely unchanged for years to shield consumers, despite rising costs associated with supplying power.
“There has never really been a tariff increase over many years because we wanted to help our people,” he said.
“Only recently have we allowed a modest increase, but PNG Power continues to struggle under enormous debts and liabilities.”
Despite the utility’s financial position, the Government had invested almost K1.5 billion in critical electricity infrastructure, Marape said.
The investment included the 132-kilovolt transmission line linking Edevu to Port Moresby, which has enabled 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.
A key element of the reform programme would be the gradual transfer of loss-making “C centres” to capable provincial governments and other qualified operators under regulated arrangements, Marape said.
He stressed that the proposed changes should not be viewed simply as an asset sale, but as an effort to preserve electricity services, protect consumers and limit pressure for further 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.”
Provincial participation
Marape cited the operation of the Ok Tedi power subsidiary as an example of how provincial and resource-sector partnerships could support improved electricity services.
He said provinces with viable energy resources could also establish their own electricity businesses, either independently or in partnership with PNG Power.
“There is nothing wrong with provincial governments owning or partnering in power companies while PNG Power continues as a strategic partner,” he said.
Under the proposed model, more generation and distribution responsibilities could be managed at the provincial level, while PNG Power focuses on the major national grids serving Port Moresby, Lae and the Highlands, he said.
Marape said further details of the policy would be released before the Mining, Petroleum and Energy Conference later this year.
The Government's objective was to create a financially sustainable electricity sector capable of delivering reliable and affordable power while allowing provinces to participate directly in energy development, he said.
