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PNG Ports Regulatory Contract Released



The Independent Consumer and Competition Commission (ICCC) has formally released the final PNG ports regulatory contract that will bind PNG Ports Corporation Limited and the ICCC from 2020 to 2024.


ICCC Commissioner and Chief Executive Officer, Paulus Ain said that this final regulatory contract is the third regulatory contract issued to PNG Ports since the establishment of its regulatory framework in 2002.


“This regulatory contract expired on December 31, 2019. Pursuant to Section 36 of the ICCC Act, the ICCC is required to develop a new regulatory contract which will supersede the 2015 – 2019 regulatory contract.”


“The ICCC therefore, undertook a review to determine a new price path necessary to be applied on the regulated services for the next five-year regulatory period (January 1, 2020 to December 31, 2024).”


“As part of the public consultation process, the ICCC had followed all due processes in ensuring that industry stakeholders were consulted prior to making its final determinations.”


Commissioner Ain also added that during the course of the review, the ICCC has addressed many issues which were critical to its final decision.


Many of the issues are related to the technical requirements into establishing the final decision.


Under the new regulatory contract, the ICCC has decided to apply the following price changes:


  • Positive 2.94 per cent per annum plus CPI for Tier 1 ports (Tier 1 ports include: Motukea, Lae, Kimbe, and Vanimo); and nNegative 8.47 per cent per annum plus CPI for Tier 2 ports (Tier 2 ports include: Kavieng, Madang, Rabaul, Alotau, Oro Bay, Daru, Buka, Kieta, Aitape and Lorengau). The fundamental elements resulting in this price decision above include the ICCC’s decision to:

  • Provide PNG Ports with a regulated operating expenditure allowance of K381.3 million over the 2020 to 2024 regulatory period.

  • Provide PNG Ports with a prudent and efficient capital expenditure allowance of K107.725 million over the 2020 to 2024 regulatory period.

  • Adopt a real pre-tax weighted average cost of capital of 13.67 per cent.

  • Allow PNG Ports to earn a total revenue of K1.02 billion over the next regulatory period.


The new regulatory arrangement will see a price reduction for this regulatory period. In aggregate, the tariffs for essential ports services under the new regulatory contract have been reduced by 7.01 per cent according to ICCC.


“This means that in general, there is a price drop for these essential port services. Consumers will now benefit from this price reduction because they will be paying less than what they would have paid had the price multiplier of 0.74 per cent under the old contract was still maintained,” it stated. Continue reading at https://postcourier.com.pg/png-ports-regulatory-contract-released/ | Post Courier