Thursday, February 26, 2009

Power sector needs competition

Since last December, we’ve been having constant electricity blackouts, water cuts, etc, etc, and the people of Port Moresby – and the whole for Papua New Guinea for that matter – are getting absolutely fed up. We want – and demand – better services! The National newspaper, PNG’s leading daily newspaper, hit the nail on the head (or rather, coffin) with this head-hitting editorial yesterday, which basically sums up the frustration of all Papua New Guineas.


MOROBE Governor Luther Wenge is not alone in directing his anger at PNG Power Ltd.

The intermittent power outages throughout the country are getting worse.

The aggregate cost to the economy of lost production, damaged electronic goods and purchase and maintenance of back-up power supply units is substantial.

Put another way, if interruption to electricity supply were not as frequent as they are now, the economy would be far better off than it is at present. The cost of doing business would be lower.

It is unimaginable for us at The National to operate without a back-up generator.

Almost every other business in PNG has to have a generator. Investing in back-up power, in uninterrupted power supply (UPS) units, and in power guards might be optional in other places. In PNG, these items are an essential cost of doing business.

Last year, PNG Chamber of Commerce president David Conn told a breakfast gathering attended by Deputy Prime Minister Dr Puka Temu that chamber members were contemplating taking class action against the electricity supplier.

One member had lost K500, 000 worth of an electronic component of a press plant, which he had installed only one week earlier. It would be difficult to estimate just how much electrical and electronic equipment had been lost as a result of power outages or power surges.

Some of the power surges are so massive that they rip through power guards to blow up power boards of sensitive equipment.

Apart from loss of expensive equipment, loss of production as a result of interrupted work flow and loss of business are immeasurable.

One power surge in Waghi Valley last December took out every computer, television set and electronic gadget that was connected to a power socket. More than K100, 000 worth of equipment was lost.

Mr Conn said he had to operate out of hotel business centres for 26 weeks during power outages. “This is no way to conduct business anywhere,” he told that breakfast gathering.

It certainly isn’t.

Anywhere else, this farce would not be tolerated. The entire board and management would be sacked and a new team named only after a few months of intermittent power outages.

We have had to put up with this nonsense for years. And there appears to be no end to it.

Port Moresby’s electricity needs are supplied through three different sources.

The Rouna Hydro grid, which takes power through three different stations, supplies part of the capital’s power needs, while the Korean Hanjung diesel generated power at Kanudi supplies the balance. The Moitaka diesel generators are normally operated as back-up power but it is said they are now, more or less, operating full time.

Despite these different sources, power outages in Port Moresby are a fact of life.

It is not only Port Moresby that experiences blackouts. Lae, Madang and the Highlands, which are served by the Yonki Hydro facility, experience frequent power cuts too.

Some of the townships, such as Madang, have diesel power back-up, but even that does not seem to hold up when the Yonki power supply is interrupted.

What makes it doubly frustrating is that nobody, not board members, not management, not the public affairs office of PNG Power, is coming forward to explain what exactly is the cause of the power outages.

Any concentrated class action against PNG Power, were it contemplated and even taken up, stands a good chance of winning. This is because losses due to power outages are measurable. Power outages are so frequent that “accidents” as a defence in court would be laughable.

It is time the Government took serious stock of the power situation in the country. If PNG Power has capacity problems, perhaps it is time to bring in other power suppliers to help out.

We can suggest, for instance, that a tender should be let for expressions of interest for supply of power to towns outside the Yonki power grid such as Wewak, Vanimo, Kimbe, Kokopo, Rabaul, Lorengau, Kavieng and Buka. This will allow PNG Power to concentrate its resources on improving electricity supply in the capital and to those towns connected by the Yonki Hydro power scheme.

If PNG Power cannot improve services at that point, direct competition should be introduced in these centres as well.

Competition, as we have seen with the telephony business, is sure to wake PNG Power up.

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