Belden Namah on the state of PNG public enterprises

Speech by Deputy Prime Minister and Acting Minister for Public Enterprises,
Hon Belden Namah, MP, Member forVanimo-Green River,
to IPBC/Public Enterprise Chairmen and CEOs,
Grand Papua Hotel, Port Moresby, Thursday January 19 2012

Good evening chairmen and CEOs of IPBC and its public enterprises.

The IPBC board has met and has made some extremely important decisions that will have a beneficial impact on our citizens.

Those decisions, to be implemented by IPBC and individual Public Enterprises, will shape the provision of essential services to the people of Papua New Guinea, not just in the next 12 months but for a long time to come.

The O’Neill-Namah Government is determined to improve service delivery across the nation, and expects decisive action from IPBC and Public Enterprises.

The approval of Business Plans and Budgets for every one of IPBC’s Public Enterprises is the starting point.

Services delivered by these institutions include aviation, water and sewerage, motor vehicle insurance, harbors and ports, power supplies, postal services and telecommunications.

They are also responsible for managing State equity in the LNG project, providing financial support for economic and business development in rural areas, and for holding the state’s share in a number of private businesses such as BSP Limited.

These are critical roles and responsibilities that have not been fulfilled satisfactorily during the past 10 years.

Therefore my Government has made clear its intention to reform Public Enterprises through a program of continuous improvement.

As of now,they now have the finances and the plans to get on with the job.

There is a lot to do. For the past 10 years Public Enterprises have been allowed to float along without clear direction from the top and without clear plans and processes of their own.

The results of this lack of leadership, direction and decision-making have been revealed by IPBC audits, commissioned by the new Government, of all Public Enterprises.

We examined their finances, whether they are meeting their community service obligations or delivering services at an acceptable standard, and whether their corporate governance and accountability practices are satisfactory.

Some detailed investigations are still being carried out, but already it is obvious that there is room for significant improvement in different areas across all Public Enterprises.

Most importantly almost all Public Enterprises have failed to meet their minimum service standard requirements and have not focused on their customer requirements.

That is not good enough. The people expect much more from their taxes and the money they pay for services.

No Public Enterprise has paid a dividend to the National Government since 2007.

That is not good enough, either. It shows that efficient and responsible management practices, tried and tested in the commercial world, are not being followed.

Public enterprises must remember that they are owned by the people. The money invested in them comes from taxes, charges and fees paid by ordinary Papua New Guineans.

Some of the money invested in Public Enterprises must be returned to the people as a dividend.

The O’Neill-Namah Government this week decided to provide some free medical services to the public, and to rehabilitate the nation’s hospitals.

Some of the money to do this will come from Public Enterprise dividends. So I urge you this evening to redouble your efforts to make your businesses more efficient, and to pay dividends to the State.

Our investigations also show, worst of all, that Public Enterprises are ignoring due process.

We have seen that from some of the financial disasters of the last 10 years that are now being uncovered:

• The K3 billion-plus Abu Dhabi loan which we have had to top up by K900 million;
• The disappearance of K100 million of MVIL money, invested without proper authorisation, into a mystery bank account in rural Australia;
•  The loss of more than K50 million by IPBC and PNG Ports in failed investments;
• Unauthorised expenditure and borrowings, in the case of Telikom alone of K800 million;
•  The need to keep injecting millions and millions of kina a year into public enterprises, when that money should be spent on roads, education and health.

These types of failures over the past 10 years have contributed significantly to the inability of Public Enterprises to pay dividends.

The O’Neill-Namah Government has moved very quickly to start the reforms required to improve service delivery and to keep prices rises as low as possible.

The people of Papua New Guinea are the ultimate owners of all Public Enterprises, and the National Government on their behalf is charged with the responsibility of ensuring that they perform up to expectations.

All Public enterprises require rehabilitation and recapitalization, some more than others.

To do that we have given IPBC and its Public Enterprises new boards and in some cases new management.

We are already seeing some signs of improvement.

For example Eda Ranu has recently won two international awards, and has been given full approval by the IPBC board for its business plan. Air Niugini likewise has won full business plan approval.

There are other signs of efficiency gains within other Public Enterprises, and most importantly some innovative activities.

So there is some light at the end of the tunnel. The O’Neill-Namah Government will continue to monitor the performance of Public Enterprises over the coming years, and take appropriate action to encourage this sort of continuous improvement.

It is IPBC’s role to make sure that the new Government’s reforms succeed, and that the nation benefits from professionally managed, competent and efficient Public Enterprises.

I am confident that IPBC and its Public Enterprises now have the skills, the financial resources and the commitment to make big improvements to service delivery in the coming years.

Thank you.