Prime Minister James Marape has outlined plans to partially privatize and restructure PNG Power Ltd, saying the state-owned electricity provider is in a “terminal” financial and operational condition after decades of underinvestment, ageing infrastructure and poor revenue collection.
Responding in Parliament yesterday to a question from West New Britain Governor Sasindran Muthuvel, PM Marape said the Government had been pursuing reforms since 2023 to make PNG Power financially sustainable, improve efficiency and expand reliable electricity access across the country.
He said the reforms would include partnerships with provincial governments and qualified private operators, particularly to take over loss-making parts of the business while PNG Power focuses on major national electricity grids.
“PNG Power is a very sick state-owned enterprise,” PM 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 stage four. That is the honest assessment of the company that supplies power to our nation.”
PM Marape said independent reviews, including work undertaken by Deloitte, had confirmed the seriousness of PNG Power’s financial and operational problems.
He said decades of inadequate maintenance had left ageing assets built from the 1970s, 1980s and 1990s 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.
PM Marape said successive governments had also avoided significant electricity tariff increases to protect consumers, despite rising costs of providing electricity.
“There has never really been a tariff increase over many years because we wanted to help our people. Only recently have we allowed a modest increase, but PNG Power continues to struggle under enormous debts and liabilities,” he said.
Despite the challenges, PM Marape said the Government had invested almost K1.5 billion in critical electricity infrastructure.
This included the new 132-kilovolt transmission line linking Edevu to Port Moresby, which has enabled an additional 54 megawatts of electricity 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.
PM Marape said a key part of the reform would be the gradual transfer of loss-making “C centres” to capable provincial governments and other qualified operators under regulated arrangements.
He stressed that the process would not simply involve selling off PNG Power assets but would seek to protect consumers, maintain services and prevent excessive increases in electricity tariffs.
“We are looking at provinces that have the capacity to operate their own power companies under license 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.”
PM Marape pointed to the successful operation of the Ok Tedi power subsidiary as an example of how provincial and resource-sector partnerships could help improve electricity services in other regions.
He said provinces with viable energy resources would also have opportunities to develop their own electricity businesses.
“There is nothing wrong with provincial governments owning or partnering in power companies while PNG Power continues as a strategic partner,” he said.
“This reform will allow more power generation and distribution responsibilities to be managed closer to the people while PNG Power concentrates on maintaining the major national grids serving Port Moresby, Lae and the Highlands.”
PM Marape said further policy details would be released before the Mining, Petroleum and Energy Conference later this year.
“Our objective is to build a stronger, financially sustainable electricity sector that delivers reliable and affordable power to Papua New Guineans while creating opportunities for provinces to participate directly in energy development,” he said.