PNG Power, Papua New Guinea’s state-owned electricity distributor and generator, is in a death spiral. With more than $1.5 billion in debt, the company has become insolvent. The firm has suffered an ongoing death spiral for the last decade and a half, calling into question whether it can continue operating. In a letter sent to shareholder companies in June, PNG Power’s chair, Mal Lewis, officially acknowledged the company’s financial difficulties.
Under PNG Power’s management, PNG Power’s revenue increase 16 percent this year. Even with a recent $50 million investment to address chronic operational losses, the future is still very touch-and-go. Unsurprising given the substantial leadership shakeup at the company over the past year. During that time, it has had four different chief executives and two board chairmen pass through its doors. These have been very destabilizing changes, as the organization has worked to find its new footing.
Leadership Changes and Organizational Challenges
The frequent change of PNG Power’s executive leadership has resulted in an atmosphere of confusion and insecurity. Paul Bayly is the current chief executive. The seemingly revolving door at the top started to turn heads both inside and outside the agency. This uncertainty has had the effect of shaking investor confidence about the company’s long-term strategic vision.
PNG Power chair Mal Lewis said he was gravely concerned about the direction the company was taking. He stated, “The lack of funds means that we are merely digging a bigger black hole, and unless we take drastic action as soon as practicable, we will continue to fail.” His statements underscore the critical importance for strong management and fiscal accountability.
Internal audit of the company showed that PNG Power still has about 50 percent of PNG Power customers without access to mains power. This deeply concerning statistic illuminates the ongoing struggles of the utility provider, further compounded by financial and operational pressures.
Government Intervention and Privatization Plans
To address PNG Power’s grim state of affairs, the government of Papua New Guinea has recently proposed a move towards partial privatization. The Asian Development Bank has advised the government to sell at least a 49 percent stake in PNG Power. Unfortunately, this decision renders the investment less than attractive, compounded further by the company’s insolvency.
Dave Burbidge, an industry analyst, commented on the government’s decision: “Offering 49 percent of an insolvent company to an investor is probably not the greatest investment opportunity that I can think of.” This statement captures the great level of skepticism about the possibility of attracting investors amid continuing financial chaos.
Most recently, the national government intervened to revoke PNG Power’s plan to raise electricity tariffs. This action would have started bringing in some much-needed revenue for the billionaire-owned company. This reversal underscores continued challenges of actually running a state-owned enterprise. It suffers from financial viability and serious under financial pressure, and is largely reliant on government funding.
Employee Perspectives and Operational Realities
Employees from around PNG Power have come out in public testimony about their frustration over the company’s downward spiral. One employee lamented, “It is really sad to see [PNG Power] become what it is today,” indicating a sense of loss for what was once a thriving organization. Another employee remarked, “What used to be a thriving organization, it’s literally crumbled to its knees.”
Ian Chow, long-time city worker recently laid off as a result of operational cutbacks. He spoke about the impact of power failures on their work setting. “When the lights turn out, your machine’s going to halt,” he said. “But in an even three minutes, you’ll start a hellish inferno in the furnaces. That means all of those machines have to run 24/7!” His comments show how critical reliable power supply is for not just industrial operations but public safety.
Chow shared harrowing personal stories about loss that frequently accompanied these power changes. “But I lost a house to one of those power fluctuations. The house burned down. And I live literally back-to-back with the fire station, they couldn’t even save my house,” he said. Such accounts emphasize the human impact of PNG Power’s operational failures and highlight the urgent need for improvements in service delivery.
Commitment to Improvement
Good news for PNG Power Undeterred by these challenges, PNG Power’s leadership is continuing to push the company to be operationally efficient and transparent. Paul Bayly illustrated this commitment well when he stated, “We at PPL will rededicate ourselves to the belief of transparency and efficiency in operation. Our aim is simple and clear, to provide stable power to the people of PNG.” This commitment aims to reassure stakeholders that efforts are underway to address existing issues.
As PNG Power works its way out of its ongoing financial and operational crisis, stakeholders both local and abroad will be watching the situation with great concern. PNG Power’s prospects lie largely in the hands of government interventions and privatization attempts. Their effectiveness will decide if the beleaguered company can pull itself up out of its current malaise, or sink deeper.
