PNG state-owned enterprises slammed for ‘poor quality, high cost’ to nation

PNG state-owned enterprises slammed for ‘poor quality, high cost’ to nation:

Air Niugini … one of the state-owned enterprises in Papua New Guinea criticised in the new report. Image: PMC archive

Pacific Scoop:

Report – By Malum Nalu in Port Moresby
A new study released by the Asian Development Bank has painted a damning picture of state-owned enterprises in Papua New Guinea, saying they have become a liability rather than an asset.
The report highlighted that PNG SOEs absorbed an estimated K700 million in direct government transfers during the financial years from 2002-09, against which they generated a net profit of K500 million – of which only K23 million was paid to Treasury in the form of a dividend.
The PNG SOEs are Air Niugini, bemobile, Motor Vehicle Insurance Ltd (MVIL), National Development Bank (NDB), Eda Ranu, PNG Ports Corporation, PNG Post Ltd, PNG Power Ltd, Telikom PNG Ltd, and Water PNG.
The bank study, “Finding balance, benchmarking the performance of state-owned enterprises in Papua New Guinea”, assessed the impact of the SOEs on the PNG economy as well as those of five other Pacific countries – Fiji, Marshall Islands, Samoa, Solomon Islands and Tonga.
The findings of the study revealed that while PNG’s SOEs had produced net profits that were in the upper range of the SOE portfolios in the six Pacific countries benchmarked, they had done so at a substantial cost to the government in terms of ongoing fiscal transfers and other subsidies.
Painfully, this is at a cost to the poorer segments of the population due to the generally poor quality of the services provided and limited range of delivery.
“By absorbing large amounts of scare capital on which the (SOEs) provide very low returns, crowding out the private sector, and diverting public funds that could otherwise be invested in such high-yielding social sectors such as health and education, SOEs act as a drag on economic growth,” the report says.
Lack of accountability

“A chronic lack of accountability has allowed the SOE portfolio to be governed extra legally over most of 2002-11.
“Indeed, of all of the countries participating in this benchmarking study, PNG has demonstrated the lowest level of transparency in the management of its SOE portfolio over the past decade.
“This has begun to change with a notable improvement in disclosure and oversight since late last year.”
Minister for Public Enterprises and State Investments Ben Micah and IPBC managing director Thomas Abe both described SOEs as liabilities to the government at last week’s PNG Advantage investment conference in Port Moresby.
Malum Nalu is a senior journalist with The National daily newspaper and publishes his own PNG blog.