Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...

undertaken independently of both industry and of the ICCC. The ICCC’s role in prosecuting anti-competitive
behaviour often puts ICCC in legal conflict with business, and this could in the future lead the ICCC to
recommend policies or regulations that unfairly undermine the rights of business. To avoid this situation,
under the MTDP the responsibility for reviewing and recommending competition policy reform will be vested
in a body that is independent of both industry and of the ICCC. To this end, a Competition for Development
Branch will be established in the Department of National Planning and Monitoring to advise on how to
achieve the ultimate goal of the PNGDSP through competition and consumer protection policy.
2.9 State owned enterp rise reform
State owned enterprise policy framework
The PNGDSP outlines the broad policy framework to position State owned enterprises (SOEs) as crucial
institutions for PNG’s development into a middle income country by 2030. The key ingredients are as follows.
· Public enterprises will play a pivotal role in service delivery and infrastructure development, although
privatisation may be further considered as a means for improving efficiency and effectiveness.
· Private sector competition will impose an ongoing obligation for SOEs to operate efficiently using
cutting edge industry technology. This is because the performance of SOEs can be measured against
their private sector competitors. The substantial benefits of this approach have already been proven
with private sector competition leading to the revolution of the telecommunications industry. As a
result, the efficiency and effectiveness of Telikom have improved substantially.
· Through partnership with the private sector, SOEs can gain access to the skills, technology and
finance that is needed to improve performance and expand infrastructure.
· In areas where service delivery is not commercial, the Government will subsidise investments by
funding SOEs to fulfil Community Service Obligations.
State owned enterprises in 2011-2015
Since 2002, the main SOEs have been placed under the control of the Independent Public Business
Corporation. This institutional arrangement will continue as it has been effective for better organising SOEs,
improving their accountability and governance, and raising their standard of performance.
Air Niugini has faced much tougher competition on international air routes since 2008, resulting in
significantly lower airfares. But in the face of competition, Air Niugini has become stronger, recording a
healthy profit in 2009 in a year when most international airlines suffered heavy losses, while still managing to
lower airfares and improve service. As outlined in section 2.8, the success of competition will be continued by
welcoming new carriers on international routes, while encouraging Air Niugini to expand its reach in the Asia-
Pacific region. Barriers to domestic competition will also be broken down to ensure that Papua New Guineans
receive a highly competitive and low cost service.
The PNGDSP outlines a broad plan for a national grid with an electricity transmission super-corridor. The
investments required in 2011-2015 and beyond for electricity generation, transmission and distribution
infrastructure will require financial resources beyond the capacity of PNG Power Ltd. Partnership with the
private sector will be needed for PNG Power to have the desired financial capacity. In areas where building
transmission and distribution lines are less commercial, partnership with donors may be needed.
Alternatively, dividends may be reinvested for this purpose. The scope for competition in electricity generation
is high, so private sector investment under competitive conditions will be relied upon to build generation
capacity. For PNG Power, the bulk of its financial capacity for investment should be directed towards building
the grid where competition is less feasible.
The rapid improvement in the performance of Telikom since the introduction of competition will need to
continue. Over the period 2011-2015, Telikom will be required to focus on the process of building and
extending a reliable and technologically advanced internet service. This will need to track closely the
extension of electricity services into rural areas. Through B-Mobile – the 50 per cent Telikom owned mobile
phone company established in 2008 – Telikom will need to pay attention to ensuring that those rural areas
that are yet to receive mobile phone services get connected. This may require reinvesting dividends in cases
where building the infrastructure is not commercial.
PNG Ports Corporation Ltd operates 16 of the 21 major ports in PNG. Implementation of the PNGDSP will
result in rapid growth in the demand for port services driven by rapid and broad based economic growth. It is
estimated in the PNGDSP that throughput will nearly double by 2015 and increase five-fold by 2030. As such,
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