INTEROIL PRICE HIKES SNOWBALL IN PNG ECONOMY

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PORT MORESBY, Papua New Guinea (PNG Post-Courier, Dec. 13) - The Government’s "surrender" to InterOil’s demands for fuel price increases is taking its toll nationwide.

Major airline and shipping companies yesterday flagged moves to increase fares, while the PNG chamber of Commerce is grappling with trucking companies operating the nation’s life-line highway, the Highlands Highway, threatening to stop operations tomorrow in a protest over fuel product increases.

Amid this fiasco, Petroleum and Energy Minister William Duma and Treasurer Patrick Pruaitch are reported to have issued directives to their departmental secretaries not to talk about this problem.

[PIR editor’s note: Canadian company InterOil late last month unilaterally raised the price of fuel products in the country, claiming it could not wait for Papua New Guinea government approval due to business losses. The company said it was losing up to US$3 million a month under the government’s pricing formula, and needed the government to agree to review the formula. InterOil fuel outlets in the capital raised their prices PGK3.109 per litre to PGK3.276 [US$4.34 to US$4.57 per gallon] of petrol.]

Air Niugini yesterday said it would be increasing its surcharges on domestic and international flights "in the next few days."

It will add another PGK35 [US$12] on domestic and PGK14.66 [US$5.43] on its international surcharges.

"Since 2006, which was the last time we imposed a surcharge on domestic fares, we have been absorbing fuel cost of approximately PGK15 million [US$5 million] and now we have come to a situation (huge fuel price increase) that is beyond our control," Air Niugini chief executive officer Wasantha Kumarasiri said yesterday.

Other airlines are considering similar moves.

"For international services, we have been consistently increasing our surcharges unlike other airlines in the region. We’d like not to increase airfares but this issue (InterOil saga) has pushed us to the limit," Kumarasiri said.

One of the country’s major shipping firms, Lutheran Shipping is considering increasing it’s fares to absorb the fuel price rise.

The church-operated firm’s operation manager Agua Nombri said submissions will be handed to its board in a meeting tomorrow for possible fare increases.

Helicopter firm, Islands Nationair said, "We might as well increase our fares but that would depend on our management’s consideration and its board."

Airlines PNG operations manager Mark Craig also raised the same sentiments.

"We are looking at that at the moment but there’s not much to say now," he said.

PNGCCI president Michael Mayberry called on the Government to bail the nation out of the fiasco by expediting the 30-year monopoly agreement with InterOil.

"If trucking companies are going to stop their operation, then the Government must do something now. We say renegotiate the deal now and jump on the alternatives or else the small people will be paying the biggest," Mr. Mayberry said.

Yesterday, officers of Treasury Secretary Simon Tosali’s office said their boss had been directed not to issue any statements regarding the problem, supposedly by Mr. Duma and Mr. Pruaitch.

It is understood PED secretary Rendle Rimua has also been told to be quiet over the issue.

"I showed him your email and he said he will not do that (respond to it)," an officer said.

A directive has been issued for him not to issue any statements regarding that issue," the officer added.

Pruaitch is said to be flying "overseas" this week.

Last month InterOil unilaterally increased its fuel product charges. It has defied Government controlled independent price monitoring agency, ICCC, to lower its fuel price saying it would only deal direct with the Government.

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