PNG Power Ltd. Announces Rate Hike For New Year

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CEO says higher tariffs due to fluctuating fuel prices

PORT MORESBY, Papua New Guinea (The National, Jan. 2, 2014) – People will pay more for the electricity they use from this month, PNG Power Ltd (PPL) says.

Chief executive officer John Tangit said electricity tariffs went up by 5.9% from yesterday, January 1.

In a statement, he said the increase had been approved by the Independent Consumer and Competition Commission.

"This is an annual review in electricity tariffs specifically based on the fluctuations in fuel prices, the consumer price index, exchange rates of the kina and Australian dollar, exchange rate of the US dollar over the 12 months from October 2012 to September 2013," he said.

"PPL remains heavily dependent on oil to maintain (power) supply, especially in the smaller isolated centres.

"This is the major operational cost for the company with variations in price having a major effect on PPL’s ability to invest in the necessary infrastructure to improve in infrastructure."

On the Australian dollar exchange rate, he said the company imported most of its new equipment, spare parts and specialist assistance from Australia.

"So these variables (consumer price index and exchange rate) are contributing factors to PPL’s investment strategy," he said.

The Kanudi power station, which supplies Port Moresby, "is a significant operational cost with the supply contract established in US dollars."

Consumers pay 86 toea [US$0.33] more for domestic Easipay use.

The old rate was 0.6968 toea [US$0.27]/kwh. The new rate is 0.7379 toea [US$0.29]/kwh for a unit of power.

For example, 19 units cost K14.56 [US$5.64] (including VAT) at the old rate.

"It cost K15.42 [US$5.98] at the new rate.

"The minimum amount of K15 for Easipay remains the same.

"It means that consumers who use less than K15 worth of electricity will still have to pay K15."

Tangit said the company had an obligation to provide a reliable and cost effective service and its only source of revenue was from the tariffs set for electricity services.

"PNG Power does not rely on the Government’s budgetary system.

"The tariffs enable (the company) to earn an acceptable rate of return on assets to fund new capital works and provide electricity to the majority of the population," he said.

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