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Invest or die: PNG Power needs to learn some lessons

PowerlinesFRANCIS NII

ENDLESS power blackouts in Simbu and elsewhere in Papua New Guinea indicate that PNG Power is inefficient in the generation, transmission and distribution of electricity.

It reminds me of the worst-case corporate coup ever in the history of PNG when Caribbean-based communications giant Digicel almost crippled the mobile phone business of home-grown rival BMobile in 2007-08.

BMobile, carrying the flag of Telikom PNG, had a golden opportunity to invest in rural areas during its monopoly period but failed miserably.

No member of parliament, particularly the minister for communications, and no state-owned enterprise back then had perceived that mobile phone services could become an infinite gold mine after an initial aggressive investment.

BMobile limited its focus to urban centers and charged exorbitant prices for its Nokia and Motorola phones.

Simcards alone went as high as K50 in some shops while the lowest was K20.

When Digicel came, it targeted rural areas where 80% of the population lives.

It imported the cheapest mobile phones, selling them for as little as K20,and flooded the market. Simcards cost only K10.

There was mobile-phone-rush and anything that Digicel marketed sold like hot cakes.

The company embarked on huge capital investment, erecting communications towers across the country wherever people lived and including many areas which BMobile had neglected or considered uneconomical.

In remote Karimui, for example, where there is no road link, Digicel choppered in the towers in sections, something that BMobile hadn’t thought to do.

The investment paid off in no time. There was a mass exodus of mobile phone users from BMobile to Digicel.

Most workers in the urban areas originate from rural areas and Digicel readily facilitated their communication with relatives. BMobile would have gone out of business if the government hadn’t bailed it out.

Today, in almost all rural areas, you will hardly hear of BMobile. Digicel is everywhere including the most remotest places.

When BMobile awoke from its investment slumber, it was too late. Digicel was way ahead.

I don’t know how BMobile is faring these days. Someone tell me.

The Digicel-BMobile experience should be a case study for state-owned electricity company PNG Power.

PNG Power, like its predecessor Elcom, currently enjoys a monopoly in the electricity sector. It is solely responsible for power generation, transmission, distribution and retailing.

While it enjoys the great advantage of monopoly, PNG Power needs to take a more emphatic approach to investment by harnessing the country’s abundant water resources to build super dams that will power the entire nation and north Queensland as well while it’s in the mood.

I have read that Cairns is growing rapidly and its future demand for electricity looks like surpassing current supply capacity. With appropriate investment now, PNG Power might be in a better position to supply power not just to PNG but also to the north of Australia.

PNG Power needs to get moving and strategically position itself to take advantage of this development.

The government and companies who have a vested interest in the energy sector are mooting the privatisation of PNG Power or allowing in competition like in mobile phone communications.

If that eventuates and a multinational giant is allowed to invest in the electricity sector, PNG Power will not stand the chance of competing against it with its current appalling service.

PNG Power must get its act together and take advantage of the monopoly it currently enjoys or else it might find itself crawling on its knees when competition is allowed.

From down there, it may find it extremely hard to stand up again.

Comments

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John K Kamasua

Good one Francis. The mobile phone experience with Bmobile should be a very good lesson for other SOEs like PNG Power and even Air Niugini.

In the early days, as you rightly point out, Bmobile was very comfortable and went into a slumber. It paid very little attention to the rural areas and its services were limited and very expensive.

Talk about foresight.

Bmobile has made some progress in reclaiming customer base. But how far I cannot tell.

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