ADELAIDE - While National Capital District governor Powes Parkop may be right in his analysis of the problem of Port Moresby's unreliable electricity supply, the solution he is proposing is not necessarily the best.
If by privatisation Parkop means selling the power assets lock, stock and barrel to a private company, then I believe he is advocating the wrong solution.
Doing that will merely ensure that a foreign company becomes the monopoly provider of a vital essential service.
Experience here in Australia and elsewhere in the world suggests this will be a mistake which merely opens Papua New Guinea and the citizens of Port Moresby open to exploitation by 'price gouging'.
The better option may be to split PNG Power Ltd into several parts.
These would probably comprise a single privately owned generator company (with the government as a major but not majority shareholder), a private transmission company (responsible for high voltage lines going to sub-stations), and a government owned but privately managed distribution company which retains ownership of the poles and wires that run to homes and businesses.
The government can invite prospective retailers of electricity to set up in Port Moresby and offer customers their services at the best rates they can.
These rates will depend upon the commercial arrangements they can negotiate with both the generation and transmission companies, which would probably involve a sliding scale of costs dependent upon the volume of electricity being sold.
The distribution company, being a government owned monopoly, would make the same charges against each and every retailer thus ensuring a level playing field in relation to distribution.
What both a generator and a transmission company want is a steady and predictable load on their systems, so the volume and timing of electricity use becomes a key commercial issue.
Consequently, this ensures that the retailers which succeed in attracting the most customers, and have the most efficient and cost effective operations, can do competitive volume based deals for the purchase of wholesale electricity which would be reflected in both their offer to customers and their profit margin.
The important thing in this is that the government continues to own the poles and wires, meaning that it has commercial leverage across the whole system.
Experience shows that this gives the government an important means of influencing how, when and where electricity is distributed.
Over this whole industry the government can set up a national electricity marketing authority whose task is to ensure that the system functions smoothly, with the various parts working harmoniously.
While this sounds complex (and is) there are models of this system available for study in Australia and, although they are by no means perfect, they do appear to work pretty well in creating a market based but quite tightly regulated means of providing an essential service.
In any event, privatisation of such an essential service should not be turned into a private monopoly of the type apparently being proposed by Governor Parkop.
If this happens, it will be a case of jumping out of the frying pan and into the fire.
Monopolies are always exploited to price gouge customers because the temptation to do so is overwhelming. Even Adam Smith warned against them.
So, as the Romans would have said, caveat emptor (let the buyer beware) when setting up any new electricity supply system.