The blackout curse that magic cannot fix
13 October 2022
I call it a curse for many reasons but I won't discuss them all. It's a curse because it really doesn't matter which government is in place or which CEO is appointed, no one - and I mean no one - has really addressed the blackout curse
JOHN KURI
PORT MORESBY - What is it? Is it some kind of magic or witchcraft? Is it a spell or incantation?
This is Papua New Guinea - a place where black power still rules the lives of citizens in the urban centres and rural areas.
Is it a disease like the Black Death in Europe of the Middle Ages? Or is it some epidemic like Covid-19?
It could be a black hole, like the celestial body above, where even light cannot escape.
This blackout curse behaves like a black hole.
Whatever it is, it seems PNG cannot get rid of it.
The blackout curse is immune to whoever takes the top post whether it be the boss of PNG Power or the prime minister himself.
It has outlived all times and threatens to continue unless something drastic is done.
But what can be done?
It has continued to prevail under different circumstances and doesn't care who is dealing with it.
If you think your CV will save you, think again as many a CEO might want to blot out that period from their memory (and that of the computer).
It would be great if there was a magic spell to rid PNG of the curse, given that PNG is a country that still practices witchcraft and sorcery.
People in PNG always summon a shaman when things are not going right like looking for a job, healing a sickness, protection from evil spirits, good luck in finding a bride and much, much more.
I wonder why no one has thought about summoning a magician to end all the blackouts…. Oops, my bad. I forgot, PNG Power doesn't operate on magic.
The curse has nothing to do with magic. It just behaves like it does. It's been quite elusive dating back to ELCOM days. The names changed but the curse remains.
The same curse laughing at everything thrown at it. Its occurrence happens on a daily basis to the point that it's accepted.
It's not a point to argue with, just accept it because the blackout curse has outlived many and will continue to do so.
I haven't lived in any other city in PNG as long as I have in Port Moresby.
While the capital city tries to find its way through modernisation, some issues keep showing their ugly head. Some can be controlled by the authorities while others just evolve because of the changing circumstances.
While increasing in population, unemployment, law and order seem to be ever present issues the PNG Power blackout curse remains.
I call it a curse for many reasons but I won't discuss them all. It's a curse because it really doesn't matter which government is in place or which CEO is appointed, no one - and I mean no one - has really addressed the blackout curse.
I'm not an energy specialist, but I believe that all the factors that contribute to the blackout curse are factors that can be controlled by PNG Power.
If I’m mistaken then please somebody explain. If the dam is not big enough, make it bigger. If the landowners are complaining, pay them. If the diesel generators are faulty, fix them or buy new ones. What is the real issue here?
I'm not asking this question as someone who can provide solutions, but someone who is part of a growing population that needs an explanation.
Why are we accepting this substandard service year after year, year in and year out?
It is simple. When there is a blackout...PNG Power loses money.
But the costs still remain the same. We don't see workers being laid off due to a blackout. They still get paid.
So while PNG Power loses money during blackouts, the expenses keep piling up.
There must be a simple explanation to the blackout curse or it must be so complicated.
Despite having all the technical, expertise available from our development partners, the issue has not been addressed.
Development needs energy. Every time there is a black out the government of PNG loses money and this cost has to be settled by the population.
Money that could have been used to develop a road or maintain a hospital is used to fund the loss. So not only is PNG Power and the state making a loss, the nation's development efforts are impeded.
Someone in the hierarchy needs to tell the state what it will cost to eradicate blackouts and formulate how to go about addressing it.
Sometimes generators may not be working and departments send their staff home early. For them it's good; for the state it's bad. It means loss in productivity. But the people still get paid nonetheless.
Maybe privatisation of PNG Power is the logical step...what do you think?
Whatever it is PNG, we have to stop accepting that blackouts are a normal part of life.
Ian, I really appreciated your technical in-depth look into this issue. I hope such thinking is present with the Executive Management of PNG Power and also most importantly , political will to support it..
Posted by: John Kuri | 13 October 2022 at 03:58 PM
The issues at PNG Power are both simple and complex.
The simple answers lie in standard stuff - technical, financial and human competency.
The complexity lies in the human aspect of its current management as a state owned entity and the consequent inability to enact change due to the political stress that this tie creates.
If you don't produce accurate or timely financial statements, how can you possibly manage PNG Power as a large business?
Evidence of this is seen in the recurring annual financial losses the company makes and the inability to produce a profit despite having a captive retail market and some of the highest prices for electricity in the world - the burden of which is placed on PNG taxpayers and businesses.
If you don't invest in intelligent maintenance, you're going to suffer ongoing operational difficulties and fail to meet any revenue targets you set (there are far too many problems with blackouts, brownouts and poor system redundancy in general).
And if you need money to pay for studies of and investment in the supply and distribution system, then without a profitable business, you're reliant on support from PNG government finances that don't have capacity or motivation to support you.
(The evidence of this is that the major portion of investment support in electrical infrastructure comes from Japanese and Australian aid support or tax deductible projects built and financed by foreign private investors.)
In talking about the human competency aspect of PNG Power, we have to make allowance for the fact that it is effectively a monopoly with huge social impact potential as well as a state-owned enterprise.
Therein lies the main problem. Jobs and longevity at PNG Power are driven by politics and this means that no matter how capable or clever the board or the staff, change cannot happen unless driven by effective political change management - something that we see is exceptionally difficult in the incessant wheeling and dealing of PNG politics.
What to do and what can be effected? Well, the PNG solution is not the Australian solution. The topography of the land, the distribution of demand, the availability of investment capital and operational risk are all quite different.
A system needs to be set up that is properly and holistically customised to PNG, not extended from the existing, dysfunctional, centralised, PNG Power platform!
(1) Decentralise and support off-grid electrification at a commercial scale. Legislate swiftly (not in 10 or 20 years as PNG politics is prone to do) and let the market take action in off-grid power supply and supply power as the market needs.
(2) Minimise the amount of regulatory/compliance process steps that commercial electricity suppliers need to jump through. This first step would be a major economic facilitator and reach those who currently need and have nothing outwith the main grid.
(3) Especially consider the use of major mining operations as a base for regional power supply, both in oil & gas and metals.
There's a great opportunity emerging with the new wave of major resource projects in PNG (Papua LNG, P'nyang, Wafi-Golpu and potentially Frieda River) and I hope it's not too late.
(4) As far as PNG Power is concerned, the financial yoke that ties the company into GoPNG needs to be broken so it can create a commercial business. Currently the company's credit-worthiness is 'junk' (non-investment grade), not because of its earning potential, but because any company financial guarantee by the government (which has the prime junk credit rating) is worthless to commercial lenders and comes with political risk.
This means PNG Power is dependent on the largesse of aid agencies, 3rd party NGO's and 3rd party government grants (like Australia and Japan) in order to make large scale investment decisions.
Apart from the dependency culture this creates in PNG Power, these sources of finance take a long time to procure and are generally conditional, limiting their applicability to develop PNG Power.
As I see it there's really no choice, if PNG Power wants to improve its current operations, other than to bring in a private partner with interest to generate a new revenue source. Ideally the new partner has existing experience in generation and distribution and certainly with access to new capital.
Go to full or partial privatisation, with choice of the external partner by GoPNG. Assisted by competent advisory agencies with and through a transparent and public appointment process.
Change management is difficult but essential. The adage 'keep on doing the same old and you'll keep on getting the same old' rings true here as everywhere else.
Posted by: Ian | 13 October 2022 at 12:02 PM