How PM O’Neill is getting ready to give PNG Power to the Israelis
Another purpose of the O’Neill-Micah declaration of a State of Emergency in the power sector is to gift-wrap PNG Power Limited for LR Group of Israel, which was secretly behind the Prime Minister’s illegal financial transaction to buy two diesel-powered generators for PPL.
The K104 million transaction is the straw that broke the camel’s back for PPL, and sent it into bankruptcy. PPL, like all other SOEs, has been destroyed by the Prime Minister’s cronies and puppets on the boards and management of IPBC and the other State Institutions. They have ripped so much money out of SOEs that not only can they not deliver services, they are now barely able to operate at all.
PPL is a case in point, and the fact that the state of emergency is another smokescreen to hide the Prime Minister’s hands is evidenced by the fact that unpaid power bills - especially by other State Owned Enterprises - can be recovered through other means.
For example, they can be recovered, as in the past and now acknowledged by Minister Ben Micah, by Treasury directly debiting the rogue State-Owned Enterprise and paying the amounts recovered directly to the creditor enterprise. This alone demonstrates that the O’Neill-Micah Regime has ulterior motives by declaring an emergency.
The declaration itself is also illegal. As the Member for Sinasina Yongomugl said, under the Constitution a State of Emergency only applies in times of great national crisis or emergency due to war or natural disasters. Kerenge Kua, a leading lawyer before he became MP, said the declaration was unconstitutional and illegal and he asked whether it was really just an excuse for the privatization of PNG Power in favour of LR Group of Israel.
LR Group and the Prime Minister are in this scandal together for mutual benefit, and they knew from the start it would destroy PNG Power. Analyses of all SOEs conducted for the PM just after he took power showed virtually all were bankrupt. PNG Power had serious cash flow problems and was constantly having to cut back on capital expenditure to repay debt and keep operating. LR Group and the Prime Minister knew this when they did their secret and illegal K104 million deal to buy the two gensets.
LR itself, in one of its reports on PNG Power written as part of its secret plan to take over the company, also identified serious financial problems. These reports were all made available to Minister Micah and the Prime Minister.
The report, Financial Evaluation& Review of Privatization Options for the Port Moresby Power System, states that although PNG Power was notionally profitable, it had overwhelming liquidity problems, with cash on hand for one extended three-year period “being less than funding needs for one (1) day of operations”. LR concluded that PNG Power would face “additional financial challenges in the near future.”
“PPL's liquidity situation needs immediate action. The situation can be improved by a number of immediate and mid-term actions. These include: an immediate stop of all large investment projects, where contracts have not been signed as of today, the definition of a minimum cash-on-hand position equal to approx. 30 M Kina as guidance for all future investment commitments.”
So knowing that PNG Power would be likely to be bankrupted by even more unsustainable debt and huge additional diesel costs, LR Group and Prime Minister O’Neill went ahead with their illegal purchase arrangements (arrangements that provided a benefit of about K10 million to LR Group because of the non-commercial interest rates improperly made available by the PM through the Bank of Papua New Guinea).
At no point was it suggested by LR that the solution to PPL’s problems was new diesel gensets - they are not cost-effective and do not address the core challenges of providing cheap reliable base load from hydro and getting power from turbines to customers without losing too much on the way.
The focus was therefore on remedial action to fix up hydro power at Rouna, putting in place a proper maintenance program for generation assets, sorting out the transmission system and reducing technical losses.
LR’s key recommendation in relation to the Port Moresby system was to privatise PNG Power (obviously to be owned by LR Group) with the following aims:
“Improving the reliability of the generation, transmission & distribution park, i.e. the supply of electricity within the POM/NCD region.
“Freeing of management capacity to focus on other areas that need urgent attention, such as accounting and controlling or operations in other regions.
“Reduction of production cost.”
It can only be concluded from these facts that that was an agreement between the Prime Minister, Ben Micah and LR Group to bring PNG Power to its knees, and for LR Group to ride to the rescue.
LR Group’s report also exposes as a lie the Micah-O’Neill claim that unpaid bills are the cause of PNG Power’s woes. Debts are only one part of the problem. LR found that other equally important problems were the company’s borrowing practises, poor management and lack of corporate capacity, lack of strategic direction, inadequate maintenance, failure to run generators at nameplate capacity and the poor state of the transmission network.
In addition, in Minister Micah’s statement on the state of emergency in the power sector, he said part of PPL’s financial problem was a lack of tariff increase. This of course is true. But the failure to implement tariff increases granted to PNG Power by the ICCC was a political decision taken directly by the Prime Minister and Minister Micah. Once again the finger of blame is pointed directly at dishonest and incompetent politicians.
In fact the illegal actions of the Prime Minister and Minister Micah, with the complicity of LR Group and the central bank, are the direct cause of PNG Power’s bankruptcy. Putting Micah, a former bankrupt and well-known conman in charge of fixing his own Ministerial mess is like making the late William Kapris chairman of BSP.
In a normal Parliamentary democracy O’Neill and Micah would have resigned long ago.
