Community service obligations have been delivered without clear rules, according to a Papua New Guinea National Research Institute (PNG NRI) Spotlight article.
Therefore, there is a need to effectively action the Community Service Obligation (CSO) Policy, it stated.
CSO refers to an arrangement where a government requires state entities or state-owned enterprises (SOEs) to undertake activities relating to the supply of goods and services that they would not choose to do on a commercial basis.
In order to maintain and expand access to these essential services such as electricity, telecommunication and ports, SOEs are undertaking community service obligations.
The article, Community service obligation in Papua New Guinea: There is a need for policy action, by Ronald Sofe, Research Fellow at the PNG NRI, stated that CSO has been delivered without clear rules in terms of how the services are identified, documented, costed and monitored.
According to the article, a formal CSO Policy was approved by the Government in 2013 which aims to improve the efficiency and transparency of CSO service delivery with positive impact on commercial performance of the SOEs.
However, the CSO Policy has not been fully operationalised since then.
Majority of the SOEs have delivered CSOs by cross subsidies in their commercial activities through uniform pricing, in which, same tariff is applied across the country irrespective of high costs and uneconomic return for the provision of a service.
This has adverse implication on their commercial performance.
CSO Policy provides a framework for identifying and financing high costs and non-commercial services by SOEs, rather than the current practise of cross subsidisation.
Therefore, the article proposed that the need to effectively action the CSO Policy is now pressing.