The Independent Consumer and Competition Commission (ICCC) has re-affirmed State-Owned Enterprise Minister William Duma’s position on Non-performing Heads of State-Owned Enterprise (SOEs).
ICCC Commissioner, Paulus Ain said that ICCC as the regulator of some of these SEOs, has re-affirmed the minister’s position.
He stated that while it is crucial to note the current progress and impact of the SOEs commercial performance in terms of their respective financial, legal and governance environment, it is equally important to put on record the regulated oversight by ICCC which has contributed to the high performance of some of the state owned entities to date.
He also said that on the onset, the ICCC in the past has provided regulatory oversight on five of the SOEs including, Telikom PNG Limited, PNG Power Limited, PNG Ports Corporation Limited, Post PNG Limited and the Motor Vehicle Insurance Limited (MVIL).
He said these SOEs monopolies were performing very well until after they were removed from the ICCC’s regulatory oversight.
“For instance, Telikom PNG Ltd and PNG Power Ltd. PNG Power was unable to recover its cost of investment due to the tariff freeze back in 2013 and it continues to face challenges to date.”
The ICCC currently regulates three of the current five SOEs monopolies, PNG Ports Corporation Limited, Motor Vehicle Insurance (MVIL) and Post PNG Limited through regulatory contracts for a five-year period.
The regulatory contracts offer a number of advantages to consumers, the regulated SOEs, and wider PNG economy.
Among these advantages offered to the regulated SOE in that the Regulatory Contract provides a degree of certainty as to the way in which maximum prices and minimum service standards are to be set and the price path that will apply over a period.
“Provided the price path has been set in such a way as to encourage greater efficiency from the regulated SOE, the greater certainty allows the regulated SOE to plan its investment and efficiency improvements in such a way that it achieves over time a better level of efficiency and standard of service delivery.”
“Consistent with the objective of the ICCC Act, the ICCC has strictly required PNG Ports and MVIL to reduce cost and improve their service levels to benefit of all provinces in PNG. The incentive provided to these entities under the ICCC regulatory arrangement is an opportunity for these entities to earn a return commensurate with their risk profiles and returns that are available in the economy.”
Furthermore, Mr. Ain said that he believes in essence as well as the importance of the current regulatory arrangement and the positive impact it has had on the respective regulated SOEs commercial performances.
“It is equally important to put on record how effective the regulatory oversight by ICCC has contributed to the healthy annual returns enjoyed by the government to date.”
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