The recent increase of 5.9 percent on electricity tariffs by PNG Power Limited (PPL) has troubled the public causing an out-cry through media outlets in recent weeks.
Today PPL management responded saying the increase by the regulator is part of a strategy to raise internal income to assist PPL fund power projects, and more particularly to improve the performance of existing assets.
PPL Management said, the problems faced today did not occur overnight but took many years to manifest themselves.
The recently approved tariff increase by the regulator is part of the strategy to raise internal income to assist PPL fund power projects, particularly to improve performance of existing assets and this tariff increase is based on PPL’s projected capital works program over the next five years.
A significant component of PPL’s capital works program is debt funded and the major lenders are the domestic banks and Super Funds, ADB and JICA.
If PPL did not get debt funding, the increase in tariff would be higher or if fuel costs came down significantly, say to 2008 levels, PPL would not need to increase tariffs by this much, in fact it may not have to increase tariffs at all.
PPL says customers will not see huge improvements in service this year but may see this benefit some years later.
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