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Business Advantage ‘In Brief’ with LCCI Commentary

Last week, Business Advantage News reported on several issues which the LCCI would like to provide further follow up to. 

Government considers lift in minimum wage

Last week, Business Advantage News reported that “Cabinet considers a rise in the minimum wage Papua New Guinea’s cabinet is reportedly considering a recommendation to increase the country’s minimum wage from K2.29 to K 3.20. The Post Courier reports that after 12 months the wage will then increase again to K3.36 an hour, before rising again to K3.50 after two years. The determination will also cover various allowances, such as camping, tool and heavy duty allowances, which may also be increased.”

LCCI Comment: LCCI would like to qualify the figures that have been reported in the above item. It is our understanding that the recommendation by the MWB is for the initial increase to be to K3.00 per hour and an increase of .30t after 12 months. The process that has to be adopted before the increase is made law is that the report must be first endorsed by the National Tripartite Consultative Council (NTCC) before going to Cabinet for a final decision.

Cabinet approves special-purpose company, Port Moresby Power Limited

Last week, Business Advantage News reported that, “Cabinet has approved setting up a special-purpose company, Port Moresby Power Limited (PMPL) to hold the (Port Moresby) city’s power generation assets. PMPL will be a wholly-owned subsidiary of PNG Power. Israeli-based LR Group will take a 50% stake in a company to manage those assets. Prime Minister Peter O’Neill has also ordered that independent power purchase agreements be arranged with private companies to produce and provide power in Rabaul, Wewak, Kimbe and Madang. The IPBC and PNG Power are expected to advertise for EOIs this week.”

LCCI Comment – we are closely watching the PPL developments in Lae. So far we have been promised a 30 MW power station after PPL signed an agreement with Korean Company Daewoo, to be constructed at Munum. This project may be on hold as Munum may be too swampy for this large scale development. Then we have been promised a 25 MW generator, as part of the K50 million deal to purchase 2 generating sets through an Israeli company, one for Lae and one for Port Moresby. There have been questions about the actual generating capacity of these sets, which may be just half of the anticipated size in the original announcement. Then we have the JICA team developing the Ramu 2 Power Station at Yonki, which is another Hydro Power Station, which we were told will be built to fulfill the power shortage in the Ramu grid. It seems that PPL may have lost the plot as they announce new projects, but forget about their previously announced projects. What we want is suitable cheap supply of power to fill the gap in the power output at the moment. Not new promises of power stations that may fill the immediate needs of Lae, but may also not be the most efficient systems. PPL must come out with their plans which supersede any previous announcements. After all we will be the main users who will pay most of the bill for the power!