international
Regulators in Papua New Guinea (PNG) are working hard to meet electrification targets set by the government of PNG and supported by the Papua New Guinea Electrification Partnership (PEP), a joint effort by the governments of PNG, the United States, Australia, New Zealand, and Japan that aims to connect 70% of the country’s population to electricity by 2030 and 100% by 2050. There are three main grids in PNG, serving urban centers in Port Moresby (the capital), Ramu (the highlands), and the Gazelle Peninsula.
Currently, only 13% of PNG’s population has dependable access to electricity. One reason for this low percentage is harsh geographical conditions. Steep mountains with elevations of over 13,000 feet[1] stretch across the main island, making it challenging and expensive to build new infrastructure, connect the capital to distant provinces, and upgrade existing infrastructure. Expanding electricity access to PNG’s remote, rural communities will require significant investment in existing generation, transmission, and distribution systems, as well as the development of small-scale off-grid renewable energy projects. The establishment of transparent, context-specific regulatory frameworks will be critical to achieving these goals and providing 1) an environment conducive to private investment, and 2) energy sector stability and financial viability.
The National Energy Authority (NEA) was established in 2021 with the enforcement of the National Energy Authority Act 2020 (NEA Act), and has assumed the licensing and economic regulatory functions of the Independent Consumer and Competition Commission (ICCC).[2] As the designated economic and technical energy regulator in PNG, it oversees all energy sector licensees, including PNG Power Limited (PPL), a state-owned utility responsible for the generation, transmission, distribution, and retailing of electricity.[3]
With support from the United States Agency for International Development (USAID), NARUC is implementing the PNG Energy Regulatory Partnership to provide targeted technical and capacity building support to the NEA in the areas of tariff setting, off-grid regulation, and competitive power procurement. NARUC’s work through the PNG Energy Regulatory Partnership supports the broader PEP initiative and aims to enable partners to achieve their goals of expanding electricity access and facilitating sustainable energy sector growth.
Papua New Guinea also participates in NARUC's regional work under the USAID Regional Development Mission for Asia (RDMA) as an observer.
Electricity Tariff Setting
Attracting large scale investment – both public and private – is necessary to help build and support overall institutional and technical ability to expand electrification. Consequently, building energy regulatory capacity and enhancing the efficiency and transparency of regulatory processes are top priorities. As setting electricity rates is one of the most fundamental responsibilities of a power sector regulator, from 2019-2020 NARUC evaluated PNG’s existing methodologies, data collection practices, accounting mechanisms, and reporting processes to produce an Analysis of Tariff Setting Practices and Methodologies in Papua New Guinea.
This document provided technical long-, medium-, and near-term recommendations to improve the efficiency, transparency, and viability of tariff setting and cost recovery practices in PNG. NARUC paired this analysis with an in-country capacity building workshop to present findings and engage the ICCC, the DPE, and PPL in a shared forum. Through this forum, PNG stakeholders had the opportunity to identify areas of potential cooperation, discuss strategies and hurdles to enhancing the financial health of the sector, and share updates and concerns related to pending energy sector reforms.
Off-Grid Regulatory Frameworks
Due to geographic barriers to grid expansion, a low-density of primarily subsistence farming population, and small-scale household energy needs, off-grid solutions such as solar home systems and small-scale micro-grids will play a significant role in electrifying PNG’s rural communities. However, uncertainties regarding the policy and regulatory frameworks governing off-grid systems present a significant hurdle to scaling development.
From 2020-2021, NARUC provided technical assistance on off-grid regulation to partners in PNG to provide greater clarity on the frameworks governing off-grid development. This assistance produced an Off-Grid Regulatory Analysis, which outlines the legal and regulatory parameters governing off-grid development in PNG, detailing the current state of off-grid definitions, licensing requirements, system standards/requirements, and regulatory decision making processes. NARUC also conducted a webinar series with energy sector stakeholders to discuss critical issues impacting off-grid development and share best practices and recommendations with regard to pricing, siting, and licensing, and continues to engage with NEA through technical discussion sessions. NARUC’s insights and recommendations are now informing the development of PNG’s Draft Off-Grid Regulation and other related regulatory tools.
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[1] “Going the Distance: Off-Grid Lighting Market Dynamics in Papua New Guinea.” International Finance Corporation (IFC), 2019. PDF file. https://www.ifc.org/wps/wcm/connect/0dc0a258-e9b4-4c4e-9e76-c2b3d67ae2c9/PNG+Off-Grid+Report.pdf?MOD=AJPERES&CVID=mNKWdxh
[2] The ICCC is an economic regulator, and its primary role is to administer and implement the ICCC Act (which includes the promotion of competition and fair trading, the regulation of prices for certain goods and services, and the protection of consumers’ interest). See http://www.paclii.org/pg/legis/consol_act/icacca2002483/ for more information.
[3] “About Us.” PNG Power Ltd. https://www.pngpower.com.pg/about
Project Dates: 2019-Present
Primary Partners:
National Energy Authority (NEA)