Lelang defends K1 billion fuel subsidy, reveals program is unbudgeted but sustainable

Minister for Rural and Economic Development Joseph Lelang has defended the government’s K1 billion emergency fuel subsidy, confirming that while the funding was not captured in the national budget, it remains manageable within the state's financial framework.

Lelang, who chairs the High-Level Task Force overseeing the relief program, was responding to a series of questions without notice from Usino-Bundi MP Vincent Kumura in Parliament on Wednesday morning.

Kumura raised concerns over the fiscal transparency and longevity of the massive intervention, questioning how the state amassed the funds and whether the rollout is sustainable given that over half of the allocation has already been exhausted.

"Could you explain to this house and to the nation if this K1 billion is captured in this year's government budget? And if not, where and how did the government amass the emergency relief funding?" Kumura asked.

He said K630 million had reportedly already been paid out in the first quarter to directly offset costs for major importers like ExxonMobil and Puma Energy.

Responding to the queries, Lelang said the K1 billion was an unbudgeted emergency intervention triggered by global market shocks, specifically referencing the Middle East crisis and the closure of the Strait of Hormuz.

"The K1 billion, as we all know, is not budgeted in this year's budget given the nature of the event," Lelang told Parliament. "However, I just want to point out that the K1 billion is only 3.4 percent of the total net expenditure and lending. And so it is within the government's ambit and Treasury to reallocate resources within its existing budget."

Lelang confirmed that the state has so far released roughly K630 million, broken down into an initial breakup of K247 million followed by a recent allocation of K383 million.

Despite the heavy initial drawdown, Lelang assured the house that the Marape-Rosso government's intervention had successfully insulated Papua New Guinea from severe inflationary pressures.

"Our price in the country is very low compared in terms of diesel and petrol prices compared to countries in the region like Australia, New Zealand, Fiji, and the Philippines. I think the only one that's below Papua New Guinea is Indonesia, and it's a result of our subsidy program," Lelang said.

Addressing the sustainability of the program as global crude prices hover around 93.50 US dollars a barrel, down from an April peak of 139 US dollars, Lelang stated that Treasury and the task force are actively exploring long-term policy options to extend the relief.

"If we can come up with certain sustainability options, we should be able to push that back towards the end of the year or so," he said. "Any final strategy would be subject to National Executive Council [NEC] approval."

Kumura also raised concerns regarding local transport operators and businesses raising prices despite the subsidy. However, minister Lelang warned against price gouging and urged citizens to report non-compliant retailers to the Independent Consumer and Competition Commission [ICCC].

The Minister publicized the dedicated ICCC hotline, urging the public to report exploitation directly.

"For any of our people out there who feel that the suppliers or the retailers are increasing prices unnecessarily, they can call ICCC on 70368350 so that they can go down, investigate that complaint, and penalize them," Lelang urged.

When pressed by the Usino-Bundi MP on whether the government is pursuing downstream processing of domestic crude oil and natural gas to prevent future fuel crises, Lelang deferred to the Ministry of Energy.

He informed the house that the Minister for Energy would soon present a comprehensive independent report to Parliament detailing the country's strategic plans for domestic refining capabilities and market obligations.