PNG Power selling electricity at a loss: Duma

PNG Power is selling electricity for less than it costs to buy it, outgoing minister William Duma says, warning that the pricing system has left the state-owned company struggling financially.

Speaking during the handover of PNG Power responsibilities to the new minister, Richard Maru on Monday, Mr Duma said PNG Power sells electricity at an average of 87 toea per kilowatt hour but buys it for more than K1 per kilowatt hour.

"PNG Power sells power at about 87 toea per kilowatt hour, but buys it at more than one kina per kilowatt hour," Mr Duma said.

"So where is the logic? When you have that tariff, this company will continue to lose money."

Mr Duma said the company has faced this challenge for many years and has continued to record financial losses.

He said long-term agreements with independent power producers have also increased the cost of supplying electricity.

"As long as these agreements remain in force, PNG Power will never be able to make a profit unless something changes," he said.

Despite the challenges, Mr Duma said PNG Power is beginning to recover through reforms introduced by the government and the company's management.

He said PNG Power recorded a profit of K1.7 million last year after more than 20 years of losses.

"That is a good turnaround. It is a sign of better things to come," he said.

Mr Duma said the government will continue working to reduce costs and improve the company's financial performance.