Photo credit: Puma Energy
Amid current economic issues in Papua New Guinea such as high inflation and unemployment, a shortage of foreign exchange currency last week crippled the country's fuel supply immensely, marking the second major nationwide fuel crisis within three months.
This was the result of an ongoing situation between the Bank of Papua New Guinea (BPNG) and the country's major fuel products supplier, Puma Energy, due to a lack of diligence in discussions by both parties concerning the approval of the fuel firm's foreign exchange orders by the country's financial regulator.
By 17th February, the nationwide shortage in fuel prompted business houses and the public to be held to ransom and left to squander what was left of Puma Energy's limited supply.
Puma Energy confirmed in a letter to the media that none of its propositions have been satisfied from agreements discussed with Prime Minister James Marape during his meet with company executives in Singapore.
Puma's Country General Manager, Hulala Tokome, revealed that what was discussed and agreed upon in Singapore with the government had not been honoured.
"Our FX orders have been restricted by the Bank of PNG, which is limiting our ability to operate and ensure the supply of product into the country. The root cause of the problem is for the Bank of PNG to approve our FX orders. If our FX orders are not settled this will impact the availability of fuel supply," he said.
"A total shutdown by Puma is going to affect a lot of businesses nationwide, because it takes us more than a month to replenish our fuel stock," Mr Tokome said.
Propositions by the government in ensuring an immediate solution since the last fuel shortage have not come to fruition, and it has shown no tangible outcomes in affirming a confirmed alternative.
This has prompted major service providers to ration their fuel intake, leading to flight disruptions, constant power blackouts, cuts in water supply, and a huge delay in business activities and operations due to the limit suppliers have put on fuel consumption.
State entities have also voiced their concerns with Commissioner of the Independent Consumer and Competition Commission (ICCC), Paulus Ain, stating that the impact of fuel disruptions in PNG is of "grave concern" and that the ICCC is encouraging fuel suppliers to enter into the PNG market.
"There is no restriction for other suppliers to enter into the fuel supply market," Mr. Ain said.
Government departments and agencies responsible for facilitating potential entrants should not become a barrier but assist and facilitate possible and potential entrants," he said.
In addition, Institute of National Affairs (INA) executive director Paul Barker also said there needs to be honest and transparent negotiations between Puma Energy and Bank of PNG.
Barker said all major forex transactions for each month should be made available and posted online to the market and public, so that ongoing disputes and claims can be openly verified.
In relation to the ongoing fuel saga, discussions by the government with Kumul Petroleum Holdings Ltd. (KPHL) and multinational companies ExxonMobil, Total Energy, Santos, and the Mineral Resources Authority (MRA) are still pending.
The Prime Minister recently stated that the government will be heading towards locally based downstream processing, but Puma's current stance has questioned the government's timing on when a local refinery is scheduled to come into play.
While the government has made its appeal to suppliers of fuel there are also underlying issues affecting the flow of foreign currency to the domestic foreign exchange market. The fall in forex together with issues concerning PNG's major economic sectors are contributing to high inflation, unemployment, and the ongoing threat in fuel supply.
