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BRIEF
Date:
31 March 2022
To:
Acting Secretary
Through:
Acting Deputy Secretary – Economic Policy
SUBJECT: TREASURY’S POSITION ON THE ISSUE OF TRANSFER OF TECHNICAL AND
ECONOMIC REGULATION FUNCTION FROM INDEPENDENT CONSUMER AND
COMPETITION COMMISSION TO NATIONAL ENERGY AUTHORITY
A. PURPOSE
1.
The purpose of this brief is to;
i)
Inform you of the Government’s energy sector reforms and restructuring resulting in the
enactment of the National Energy Act 2021 (NEA Act) and the Electricity Industry
Amendment Act 2021 (EIAA Act), as requirement of the National Energy Policy 20172027,
ii) highlight you the issues relating to the transfer of technical and economic regulation
functions from ICCC to National Energy Authority (NEA) as part of enabling the Electricity
Industry Amendment Act 2021 (EIAA Act), and
iii) seek your endorsement on the Treasury’s position in response to matters raised by ICCC.
B. BACKGROUND
2.
Department of Treasury through the Treasurer is responsible for the ICCC operations. Apart
from the Independent Consumer and Competition Commission Act 2002 (ICCC Act), which
establishes the ICCC, the ICCC also administers other legislations to effectively undertake its
responsibilities in fostering competition and protecting consumers against unjust practices.
One of such is the administration of the electricity industry regulation under the Electricity
Industry Act (Chapter No. 78).
3.
The ICCC Commissioner has written to you as the Acting Secretary for Treasury couple of
correspondences in February and March this year (2019) raising issues and concerns in
relation to the Department of Petroleum (DPE) sponsored enactment of the Electricity Industry
(Amendment) Act 2021 (EIAA 2021), which replaces the ICCC with the NEA as the regulator
of the electricity supply industry in PNG.
4.
As you may aware, the enactment of the Electricity Industry (Amendment) Act 2021 (EIAA
2021) and the National Energy Authority Act 2020 (NEA Act) was done together by Parliament
in July 2021. They are requirements of the National Energy Policy 2017-2027 being delivered
as part of the Government’s ongoing energy sector reforms and structuring being undertaken
by DPE since 2014.
C. FACTS AND CONSIDERATIONS
5.
The Government through the Department of Petroleum and Energy (DPE) have initiated an
energy sector reforms and structuring in 2014.
6.
National Electrification Roll Out Plan aims to deliver electricity to 70% of our people and
country by 2030 and our Vision 2050 envisages electricity for all by 2050; My government
aims to deliver electricity to 70% of our country by 2025.”
7.
The energy sector in PNG is guided by the Oil and Gas Act 1998, Mining Act 1992, Electricity
Industry Act 2002 and a number of other legislations. In order for the sector to adopt the The
Government considered that there was a need for these The legislations were needed
8. Independent Consumer and Competition Commission (ICCC) is currently the economic
regulator for electricity tariffs but has limited capacity to carry out its mandate and cannot
independently take decisions. ICCC also sets license conditions for market participants,
though PPL is the only regulated electricity entity at present. The ICCC also issues licenses
to IPPs and mining companies that own generation and distribution facilities. As specified
in the NEP, its regulatory responsibilities for electricity are to be transferred to ENERCOM
(see Section 4.1).
9.
Currently, ICCC sets electricity tariff under the regulatory contract between PPL and ICCC,
and issues license for IPP and other private companies that wish to own generation and
distribution facilities. This now will change with the current reform in the endorsement of the
National Energy Authority Bill which enables the establishment of two entities, the National
Energy Authority (NEA) and the Energy Regulatory Commission (ENERCOM).
1) NEA will be an overarching body responsible for all energy related matters involving the
development, conversion and transportation of energy, including the development and
implementation of the NEP, the development of renewable resources, the electrification
roll-out, and in the long term, the use and deployment of technology to develop new energy
products. NEA will aim to become the central policy-making and planning entity for the
energy sector.
2) ENERCOM will be a regulatory body responsible for the economic and technical regulation
of the electricity sector and for the promotion of a competitive energy industry, as an
independent industry watchdog. These functions are currently undertaken by the ICCC
with technical regulation delegated to PPL.
10. PNG Electricity Industry Act. Chapter 78 consolidated to No 10 of 2002. An Act to provide for
the establishment of an Electricity Commission and to regulate the generation, supply and
sale of electricity and for related purposes. Being an Act to regulate the generation, supply
and sale of electricity and for related purposes.
11. The energy sector is guided by the Oil and Gas Act 1998, Mining Act 1992, Electricity Industry
Act 2002 and a number of other legislations. With the adoption of the PNG Vision 2050, there
was a need to formulate both the policy and accompanying legislations so as to align them
with the Vision, and the statutes shall be reviewed and consolidated into one.
12. The energy sector is guided by the Oil and Gas Act 1998, Mining Act 1992, Electricity Industry
Act 2002 and a number of other legislations. In 2014, the Government directed the
Department of Petroleum and Energy (DPE) for the energy sector reforms and structuring as
part Government’s of the process to adopt the PNG Vision 2050. The reforms have led to the
development of National Energy Policy 2017-2027 which was approved for operationalization
by Government in 2017.
13. The policy provides for the comprehensive and over-arching platform for further legislative
and institutional reforms to establish a National Energy Authority (NEA).
14.
15. the DPE has sponsored a enactment of the , hence the enactment of the two legislations by
the Parliament last year in July 2021.
In 2014, the Government provided direction for the Department of Petroleum and Energy to initiate
an energy sector reforms and restructuring. This has culminated with a development of a National
Energy Policy 2017-2027 which was approved by the Government in 2017 to be operationalized.
The National Energy Policy provides framework for further legislative and institution reforms,
specifically for the establishment of the National Energy Authority (NEA).
The Department of Petroleum (DPE), in drive to implement the National Energy Policy, sponsored
for an enactment of two legislations, the National Energy Authority (NEA) Act 2020 and the
Electricity Industry (Amendment) Act 2021 (EIAA 2021). These Acts were passed into laws by
Parliament and will now enable the establishment of the National Energy Authority (NEA) and
replace ICCC with the NEA as the Regulator of the electricity supply industry in PNG.
The Government has approved and endorsed the implementation of the new National Energy
Policy 2017-2027 in August 2020. The policy was part of a major government reforms to
B. The ICCC maintain position as the regulator of Electricity Supply industry in accordance with
Electricity Industry Act Ch.No.78 (EI Act),arguing the proposed amendments (NEA Act 2020
and EIAA 2021) made to non-existing legislative.
C. ICCC has explain that there is erred in EIAA 2021. The EIAA 2021 was to amend Electricity
Industry Act 2002 that would replace ICCC Act in Electricity Regulatory function. However there
is no legislative such as electricity Industry act 2002. Thus ICCC, still the technical and
economical regulator of electricity supply
D. the ICCC has written a to Office of Legislative Council (OLC)seeking legal advice on above
matter which the OLC responded through a letter dated 24th December 2021 indicate that
there is non-existence of an electricity industry act 2002 and figure out, there is lack in
consultation of EIAA 2021.
National Energy Authority Positions
E. On 21 April 2021, the PNG Parliament passed the National Energy Authority Act 2020 (NEA
Act) and the Electricity Industry (Amendment) Act 2020 (Amending Act) (together the Acts).
F. the Authority will assume the economic regulatory functions of the Independent Consumer and
Competition Commission (the ICCC), although the split in roles is not entirely clear;
G. Licences issued under the Electricity Industry Act (Ch. 78) (EI Act) and the Independent
Consumer and Competition Commission Act 2002 (ICCC Act) are preserved under the NEA
Act, although there do not appear to be any grandfathering clauses1;
H. the Authority will have the ability to charge levies and fees, including levies on generation
licences, the Authority will also have the power to 'take over' the operations of the power
producers where there is a breach of licence conditions; new National Content provisions will
apply to licensees; and
I.
Rights granted under existing licences issued by the ICCC under the Electricity Industry Act
(Ch. 78) (EI Act) and the ICCC Act 2002 are preserved, and existing licences may be renewed.
It appears the ICCC has retained its licensing functions under the EI Act ostensibly to deal with
renewal applications of existing licences granted under that Act, although no new licences may
be granted by the ICCC following commencement of the NEA Act.
J. Administrative arrangement appears that the Authority will take up functions from the ICCC, the
Energy Wing of the former Department of Petroleum and Energy and some of the technical and
safety powers of the ICCC, which we understand are currently undertaken by PNG Power
Limited.
K. Considerably, the NEA Act 2020 and EIAA 2021 amend the EI Act by repealing the list of
functions of the ICCC. However, none of Part IIIB of the EI Act, which deals with licensing by
the ICCC of participants in the Electricity Industry, will be repealed. Thus the electricity
supply industry will remain a regulated industry for the purposes of the ICCC Act, but
will also be a regulated industry under the NEA Act, and both acts contain licensing
requirements for participants in the electricity supply industry.
L.
Though NEA Act contains statutory easements identical to the repealed provisions of the EI
Act, those protections will now only apply in respect of electricity undertakers licenced under
the NEA Act and will to be available to existing licence holders.
M. The ICCC has confirm a letter dated 24th December 2021 from the office of legislative Council
(OLC) confirming error and mistake in new acts (NEA 2020 and EIAA 2021) which the
consequential amendment made to non-existing of previous legislative for instance there is
no laws such as Electricity Industry Act 2002 in PNG.
1
S. Kuman, E.Auru, G.Pogla Changes in PNG's energy laws, Allen Linkleters .13 May 2021 ,.
D. TREASURY’S VIEW
N. From reviewing above ICCC and NEA legal status, it clearly indicate that there is duplication
of electricity supply industry regulator when the NEA/EIAA endorsed. The electricity supply
industry regulatory function is deliberated in EI Act Ch.No.78 which perform by ICCC as
regulator.
O. Significantly, there are numerous errors in provisions of the (NEA 2020 and EIAA 2021) and
some sections where the same provisions appear more than once. It also indicated lack of
consultation and dialogue on the amendment of EI Acts.
P. Also note that, the EI Act Ch.No. 78 also capture Appeal Panel Process which Treasury
facilitate as secretariat for transparent consumer and competition in markets that enhance
economic development. The EIAA 2021 doesn’t interpret well on that roles.
Q. Furthermore, the NEA is still a premature agency, where there is no structure, code of
conducts, guidelines, staffs, office or funding to exercise the role as regulator of Electricity
Industries.
E. WAY FORWARD
R. Convincible, for transparent economic prudent the Electricity Industry Act Ch.No .78 would
guide and still effective that gives power for ICCC as the technical and economical regulator
of Electricity Supply Industry in PNG.
S. Thereby, Treasury would write to OLC confirming the statue, write to Department of Petroleum
& Energy (DPE) and NEA clarifying that matter and ICCC to continue as regulator.
F.
RECOMMENDATION
T.
It is recommended that you note the content of this brief.

Should you agree;

Endorse the letter to FLC, DPE and ICCC with draft ToR; and
Submitted for your noting and approval.
DAVID KUI
Acting First Assistant Secretary