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Papua New Guinea: Privatisation freeze

12 August 2002

PNG's new Prime Minister Sir Michael Somare has suspended his predecessor's controversial privatization policy.

The privatization process introduced by former Prime Minister Sir Mekere Morauta has been unpopular with many Papua New Guineans unions, student groups and members of the defence forces have all taken to the streets in protest.

It seems the newly elected Prime Minister also has reservations.

Sir Michael says he's not convinced of the benefits of selling off the nation's airline, electricity authority and phone company.

But the move may unsettle international donors, who have linked their financial support to ongoing economic reforms.

Sir Michael Somare knows his country's in big economic trouble.

"We've been spending money which we do not have," he says.

"We will drive the country off the edge if we don't become responsible leaders."

Public assets worth keeping

But the man who was Prime Minister in 1975 when the institutions of his new country were being established, doesn't believe selling off the Government bank, the airline and the phone company is the way forward.

"Most of these institutions, I remember in my time they were making money," he says.

"PNGBC (Papua New Guinea Banking Corporation) was paying profit, each profit to the National Government, to the Treasury.

"PTC (Public Telecommunications) used to make a turnover of three to four hundred million a year, four hundred million kina a year.

"How come so suddenly, within this period of two years, it cannot make money?"

Privatisation started under Sir Michael's predecessor, Sir Mekere Morauta.

The first high profile sale was the bank, the PNGBC, followed by the phone company, Telikom PNG. Its sale was announced just under a fortnight ago, only days before Sir Michael returned to the Prime Ministership.

Too much, too soon

Sir Michael believes privatisation has been conducted too hastily.

He's called a freeze so his new coalition Government can decide if it wants the process to continue.

"It's not that Papua New Guineans cannot do it, they can do it, but you appoint the right people, right team of people, right management and I'm sure that these institutions can make money," he explains.

Other Government businesses on the block are Air Niugini, the PNG Harbours Board, water authorities and the Electricity Commission.

Sir Michael is keen to stress that the privatisation policy isn't being terminated, just suspended.

He says there's no reason why privatisation shouldn't go ahead, if it's in the economic and social interests of PNG.

But for the international community, which so strongly backed Sir Michael's predecessor, the decision is perhaps the first indicator of a change of focus under the new administration.

Shane McLeod
Published by Pacific Beat, ABC © 2002 ABC

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