August 9, 2019
The results of state-owned enterprises (SOEs), the shareholding of which are held in the General Business Trust (GBT) and managed by Kumul Consolidated Holdings (KCH), are listed below for the first half of 2019. As shown below, KCH delivered a profit of K169.7m for the first half of 2019, driven by investment performance from marketable securities and increased operating efficiencies.
The results for the period are dominated by the three larger SOEs – Air Niugini (ANL), PNG Power Limited (PPL) and Kumul Telikom Holdings (KTH). ANL’s turnaround strategy is demonstrated in the half year results. Cancelling loss making sectors, building integrity into the schedule and driving cost efficiency through the ‘Higher Altitudes’ program is behind the K80m turnaround, with ANL on track to record a profit by year end. The introduction of a Cairns to Hong Kong service through Port Moresby, together with heavy maintenance checks on regional airline fleet, are indications of positive growth from new strategies. The PPL restructuring program commenced in the latter part of 2018 – the comparison between the first half of 2019 and the last half of 2018 demonstrates a significant improvement in performance. This improvement is driven by rehabilitation programs favouring least cost power and an accelerated move to switch generation to gas and hydro. Continued efforts to build resilience across the ageing transmission network and improving reliability of supply is bringing customer confidence back to the utility. Retooling, improved warehousing and logistics and strict cost control, with multi-lateral support to build capacity, are all strengthening the business and positioning PPL to connect more than 70% of households over the next 10 years. KTH losses continue through the 1st half of 2019. A robust plan to monetise the mobile communications infrastructure through aggressive pricing policies is gaining some traction. However, this must be coupled with significant operational restructuring and cost management to turn the business around. The implementation of programs that build reliability across the networks is needed to encourage subscriber confidence in connectivity as well as pricing. The introduction of domestic and international submarine cable infrastructure presents a game-changer in the delivery of fast, affordable broadband communications solutions across PNG. The government’s investment in this infrastructure reflects the importance of communications to PNG’s socio-economic growth.
PNG Ports Corporation (PNGPCL) is building on structural changes to its business and the outsourced terminal operator contract. The company is driving a port modernization program to ensure that PNG has the capacity to meet its import and export requirements. Water PNG continues to address the need to provide fresh water and sanitation services to cities, towns and communities across PNG. However, it is dealing with a significant increase in non-revenue water losses, across major systems in Port Moresby and Lae. The remaining SOEs continue to track profitably with focus on incremental revenue growth from new products and services and improved operating efficiency to combat waste and overspend. Kumul Agriculture Limited, as a start-up business is assessing investment opportunities in the agri space and is tasked with building commercially viable state investment in coffee, cocoa and coconut commodities across PNG.
Collectively, the SOEs revenues represent 4% of the country’s gross domestic product (GDP). There is no doubt that the delivery of competent, viable, affordable services will stimulate and encourage an environment for sustained economic growth and social prosperity, in keeping with this Government’s medium to long term development strategies. Government departments and agencies must ensure that outstanding arrears for services rendered by SOEs are paid in a timely manner.
• Results for KCH and SOEs YE2018 and H1 2019 are unaudited financial management accounts, and are subject to change
• KCH/GBT 2017 NPBT results include an asset value write down (fair valuation) from SOEs, including Bemobile of K230m
• KCH/GBT 2018 NPBT results includes a gain in the value of marketable securities
• PPL – 2018 NPBT includes K67.0m provision for understated expenses incurred during the 2017-2018 periods, currently being assessed
• Kumul Agriculture results are formally published for comparison, from Jan 2019
• Kumul Telikom Holdings performance results for B-mobile, Telikom PNG and PNG DataCo as a consequence of the merger of the three state-owned telcos
• Water PNG/Eda Ranu results are consolidated as a consequence of the merger of the water businesses under the government’s WaSH policy
Kumul Consolidated Holdings, in collaboration with PNG Power Ltd (PPL), is seeking Expressions of Interest (EoI) from owners of suitable alienated land to enter into a lease agreement with a future independent power producer under which the land will be used for the installation and operation of a solar farm.
Acting Managing Director of Kumul Consolidated Holdings (KCH) David Kavanamur, presented Chief Executive Officer of Nasfund, Ian Tarutia and his Investment Team with the Information Memorandum for the partial privatisation of Telikom Limited.
Kumul Consolidated Holdings (KCH) Chairman Peter Aitsi and Chair of the KCH Audit & Risk Committee James Gore today announced that their Board had endorsed a Whistleblower Policy.