PNG Steps Up Fuel Subsidy Effort with Additional K146 Million

Papua New Guinea is stepping up efforts to manage rising fuel costs, with the government preparing to inject another K146 million to keep prices stable over the next two months.

Authorities have already released K100 million earlier this week, bringing total funding under the initiative to K246 million as part of a K1 billion support mechanism targeting the impact of global fuel price increases.

Prime Minister James Marape said the subsidy programme is being implemented in partnership with key fuel importers—ExxonMobil, Puma Energy and Ok Tedi Mining Limited—to reduce the pressure on domestic consumers.

 PNG Steps Up Fuel Subsidy Effort with Additional K146 Million

He said the first round of funding had already helped bring prices back in line with March levels, but sustaining that outcome through May and June will depend on securing the additional funds.

“We need to find 146 million Kina more to ensure that our three main importers are paying the price of increased fuel price as of April, as they bring in fuel from outside to make sure we have enough fuel to take us to May and June,” he said.

Mr Marape noted that the initial K100 million was sourced internally from budget provisions, including NEC allocations, without requiring parliamentary approval at this stage.

“At this stage, we don't need to go to Parliament as yet, and Section 3 and Section 4 powers that treasurer has, he could deploy mobilization of additional resources. But more importantly, within this year's budget, we have enough space in the budget, especially couple of our budget items. And so we're sourcing that first 100 million from a budget item, line NEC and government commitments, that 100 million is sourced from this.”

He added that the balance of the K1 billion support facility may be financed through fiscal measures such as tax adjustments and incentives.

The Prime Minister acknowledged that diverting funds to support fuel prices requires trade-offs but said rising oil and gas prices could provide additional revenue to offset current spending.

“So you expect to see some drop in fuel price again, but the country must appreciate we're sacrificing elsewhere, and we're also profiting potential revenue in the upside going forward. We anticipate that with the rise in fuel price, our country will also earn from a little bit of increase in gas and oil price going forward into the year. So knowing this, we'll reconcile later, hopefully as we go on into the year, whether it's a supplementary budget or budget proper readjustments in November, December. We will be working to reconcile with additional revenue coming in and the spend we are making today to help our country live with the rising fuel cost elsewhere.”

He cautioned that global conditions driving fuel prices are likely to persist, urging the public to adjust expectations in the medium term.

“But I want to also at the same time inform our country that the global fuel crisis is not short term, it's a mid-term and almost the impact of what is happening in the Middle East will go on for three, four, five years. So let's adjust to live with a shifting reconfiguration in price of oil that is happening around the world right now.”