PNG fuel subsidy bill set to hit K1.5 billion by year's end

The Papua New Guinea Government's fuel subsidy programme will keep running through to December, with Treasurer Ian Ling-Stuckey confirming that the country's total spend to cushion pump prices will now climb to around K1.5 billion, well above the K1 billion originally budgeted.

 PNG fuel subsidy bill set to hit K1.5 billion by year's end

By the close of last month, Waigani had already forked out K801.4 million on the scheme since it was rolled out in April to shield the country from swinging global oil prices.

Ling-Stuckey gave the update after being asked directly whether the programme would be extended and how much had been spent so far.

"Subsidy will continue till end of the year and because prices have gone up again, we (Government) estimate that the subsidy package will not be K1 billion, but around K1.5 billion," he said.

He noted that by contrast, Australia was subsidising less than 10 per cent of its fuel costs, suggesting PNG's intervention was comparatively heavy-handed but necessary given local conditions.

The scheme was first unveiled in April by Prime Minister James Marape, who announced a K1 billion package aimed at protecting the country from fuel price shocks tied to global geopolitical tension.

At the time, Marape said the Government could not sit back and let outside pressures hit ordinary Papua New Guineans directly, and Cabinet had signed off on the intervention to keep prices steady.

Under the mechanism, fuel importers buy stock at the higher international rate but sell to consumers at the stabilised local price, with the state covering the shortfall between the two.

"We are asking importers to buy fuel at higher international prices, but sell to our consumers at affordable rates. Government will step in to cover that gap," Marape said, adding that the arrangement was designed to keep petrol, diesel, kerosene and jet fuel affordable at the pump for households and businesses alike.