Important changes to the industry 3 min read
The commencement of the National Energy Authority Act 2020 and the Electricity Industry (Amendment) Act 2020 mean important changes in the electricity industry in PNG.
In this Insight we review the key changes and assess their impact on the industry.
Energy legislation comes into force
On 6 July 2021, the National Energy Authority Act 2020 (NEA Act) and the Electricity Industry (Amendment) Act 2020 (Amending Act) (together the Acts) came into force with the publication in the National Gazette of notices of commencement of both Acts.
The Acts had previously been passed by Parliament on 21 April 2021 and were subsequently certified by the Speaker of Parliament on 10 June 2021.
We discussed the proposed effects of these Acts in our previous Insight: Changes in PNG's energy laws.
Effect of commencement
Now that the Acts have come into force:
National Energy Authority
- the National Energy Authority (the Authority) is established and the Deputy Secretary responsible for the Energy Wing of the former Department of Petroleum and Energy will be the Interim Managing Director until the appointment of a Managing Director under the NEA Act.
- All staff of the Energy Wing of the former Department of Petroleum and Energy or the Department of Public Enterprises are deemed to be employees of the Authority in the same or equivalent position or category of employment, and on the same terms and conditions of employment, until such time as the managing director makes a decision on staffing.
Licensing
- The National Energy Authority will assume the licensing and economic regulatory functions of the Independent Consumer and Competition Commission (the ICCC).
- Rights granted under existing licences issued by the ICCC under the Electricity Industry Act (Ch. 78) (EI Act) and the Independent Consumer and Competition Commission 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.
- The Authority will also have the power to take over the operations of the power producers where there is a breach of licence conditions.
National Electrification Trust Fund
- The National Electrification Trust Fund is established for the implementation of the National Electrification Roll-out plan. The National Electrification Roll-out plan is the national plan approved by the National Executive Council to be implemented in order to meet the national objective of electricity access to 70% of Papua New Guinea households by 2030.
Levies and fees
- The Authority will have the ability to charge levies and fees on licences granted under the NEA Act, including levies on generation licences granted under the NEA Act.
National content
- National content provisions will now apply to all new projects set to kick off under this new regime, with 'project' meaning projects licenced under the NEA Act for the generation, transmission, distribution or retailing of electricity.
Domestic market obligations
- The Authority now has the power and responsibility to obtain, and regulate the use of, gas provided by gas producers, in satisfaction of domestic market obligations.
- The Authority may also, in consultation with the State, regulate:
- gas utilisation for power generation, including safety standards for off-take of gas from producers, transport of gas to electricity project sites, storage, usage and environmental considerations for utilisation of gas; and
- the storage, distribution and usage of liquefied petroleum gas (LPG).
Statutory easements for transmission lines
Following commencement of the Amending Act, the list of functions of the ICCC, as well as parts of the EI Act relating to land access and ownership of transmission lines, safety and technical requirements and offences have now been repealed.
Some of the sections of the EI Act which have now been repealed provided statutory easements for transmission lines of existing licence holders, as well as protections from removal or tampering with existing electricity infrastructure. These provisions have been reproduced in the NEA Act and it appears that Regulations may provide for existing licence holders to be classified as electricity undertakers under the NEA Act for specific provisions of the NEA Act including, we assume, in relation to the statutory easements and land access provisions under the NEA Act.
Next steps
Now that the Acts have commenced operation and the Authority has been established, we will monitor progress of the Authority, including the issuance of new Regulations, Codes and Guidelines referred to in the NEA Act.
If you would like to discuss these changes, please contact any of the people below.