ICCC News

The Independent Consumer and Competition Commission (“ICCC”) is conducting another Public Motor Vehicle and Taxi Fare Review (Review) to to determine appropriate fares for all the approved routes throughout PNG for the next regulatory period (2020-2024).

ICCC Commissioner and Chief Executive Officer, Paulus Ain said the current regulatory arrangements for PMV and taxi services will end on 31st December this year and therefore the ICCC is required under Section 25A (6) of the Prices Regulation Act  (PR Act) to undertake another Review.

PMV and taxi services are declared services for the purpose of price control under Sections 10 and 21 of the Prices Regulation Act (PR Act).

“In accordance with the PR Act, the ICCC is responsible for setting the PMV and taxi fares for all approved and designated routes in the country, thus this is an important exercise” Commissioner Ain said.

Some of the broader issues that will be considered as part of this Review will include but are not limited to the following:

  • Identify any competition issues in the PMV & taxi industry. This will include the impact of the introduction of premium PMV services such Ginigoada Meri safe buses (women only service) on existing PMVs;
  • Determine the efficient costs for owning and operating PMVs and taxis in PNG. This includes taking into consideration the average cost of a typical motor vehicle used for PMV and taxi services based on the range of vehicles used, average depreciation costs, average passenger capacity (for PMVs only) and average operating costs;
  • Estimate an appropriate Weighted Average Costs of Capital to determine an appropriate return on investment for PMV and taxi owners;
  • Using a building block appraoch, determine appropriate revenue requirements for  PMVs and Taxis respectively in the next regulatory period;
  • Based on the revenue requirement for PMVs, determine the appropriate fares (per kilometre fare) which will be used to re-set the base fares for all the approved routes in the country;
  • Based on the revenue requirement for Taxis, determine the appropriate fare (per kilometre fare) and flag fall rate; and
  • Consider all other issues relevant for this review but not limited to the enforcment of PMV and taxi fares, and safety and service standards.

A Public Notice advising of the Review was published in the newspapers. The closing date for Receipt of Comments in that Public Notice is April 31st.

A Draft Report will be released on July 31st. Close of Comments on this Draft Report will be August 30th. ICCC will then release a Final Report on the Review on 31st September.

Commissioner Ain said the ICCC endeavours to conduct this Review in an open and transparent manner before making its final determinations.

“The ICCC encourages the general public, interested stakeholders and current and prospective PMV and taxi owners to participate in this Review process by providing comments or written submissions on the issues outlined in this Public Notice. The ICCC will consider all relevant information provided in this Review.”

All submissions received will be treated as public information unless certain information is designated as “confidential”.

Enquiries on this Review should be forwarded to ICCC’s Executive Manager for Prices & Productivity Division, Mr. Jack Timi or the Manager for Prices, Mr. Junior Hasu on the telephone number 325 2144 or on email This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it., respectively.

The Independent Consumer and Competition Commission (“ICCC”) is conducting another Petroleum Industry Pricing Review (Review) to determine appropriate wholesale, retail and drum-filling margins for declared petroleum products (petrol, diesel and kerosene) for the next regulatory period (2020-2024).

ICCC Commissioner and Chief Executive Officer, Paulus Ain said the current regulatory arrangements for these declared petroleum products will expire on 31st December, 2019.

“Being the administrator of the Prices Regulation Act (PR Act), the ICCC is responsible for setting the annual wholesale, retail and drum-filling margins, and the monthly retail prices for petrol, diesel and kerosene in the country.”

Commissioner Ain said some of the broader issues that will be considered as part of this Review will include, but are not limited to, the following:

  • Identify any competition issues in the (1) refining market, (2) the wholesale and distribution market (3) and the retail market for refined petroleum products over the last five years;
  • Review the current monitoring arrangements of the IPP, and domestic road and sea freight; and decide on an appropriate form(s) of regulation for the next regulatory period, should regulation continue;
  • Review the current cost build-up of fuel products (petrol, diesel and kerosene) from the Napa Napa refinery through the domestic distribution networks to the retail outlets and identify any inefficiencies that can be addressed as part of this study;
  • Review and assess the industry participants’ fixed asset registers to determine an appropriate Regulatory Asset Base to apply in the next price path period for distribution and retail assets;
  • Review the Weighted Average Cost of Capital used in the 2016 Final Report and recommend changes where necessary.
  • Review and assess budget and forecasted information provided by industry participants relating to sales and demand, revenues, operating and maintenance expenditures, and capital expenditures for the forthcoming regulatory period to ensure recovery of efficient costs, at a given level of service quality;
  • Based on the respective forecast revenue requirements, determine the appropriate Wholesale, Retail, and Drum filling margins for petrol, diesel and kerosense for the next regulatory period. 

A Public Notice advising of the Review was published in the newspapers and the Close of Receipt of Comments on that Public Notice is on April 30th.

A Draft Report will be releases on June 28th with the Close of Comments on this Draft Report on August 30th. ICCC will release a Final Report on the Review on 30th September.

Commissioner Ain said the ICCC endeavours to conduct this Review in an open and transparent manner before making its final determinations.

“The ICCC encourages the general public, interested stakeholders and fuel wholesalers and retailers to participate in this Review process by providing comments or written submissions on the issues outlined in this Public Notice which might be relevant for the ICCC to consider as part of this Review.”

All submissions received will be treated as public information unless certain information is designated as “confidential”.

Enquiries on this Review should be forwarded to ICCC’s Executive Manager for Prices & Productivity Division, Mr. Jack Timi or the Manager for Prices, Mr. Junior Hasu on the telephone number 325 2144 or on email This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it., respectively.

The Independent Consumer and Competition Commission (ICCC) has taken the Road Traffic Authority (RTA) to Court over non-compliance of ICCC’s Statutory Notice.

ICCC Commissioner and Chief Executive Officer, Paulus Ain said that on the 31st May, 2018 the Road Traffic Authority (RTA) released a Public Notice, on Page 14 of The National newspaper, announcing new road traffic fees and charges to come into effect on 1st June, 2018 which raised concerns at the ICCC.

“The ICCC was very concerned about the new fees and charges with regards to the financial impact on commuters and vehicle owners; the RTA’s lack of meaningful consultation with relevant stakeholders, ICCC being one of them, before the implementation of these fees and charges; and the fact that the new fees and charges being excessive would be a burden for the majority of the commuters and vehicle owners.”

Commissioner Ain added that in ICCC validating its concerns, the ICCC also received complaints from the public about the sudden increases in fees and charges.

“The ICCC decided to look into these complaints and concerns by consulting with RTA.”

“The purpose of ICCC’s inquiry into the RTA was to establish how the RTA came about with the calculation of these excessive fees and charges and review these calculations to determine whether the calculations were accurate and reasonable.”

“If the ICCC reviews the calculations and determines that it is unreasonable, then we intend to liaise with RTA to stop the implementation of these fees and charges and collectively review calculation of these fees and charges.”

The ICCC can issue a Statutory Notice under Section 128 of the ICCC Act to a person and that person is then required by law to comply with that Statutory notice to provide information that will assist with ICCC’s functions.

Under the ICCC Act when a person is required to furnish information or answer a question and the person refuses or fails to furnish the information or to answer the question; or gives information or makes an answer that is false that person is guilty of an offence.

Commissioner Ain said where a person is guilty of an offence under the ICCC Act, the ICCC can prosecute that person in the courts.

ICCC wrote to RTA requesting information about the sudden increases in fees and charges.

Following the failure of RTA to favorably respond to ICCC’s requests for information about the sudden increases in fees and charges, the ICCC issued a Statutory Notice to RTA in October last year, requiring RTA to provide the following to the ICCC by 16th November, 2018:

  • Justifications for the increases in fees and charges;
  • The data set used to calculate the increases; and
  • The methodology used to calculate the increases.

RTA only provided information relating to its justification for the increases in fees and charges and the methodology used to calculate the increases.

The ICCC extended the due-date to 14th December, 2018 for RTA to provide information relating to the data used to calculate the increases however, the RTA has failed to fully comply to the Statutory Notice within the before or by 14th December 2018.

On 21st December 2018, ICCC wrote to the Office of Public Prosecutor, advising that it will be taking legal actions against RTA.

On 7th of March 2019 the ICCC filed court proceedings against RTA, for allegedly breaching Section 128 of the ICCC Act.

Commissioner Ain said the ICCC will inform the general public of the outcome of this court case following the court decision in the near future.

The Independent Consumer and Competition Commission (“ICCC”) has granted clearance to Kina Bank Limited (Kina Bank) to proceed with the proposed acquisition of the Retail, Commercial and Small and Medium Enterprise (SME) businesses of Australia and New Zealand Banking Limited (“ANZ PNG”).

ICCC Commissioner and Chief Executive Officer, Paulus Ain said that the ICCC assessed Kina Bank’s authorization application and was satisfied that the Proposed Acquisition, if it proceeds, would not lessen competition in any of the relevant markets and therefore granted clearance for the acquisition to proceed.

In its consideration of the likely effects on competition as a result of the Proposed Acquisition the ICCC had formed the following conclusions:

  • Whilst ANZ PNG proposes to continue to carry on business in the corporate/institutional markets, its business in the consumer/SME/retail markets is proposed to be merged with that of the acquirer, hence, the number of competitors in the latter category of markets will be reduced because of the combination of the businesses of the proposed parties and, thereby, concentration in relevant markets would be increased.
  • However, the Proposed Acquisition is not likely to either significantly increase, or create any new, barriers to entry or expansion in the market because Kina Bank is a small player and ANZ PNG is a relatively small player compared to the main incumbent, Bank South Pacific (BSP). Furthermore, while the incumbents have existing branch and ATM networks which are non-trivial barriers to new entrants, the proposed combination assists the proposed acquirer to expand and compete more effectively in a market characterized by a dominant presence of BSP.
  • The Proposed Acquisition, if it proceeds, is not likely to give Kina Bank such power to significantly and sustainably increase its prices and profit margins because there are other effective competitors who will put competitive pressure on its products and services. It is noted that Kina Bank proposes to reduce its prices to maintain and capture some market shares, although that remains to be demonstrated;
  • The Proposed Acquisition would not impact the extent to which substitutes are available in the market;
  • The Proposed Acquisition does not remove a vigorous and effective competitor because ANZ PNG does not appear to have significantly expanded its business over recent past years. Besides, ANZ PNG has been more focused on its business interest in other areas and its business in the retail and SME markets have remained stagnant;
  • The existing levels of vertical integration will not be impacted by the Proposed Acquisition; and
  • The market is highly dynamic.

Commissioner Ain added that the Proposed Acquisition would generally involve ANZ PNG transferring to Kina Bank the retail customer deposits and loans including credit cards, commercial/SME customer loans and deposits (subject to minimum credit rating requirements), business premises including 15 retail branches and a portion of ANZ’s commercial office spaces in Port Moresby and Lae, ATMs and EFTPOS terminals, other fixed assets, some motor vehicles, and cash in hand, in respect of the relevant business and certain employees.

The Proposed Acquisition, however, did not include the sale of ANZ PNG’s corporate and institutional business in PNG.

“In complying with the mergers and acquisition provisions of the ICCC Act, Kina Bank submitted that the Proposed Acquisition should be allowed to proceed because it will not lessen competition in any of the relevant markets but instead will result in more benefits to the public,” Commissioner Ain said.

“Both Kina Bank and ANZ PNG offer retail, commercial and SME banking services in PNG, however, Kina Bank does not offer credit cards and operate a propriety Point of Sale Network.”

“In addition, Kina Bank only has branches in Lae and Port Moresby whilst ANZ has branches in Hides, Mt Hagen, Goroka, Madang, Kokopo, Kimbe and including Port Moresby and Lae.”

Commissioner Ain explained that, though Kina Bank applied for authorization under Section 82 of the ICCC Act, based on the conclusion that the Proposed Acquisition would not substantially lessen competition in any of the relevant markets identified, the ICCC was satisfied and has proceeded to give clearance, consistent with Section 82 of the ICCC Act.

The ICCC took into consideration comments from the applicant and other stakeholders, and considered that the Proposed Acquisition would affect the following markets:

  • The provision of transaction account services in specific main centres around PNG;
  • The provision of savings or term deposit accounts and investment services nationally;
  • The provision of home loan services nationally;
  • The provision of personal loan services nationally; and
  • The provision of SME banking services in specific main centres around PNG.

The Independent Consumer and Competition Commission (ICCC) is of the view that crude oil prices will continue to fluctuate in the remaining months of 2019 through to 2020 but gently towards a downward path.

Making reference to a short-term forecast from Oil Crude Price.Com, the ICCC stated that global crude oil price could average $64.93 per barrel in 2019 and $65.19 per barrel in 2020.

As crude oil is used to produce petrol, diesel and kerosene among other petroleum products, retail price movements for these petroleum products are mainly dictated by crude oil price movements. Crude oil price movements are mainly dictated by the following:

  • Demand for oil by the major oil consuming economies such as China, India, and the United States. When shale oil production is low, the US usually becomes a major oil consumer;
  • Supply of oil from the major oil producers such as the Organisation of Petroleum Exporting Countries (OPEC) and Russia and the US. US is leading shale oil producer and its shale oil stock also has a major impact on global oil prices; and
  • Geopolitical and trade issues have a major impact on global economic activities, thus they also have a major impact on oil prices. This is the case where geopolitical and trade issues affect the production, supply and trading of oil.

ICCC Commissioner and Chief Executive Officer, Paulus Ain added that Papua New Guinea does not have any influence in the international oil market and therefore, any developments in relation to the global supply and demand of oil will have an impact on the future oil prices and eventually on the movements of retail fuel prices in the country.

While the ICCC is responsible for setting the annual wholesale and retail margins, and the monthly fuel prices in the country, it does not have any control over several components that feed into the retail price build-up.”

These components that Commissioner Ain was referring to were;

  • Import Parity Prices (IPP) which is mainly influenced by the Mean of Platts Singapore (MOPS) prices for petrol, diesel and kerosene, and the PNG-kina US dollar exchange rate. The MOPS price movements are mainly influenced by international oil price movements. Nevertheless, the IPP usually accounts for 50-60 % of the monthly retail prices and is usually a pass through cost in the retail price build-up; and
  • The domestic road and sea freight rates are also pass through costs in the retail price build-up. For centres like Kavieng, the total freight can be as high as 30% of the final retail price.

Commissioner Ain explained that the OPEC bloc have long dictated global crude oil prices, while the US emerged over time as a significant producer of shale oil but recent years, oil production from the US has risen sharply, surpassing Russia and all other oil producing countries.

“In May 2018, the United States pulled out of the 2015 Iran Nuclear Deal, subsequently targeting Iran with economic sanctions that affected the country’s energy sector, and further restrained other countries from trading with it. By October, the US granted waivers to eight countries to resume import of Iranian oil but then, Iraq already had a huge stockpile of oil inventory.”

“These political measures pushed up crude oil prices to a peak of $82 per barrel in September 2018; as OPEC countries and Russia continued producing high volumes. By October 2018, the global oil market was saturated with excess supply, mostly from Iran and the US. The supply glut caused a dip in crude oil prices in the last quarter of 2018, forcing prices to fall significantly, from an average high of $82 per barrel in October down to $50 per barrel in December.”

“To drive up oil prices, OPEC and Russia (OPEC+) made an agreement in January 2019 for member countries to reduce crude oil production to 1.2 million barrels per day (bpd) through to June.”

“The OPEC-backed supply cuts have led to price increases in the early months of 2019, and markets have been further tightened by US sanctions against oil exports from Venezuela. However, the strong responsiveness of shale oil from US to patch up the supply gap apparently has kept global prices within a narrower band than has historically been the case.”

Commissioner Ain added that currently the OPEC-led bloc look set to continue supporting prices with ongoing production cuts, instead of fighting for market share, which would practically give more incentives to US shale producers to counter OPEC-led production cuts by setting higher production records, which would ultimately compel the alliance to reconsider their position on supply cuts, as most of their own members also have higher reserves of supplies building up.

“Due to volatility in the oil market, it is difficult to precisely forecast the retail fuel price movements.”

“However, based on the short term projections in oil price movements as provided above, the ICCC is of the view that crude oil prices will continue to fluctuate in the remaining months of 2019 through to 2020 but gently towards a downward path.”

Commissioner Ain added that these price movements will mainly depend on the on-going geo-political tensions between U.S and oil producing economic countries, the demand and supply of oil, and the other aforementioned factors.