Papua New Guinea's only electricity provider is insolvent and more than $1.5 billion in debt, as insiders describe the situation as "hopeless" and "untenable".
PNG Power is the national electricity company in Papua New Guinea, a country where fewer than one in five people have access to mains power.
The government-owned company was set up in 1963 to deliver electricity to the developing nation.
But a six-month ABC investigation can reveal that in recent years the company has been grappling with extreme financial distress and severe debts.
Company insiders, who spoke on condition of anonymity, said staff feared they would be fired if they spoke out.
Across Papua New Guinea, many of the people who do have mains power complained it was unreliable and in some parts of the country, prone to daily blackouts and surges.
One business owner said due to surges he had lost millions of dollars in equipment — as well as a house, which burnt down after a "power fluctuation".
Meanwhile, a group of companies that sell electricity to PNG Power said they were voluntarily "keeping the lights on" while the electricity provider was unable to pay its debts.
"It is really sad to see [PNG Power] become what it is today," one employee told the ABC.
"What used to be a thriving organisation, it's literally crumbled to its knees."
PNG Power owes more than $1.5 billion to creditors: analysis
Concerns about PNG Power's ability to continue operating were raised in 2022, when an Ernst and Young audit said the company had net liabilities of $78 million.
The company's situation has worsened since then.
In a letter sent to its shareholder company in June, PNG Power chair Mal Lewis said the electricity behemoth was insolvent and had been in "steady decline" for the past 15 years.
Separately, he told PNG's prime minister and deputy prime minister in an email that PNG Power was losing money rapidly, urging the government to declare a state of emergency.
"The lack of funds means that we are merely digging a bigger black hole, and unless we take drastic action as soon as practicable, we will continue to fail," Mr Lewis said.
A more recent independent analysis of PPL's debts shows the company currently owes more than $1.5 billion to its creditors.
The largest debt is owed to the Asian Development Bank (ADB), a development financier to which Australia contributes hundreds of millions of dollars.
The ADB has loaned more than $360 million to the PNG government, which PNG Power ultimately must pay back.
PNG Power also owes hundreds of millions of dollars to various companies that generate electricity and sell it to the provider.
Dave Burbidge, the chair of the Independent Power Producers PNG, said collectively they were owed nearly $600 million.
He said those companies were voluntarily "keeping the lights on" while PNG Power is unable to pay its debts.
But he thinks they cannot continue to bleed money.
"Sooner or later their shareholders will say, 'Look — enough is enough' … that would mean blackouts … permanently," he said.
PNG Power in 'steady decline'
The ABC spoke with almost a dozen current and former employees at PNG Power, who said staff morale was at an all-time low and chronic leadership instability had left the company directionless.
In the last year alone, PPL has had four different CEOs and acting CEOs and two different board chairmen.
One senior employee said the company's situation was "hopeless and untenable", adding that the organisation had been drained of the technical expertise required to turn it around.
Several insiders told the ABC that PNG Power's financial problems were partly due to misconduct and misuse of funding. But they said they were too afraid to speak out for fear of being terminated.
"These people in authority, they have the money, power up there. And they dictate, they run the show," one source said.
"If you say anything you'll get sacked, everyone is being intimidated," another insider added.
PNG's Independent Commission Against Corruption is currently assessing claims of corruption within PNG Power and its shareholder company, Kumul Consolidated Holdings.
The ABC understands similar matters have also been referred to police.
Farm doesn't have power despite $2 million contract
The ABC recently travelled across PNG and heard stories of businesses hamstrung by unreliable power.
Near one town, a major local business is operating without mains power despite a contractor being awarded almost $2 million to connect it and others to the grid.
Rumion Farm is situated in the Markham Valley, about an hour from PNG's industrial hub of Lae.
Driving up a dusty road, large grain silos appear as the roar of a diesel generator grows louder.
With 11,000 pigs and over 4,000 cattle, it's the largest commercial piggery in the country.
"It's very important for a livestock business to have continuous electricity," says Arnold Periera, the farm's head of finance.
The property is not connected to the mains power grid, so the farm relies entirely on diesel generators.
"We maintain three 275KVA of generator sets, two of which [are] running alternatively in 12-hour shifts, while the other serves as a backup unit," Mr Periera said.
With the rising cost of fuel, it's an expensive source of electricity. But Rumion Farm should have mains power.
In 2022, PNG Power awarded a $1.9 million contract to a local company to connect 10 commercial properties to the electricity grid, including Rumion Farm.
Half of those customers still don't have mains power, an internal PNG Power audit shows.
The investigation suggests a senior employee increased the value of the contract by $65,400 without approval from the PNG Power board.
"With no board approvals, inflating the project cost … is wrong and fraudulent," the auditors said.
According to the document, $276,876 of mobilisation funds paid to the local company remain unaccounted-for.
At Rumion Farm, Mr Periera said he had no idea that a contractor had been paid to connect his property to mains power.
Manufacturer loses major deal due to power costs
But other businesses that do have access to the grid choose to operate on generators anyway, because mains power is so unreliable.
Ian Chow is the owner of Lae Biscuit Company, one of the country's largest manufacturers.
He scoots around his factory in a bright orange buggy, whizzing past aisles of boxes filled with PNG's famous Snax biscuits and two-minute noodles.
Mr Chow said he was close to landing a deal to supply one of Australia's major supermarket chains a few years ago.
"We were almost there … we nearly got it," he told the ABC.
But the company couldn't get its production cost low enough, and the deal fell through.
"I know if we had cheaper power, that would bring our costs down maybe 10 per cent. And that 10 per cent is enough to get us over the line to supply like Woolies or Coles in Australia," he said.
Mr Chow explains that despite having access to mains electricity, he chooses to run his factories on expensive diesel generators to protect the facility from blackouts and surges.
"When the power goes off, your machine will stop," he said.
"And within three minutes you will have a big fire in the ovens … so all the machines have got to be continuously running."
As he drives around the factory, Mr Chow passes a graveyard of equipment, worth millions of dollars, that he says was damaged by power surges.
And it's not just his business that has been affected.
"I lost a house to a power fluctuation, the house burnt down. And I live back-to-back with the fire station, they couldn't even save my house. That's how bad it was," he said.
For Mr Chow, it's an unfortunate part of doing business in PNG.
"It has gotten worse. But as I said, we're used to it," he said.
But it's also a lost source of income for PNG Power, which desperately needs to increase its revenue.
"We have the money to pay. You just have to supply to us. But if you can't supply, you're losing the guaranteed income," Mr Chow said.
'We need to rise up'
The revelations come as PNG prepares to celebrate 50 years of independence next month.
PNG Power insiders said the state of the company was reflective of deeper issues the nation faced.
"What are you going to celebrate? As a nation and as a company we're still struggling to provide the reliable power to the people. We have never improved," one source said.
"All our state institutions that are there to fight corruption, they're dead. They're not functioning.
"So the onus is on us, the people, now. We need to rise up and fight corruption in this country."
Adding to its financial woes, PNG Power has been crippled by a government decision to freeze the electricity tariff in 2013, meaning it hasn't been able to increase prices in 12 years.
A decision to increase electricity rates earlier this year was overturned by the government.
PNG Power also loses a substantial amount of money to theft through meter tampering and illegal connections to the grid.
Late last year, the PNG government announced plans to partially privatise PNG Power, saying it would sell off a 49 per cent stake in the company.
But there are doubts that investors would come forward, according to Mr Burbidge from Independent Power Producers PNG.
"Offering 49 per cent of an insolvent company to an investor is probably not the greatest investment opportunity that I can think of," he said.
"I fail to see how it can possibly work."
PNG Power did not respond directly to specific questions from the ABC.
In a separate statement, the company's chief executive Paul Bayly said PNG Power's revenue had increased by 16 per cent and $50 million had been invested to address losses.
Part of that, he said, involved upgrading transmission and distribution infrastructure to avoid technical losses, as well as installing "smart meters" to prevent theft.
"We at PPL remain steadfast in its commitment to transparency, operational efficiency, and delivering reliable power to the people of Papua New Guinea," Mr Bayly said.
