Papua New Guinea's sole fuel provider, Puma Energy Papua New Guinea, has restricted supplies nationwide following payment delays, causing the state-owned flag carrier, Air Niugini (PX, Port Moresby), and PNG Air (CG, Port Moresby) to cancel all domestic flights from July 28.

In a July 27 media release, Puma said its access to banking services remains constrained, in contravention of PNG Government directives, and is experiencing payment delays for fuel due to an ongoing foreign exchange shortage in the country.

"Without the necessary access to sufficient foreign exchange and financial services, Puma Energy remains unable to import product from the international market and must actively manage remaining fuel stocks to extend the security of supply for emergency services, hospitals and critical infrastructure," the release reads.

Air Niugini, the country's largest carrier, announced shortly after that all domestic flights, including those operated by subsidiary Link PNG (Port Moresby), would be cancelled from midnight on July 28. "This unfortunate decision has been necessitated by the recent imposition of jet fuel restrictions by Puma Energy," said its press release. "The airline is actively engaging in discussions with Puma Energy and other relevant stakeholders to urgently address the fuel supply issues and find a swift resolution. We understand the significance of air connectivity for Papua New Guinea and are committed to resuming full operations as soon as possible."

Papua New Guinea's second scheduled passenger airline, PNG Air, has also confirmed that it will cancel all domestic flights effective midnight (0000L/1400Z-1) on July 28. "Cancellation of flights will be ongoing until the cancellation of supply restrictions on jet aviation fuel are removed," its statement reads.

In a typical week, Air Niugini provides over 28,000 seats and PNG Air almost 12,000 seats on domestic flights around Papua New Guinea. The mountainous nation has minimal road infrastructure outside the cities, no rail infrastructure, and relies heavily on aviation to meet essential public transportation needs. However, there have been rolling problems with Puma's fuel supply despite government directives out of Port Moresby that it be paid promptly on an ongoing basis. BSP Financial Group Limited (Bank South Pacific), Papua New Guinea's largest financial institution and Puma's local banker, is in the energy company's firing line.

"Puma's access to banking services remains constrained, contravening Papua New Guinea government directives," the energy group said. "We have had no explanation of the issues restricting our access to financial services, and we urge BSP to come forward with a way to remedy any outstanding matters. BSP is leading us down a path that is jeopardizing the entire community."

Puma Energy is Switzerland-based but majority owned by Trafigura, a multinational commodity trading company based in Singapore. Previously, PNG Prime Minister James Marape called the fuel restrictions a national security issue and said the nation would "not be held to ransom."

In addition to domestic flights, Air Niugini operates international services and commands a 74% market share on routes in and out of the country. However, the airline says that its international flights will not be affected.