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Bekker Says Contract Reviews Are Important
by PNG Business News - April 19, 2021
According to PNG Power Ltd, renegotiation and reviews of current contracts with independent power producers (IPPs) make the business healthier and more competitive (PPL).
PPL managing director Flagon Bekker made the statement in response to questions raised by IPP industry groups (IP3) about PPL unilaterally reviewing and renegotiating current contracts and contractually negotiated prices to supply electricity to the grid.
IPPs, according to Bekker, must be adaptable enough to evolve as fiscal, technical, and environmental factors change with time.
“We asked IPPs to respond to a survey late last year where we asked them for their suggestions and next steps in dealing with the current commercial status quo,” he said.
“In fact, we offered four or five alternatives to renegotiation. None responded.”
According to Bekker, analysis shows that in terms of pricing, spending, and the overall economy, it is best to keep IPPs' share of the total market minimal.
“Egypt is the best example of countries that have kept IPPs to a smaller share of the total (market) and found it easier to weather macro-economic shock and have greater freedom in deciding where to source finance for power investment in the future,” he said.
“The IPPs not only make the macroeconomy weaker, but they are also the cause of their own problems.
“PPL is leading to change this.
“IPPs should not resist.
“They should partner by suggesting solutions for the future.
“PPL will send the survey out again and we hope they respond this time.”
According to Bekker, there was a lot of analysis and support focused on post-negotiation evaluations, which shows that the renegotiation process contributes to the discovery of lessons and eventually the execution of those lessons.
“Off the top of my head, here is a list of countries that have renegotiated PPAs in full or in part over the years: Philippines, Brazil, India, Argentina, Mexico, Turkey, Poland, China (among others),” Bekker said.
PNG Business News - March 31, 2021
PNG Ports Explains Their Decision to Deal with Covid-19
COVID-19 had a major impact on Papua New Guinea's exports and port movement, but the PNG Ports Corporation had taken political decisions to handle the situation. In recent months, the world has seen and continues to see a significant shift in everyday lives, which has had significant implications for industry, commerce, and transportation. The pandemic's emergence altered both economic and trade forecasts for 2020. New predictions have reduced forecasts to negative 4.9 per cent, down from an estimate of 3.6 per cent increase in container trade worldwide in the fourth quarter of 2019 to 2.5 per cent in January 2020. PNG Ports chairman Kepas Wali clarified that the company's earnings were the result of tight cost-cutting steps and prudent decisions taken by management. Last year, he said, the closing of borders and prohibitions surrounding the COVID-19 pandemic struck PNG Ports hard, which is dependent on trade. Despite COVID-19, PNG Ports has continued to operate all of its ports. “When COVID-19 hit the country and the world, the management of PNG Ports worked quickly and instituted certain protocols and prevention measures just so we can maintain our ports operations,” he said. “The management’s quick response to the situation has made it possible for all ports to operate during the hit by the pandemic through until now.” He said the pandemic's consequences on the company were expensive, but PNG Ports is happy with the positive results obtained by their management's swift reaction and aims to continue this going forward.
PNG Business News - April 08, 2021
PNG Power Receives Assistance from the World Bank
The World Bank has funded a $30 million (PGK105 million) project to help the state-owned electricity provider PNG Power boost its operational and financial efficiency. The PNG Energy Utility Efficiency and Reliability Improvement Project (EUPRIP) arrives at a crucial time for PNG, with people around the country facing big problems with inadequate access to electricity, and even for those that do, unreliable power sources and long blackouts that are affecting households, industries, and critical service delivery. Though PNG has tremendous untapped energy resources, growth is lagging, and electricity connectivity remains extremely limited, with only around 13 per cent of the country's 8.6 million population having access to grid-connected electricity. The new project, which is scheduled to be completed between 2021 and 2026, will assist PPL in establishing a stable financial base and catalyze private investments in the energy sector. The scheme includes the reconstruction, reinforcement, and improvement of utilities on PNG Power Limited's (PPL) owned and managed grids in Port Moresby, Ramu, and Gazelle. The project would also help PPL boost its management and financial stability, with an emphasis on raising service quality to reach higher expectations on a regular basis. PPL will gain assistance in developing the business reform strategy, which will include smart meter installation and emerging technology implementations. In addition, through the planning and execution of a Least Cost Power Development Plan for PPL, the initiative will lead to lowering the cost of power generation and switching to clean, renewable energy. William Duma, the Minister for State Enterprises, said that supplying inexpensive and stable electricity to the PNG community is critical to the government's growth plans and that it necessitates a well-functioning service provider. Meanwhile, PPL Managing Director Flagon Bekker noted that the World Bank-funded PNG Energy Utility Efficiency and Reliability Improvement Project would allow PPL to contribute significantly to the Government's aim of connecting 70% of the population to electricity by 2030, as outlined in the PNG 2010-2030 Growth Strategic Plan. “PPL is embarking on major corporate reform initiatives,” he said. “We look forward to working alongside the World Bank team to put in place critical improvements that will ultimately deliver stronger, more reliable energy for all Papua New Guineans.” Stefano Mocci, the World Bank's Country Manager for Papua New Guinea, also stressed the importance of access to secure, affordable electricity for economic development; companies, schools, hospitals, and clinics, among countless other facilities in PNG, all need reliable, affordable electricity to keep the country developing. “This new project builds on the groundwork delivered through the World Bank’s Energy Sector Development Project, which helped prepare PNG’s National Electrification Rollout Plan, and geospatial assessments to plan optimal approaches to provide electricity to 70 per cent of the country’s population by the year 2030,” he said. “We’re proud to be helping ensure more Papua New Guineans can get connected - and stay connected – to reliable, affordable electricity in the years ahead.” Agriculture, health, road transport, water and sanitation, electricity, rural service delivery, and youth jobs are among the nine successful projects supported by the World Bank in PNG, totalling approximately US$455 million.
PNG Business News - March 25, 2021
PNG Ports Corporation Records K83mil Profit
PNG Ports Corporation has reported a profit of K83 million for the full year of 2019. This permitted Kumul Consolidated Holdings (KCH) to receive a full-year dividend payment of K21 million, which was finalized yesterday with the presentation of K11.4 million to KCH as a second payment following the first part of K9.6 million paid in November. Chairman Kepas Wali said PNG Ports had had a challenging two years, with the Covid-19 impacting the majority of its business. “We saw a decline in shipment and cargo through our ports, but because management instituted certain stringent measures in management and costs, PNG Ports has been able to maintain a healthy bottom line,” he said. “Despite the Covid-19, we have been able to maintain the ports operationally. Management quickly introduced certain protocols at the ports when the pandemic hit to keep the ports operating. There wasn’t any stage that the ports were closed down. They (PNG Ports Corporation) were able to separate the operation of the ships from the shore so shipping continued and cargo was still transmitted through our shores.” Wali also explained that the dividend was based on a loan agreement they had with Bank South Pacific (BSP), which stipulated that only 25% of profits could be paid out as dividends. The dividend payment for 2019 was timely, according to KCH managing director Isikeli Taureka, since the money would be injected into other state-owned enterprises (SOEs) that were struggling during the Covid-19 period. “One of the things we appreciated is that apart from the major ports, most of the secondary ports around the country are at least recovering cost and breaking even.” The dividend payment was agreed by State Enterprise Minister William Duma. PNG Ports, according to Duma, has been a reliable performer over the years. He stated that the K21 million spent in 2019 was a good effort. “We need every toea and the K21 million is a lot of money and in times like these millions of kina makes a big difference,” he said. PNG Ports Corporation has also paid the government a total of K43 million in royalties.
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PNG Business News - May 13, 2021
National Airport Corporation to Focus on Redevelopment Projects
The National Airports Corporation plans to devote more resources to the redevelopment projects at Kavieng, Tari, and Mendi airports as part of the Civil Aviation Growth Investment Program. With the exception of three airports, all airports under the CADIP program are on a budget, according to NAC acting managing director Rex Kiponge. Apart from Jackson Airport in Port Moresby, Kiponge claims that the majority of the country's airports are unable to handle the newly launched F100 aircraft. “The introduction of F100 aircraft has deteriorated the condition of runways in PNG. Under CADIP, fencing and runway length deficiencies will now meet the F100 and ICAO requirements. CADIP was implemented to meet the minimum PNG Civil Aviation Rules (CARS) and the International Civil Aviation Organisation (ICAO) standards and recommended practices in all the 22 airports in the country. “The F100 aircraft require a minimum runway length of 1900 metres –– only three airports meet this requirement.” The F100 will be able to land at 12 airports thanks to a CADIP runway length upgrade. Port Moresby is now the only province that meets the operating criteria for F100 planes. Standby control, security fencing, apron parking, runway, taxiway, and apron strength, and a runway length suitable for takeoff at maximum payload are all part of the 22 airport upgrades. Kiponge recently visited the three airports and expressed his satisfaction with the development. Contractors have already finished construction on the security fence at Kavieng Airport, and work on the runway extension is going well. Once the runway extension is complete, the contractors can begin work on the terminal. He mentioned that the runway extension at Tari Airport is complete, and contractors are currently working on the apron, which will be finished until the runway extension is completed. Owing to the contractors' inability to obtain materials for the runway at Mendi Airport, NAC has requested that they redo the runway before moving on to the other areas. “Despite whatever issues within NAC, I will ensure that all 22 NAC’s airports undergoing upgrading will be completed and I will put in a lot of efforts and focus to makes certain work is done well and completed,” Kiponge said.
PNG Business News - May 13, 2021
Govt to Focus on Downstream Processing
The government is putting a lot of effort into encouraging downstream production in the region. This was said by Prime Minister James Marape during a visit to Paradise Foods Company Limited. “We are focused on downstream processing as far as going forward is concerned –– instead of exporting raw products,” said Marape. “We want to go downstream to satisfy our local markets as well as export to economies around us.” PNG is fortunate, according to Marape, to have access to 60% of the world's gross domestic product (GDP) through the APEC network. “As well as, not just the APEC network, but in the vicinity of PNG’s accessibility to markets, we have over 4 billion people from the Pacific, Northern Asia, Western Asia and Northeast Asia put together. “So to satisfy our local markets in PNG for our 8 million-plus people, as well as the opportunity of exporting to markets closest to us like our neighbouring countries.” Marape has stated that he supports downstream production and marketing of PNG's natural resources both locally and internationally. “Today, I am privileged to visit an industry that has been at work since 1945, and I’d like to thank Paradise Foods Company Limited for doing a wonderful job and feeding our country.” Marape promised that the government will help the industry and market.
PNG Business News - May 13, 2021
Mayur Discusses Power Plant Project in Lae
Mayur Resources Ltd says it has formed an ongoing relationship with the State negotiation team to discuss and finalize a power purchase agreement (PPA) for its planned power plant in Lae, Morobe. The organization was waiting for the State negotiation team's makeup to be finalized and signed off, according to managing director Paul Mulder. After that, he said, the Enviro Energy Park (EEP) project's final discussions and negotiations will begin. Mayur's planned 52.5-megawatt EEP project is an advanced power plant that will produce more efficient and cheaper electricity than current solutions by combining conventional thermal energy (sourced from the company's wholly-owned Depot Creek project), solar, and biomass woodchip, while also supplying co-generated steam to nearby industrial users who were burning diesel for their steam needs. The EEP, which is near Lae, will also have steam as a by-product for local industrial uses, and potential dual fuel systems will allow for the use of diesel. “The energy park would balance the need for new environmentally friendly technologies and reliable energy,” Mulder said.