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PNG Business News - February 25, 2021

Government and Chinese Firm Sign Hydropower Project

The government and Shenzhen Energy of China recently signed the K3.3 billion Ramu 2 hydropower project. According to State Enterprise Minister William Duma, although the conditional power purchase agreement with PNG Power had been signed, there were other financing arrangements that the project consortium needed to work on with their own parties before the commencement. “The first hurdle has been dealt with now with the signing today,” he said. “As soon as they organise their financing, we will start. We are looking at an initial investment of K200 million for the early work programme – building roads, setting up camp – an immediate capital investment of money into our country.” Duma said Morobe and the Eastern Highlands would each own 10 per cent equity in the project. Landowners from each of these places would have a 10% share while the state, 60%. “We are giving equity to the two impacted provincial governments and landowners plus the project will be paying the lease of K350,000 every year,” he said. “On top of that, the landowners will receive an upfront payment of K10mil for their landowner companies.” After a strong bidding process managed by Kumul Consolidated Holdings, Duma said the National Executive Council had picked the consortium led by Shenzhen Energy. Not only will the project supply electricity to the Wafi-Golpu mine and maybe the Ramu Nico project in Madang, but the project will also provide jobs and benefits to businesses and landowners. “This project might even outlive the Wafi-Golpu mine,” Duma said.


PNG Business News - February 22, 2021

Project Relies on Production of Low-Cost Power

If low-cost power can be produced, then the investment into the Ramu Two power project may proceed, said Prime Minister James Marape, who was responding to a report that a Chinese investor in the Ramu project had said that the government had nothing to do with this. Marape added that the investment was part of the public-private partnership, where the Chinese government wants to invest in. The reports said that this investment would be priced at K6.94 billion (AU$2.6 billion) to be built by a Chinese hydropower company. China’s Shenzhen Energy will finance, build, and operate this for 25 years before handing it over to PNG. Marape said the Ramu project had been here for quite some time. “State Enterprises Minister William Duma and the State-Owned Enterprises are handling that,” he said. “If the numbers are determined, the project will go ahead. If it’s not burdensome on PNG Power and if they produce low-cost power supply, then I don’t see any issue with it.” If the numbers don’t stack up, then he said that the project might not proceed. “It’s something that PNG Power will have a handle on at their level,” Marape said.


PNG Business News - January 27, 2021

Energy Sector of Papua New Guinea Worth K4.2 Billion

If properly developed, the energy sector of Papua New Guinea is worth around US$1.2 billion (K4.2bil). According to the outgoing Energy Minister William Onglo, some countries are dependent on wind for power generation while others for thermal and some, for water. “I’ve seen that its potential is too huge and this industry can be a US$1.2 billion industry,” he said. “We have the energy resources to supply electricity to all our people (but) we are not getting it right. That’s why the policy and national electrification rollout plan plans are the guide. Petroleum has taken over the upstream. The energy has basically taken over everything downstream.” His successor, Saki Soloma, added that the energy sector had poorly-managed electricity services which sometimes become unreliable or limited for customers. “As a result, there are conflicting roles, mandates and poor performance by the institutions involved in the regulation of the energy sector,” he said. “These concerns have also been raised by the development partners, donors, financiers and other energy stakeholders. Legislation is, therefore, required to address these issues affecting the energy sector.” In April, Soloma hopes to take up the recently-approved National Energy Authority Bill. “The Bill will establish the National Energy Authority as well as the electricity and energy law for the energy sector,” he said. “The enactment of the Bill will create a one-stop-shop regulatory authority. There will be no more fragmentation or scattering of the regulatory functions currently housed in a number of agencies of the Government.”


PNG Business News - January 12, 2021

Basil Expresses the Need for Coal

In a meeting with the Lae chamber of commerce and industry, Deputy Prime Minister Sam Basil expressed that coal should be included in the energy mix of the country, adding gas, diesel, hydro, and other energy forms should also be part of this. He said that among the challenges of investments coming to the country were the high costs of living. He said that this challenge needed to be addressed, especially the high cost of electricity - while acknowledging upcoming and existing investments within the chamber. “At this stage, cheap, affordable power for manufacturing, downstream processing, increasing employment and ultimately industrialisation is crucial,” he said.


PNG Business News - November 23, 2020

Dirio Project Supplies Power

Dirio Gas & Power project, the newest private power plant in Central province, was recently launched, providing the City of Port Moresby its much-needed electricity. The power plant generates 45 megawatts (MW) of power supplied to the city’s power grid at a rate of 37 toea per kilowatt, distributed by PNG Power Ltd as per the Power Purchase Agreement (PPA) between the two companies. Hela Governor Philip Undialu hopes that with this new milestone, the developers of the PNG LNG project can now have great confidence in the resource landowners in establishing other major business projects in the near future. “We have 20 years of a power supply contract with PNG Power and almost 25 years of gas supply from ExxonMobil PNG, so your investment is not wasted,” he said. “Welcome you all to the class of the corporate world, we are no longer the bystanders, rent collectors and royalty collectors.” He also expressed his gratitude to the agencies and people involved, especially for the National Government for this project. For his part, Mineral Resources Development Company (MRDC) managing director and chief executive officer Augustine Mano said that for the first time, this project signalled the entry into power generation business by a nationally-owned company. “It is a historic moment for landowners and a momentous occasion for the country,” Mano said. “Dirio is owned by PNG LNG project landowners in Hela, Southern Highlands, Gulf, Western and Central. Their provincial governments are also partners in this project. I’m very proud of their decision to undertake this venture. The petroleum and energy sector in our country has huge potential in the upstream through to downstream value chain. For a long time, business along this value chain has been dominated by foreigners. That has to change, and that change begins now. “Dirio Power is a game-changer,” he said. “The MRDC group and its trustee subsidiaries have the capacity to undertake this business. “We have secured financing and retained the best expert advice to ensure this power project succeeds.” Meanwhile, PNG Power Ltd has been urged to come out with solutions so that residents and business owners should pay less for electricity. According to Prime Minister James Marape, this launch, together with the other power players in the region, should contribute a lot to the power and therefore, can reduce the cost of sale of electricity energy to PNG Power. “I want all our manufacturing plants in Port Moresby to have excess to cheap power,” said James Marape. “PNG Power you now have first opportunity with half the cost of power being passed to you, I want this to be passed on to customers and customers to enjoy cheap power in Port Moresby.” The Dirio project proposed to provide Port Moresby with 45 MW of power using natural gas bought from the PNG LNG Project. The plant will function three 15 MW Titan Solar turbines, coming up with the total energy capacity of 45 MW. In September 2019, the landowner company signed the PPA with PNG Power, agreeing to provide electricity at a cost lesser than other third-party suppliers. Dirio supplies cheaper power, making electricity more affordable tor residents.


PNG Business News - November 04, 2020

US Invests for PNG Electrification

To fund electrification in PNG, the United States government through the USA Agency for International Development is set to invest US$57million. According to United States Ambassador to PNG, Solomon Islands and Vanuatu Erin McKee, electricity brings up the living standards of towns, cities, and remote villages. This also lets hospitals and schools bring essential service and this is also an important predecessor for the growth of the private sector - which includes SMEs. Ambassador McKee said that Research Triangle Institute (RTI) International, an independent non-profit research institute, will spearhead this initiative. She said that the progress being undertaken by PNG requires large-scale investment by both the private and public sector. This also involves investments in connecting service providers, households, and businesses to the grid where communities are isolated and have a difficult time communicating with one another. In partnership with the PNG government, the US guarantees that a target of 200,000 new household electricity connections are done through the strengthening of the operations of the PPL and increase in revenues. This is also to improve the grid electrification marvels to bring up electricity access in many distant communities. For his part, Minister for Energy William Onglo expressed his gratitude to the US government and its people for helping them through these troubled times, and for their continued support.


PNG Business News - November 02, 2020

Renewable Sources to be Included in PNG’s Power Supply

Renewable sources such as wind, biomass and solar are still included in the future plans for power supply for PNG Power. According to Managing Director Flagon Bekker, renewable energy is the answer to the power struggles of PNG. “You’ve got me very excited because PNG clearly is very well endowed with huge renewable resources so we wouldn’t be very good custodians of this business if we didn’t consider renewable (energy) seriously,” he said, Mr. Bekker added that while there is a need to give a combination of reliable sources, there is also a need for gas and other fuel sources. These are measured against the metrics of particular business plans and how this falls into the costing. Mr Bekker added, “The future for PNG is definitely renewable. Our strategy is to have reliable available power sources and to do that we will consider other power sources, but of course, our first priority is to look at renewable.”


PNG Business News - October 17, 2020

Enga Province To Address Problem of Electricity

To bring electricity supply to Enga province and provide millions of kina in revenue, the Enga Hydro Power LTD and Power China (PNG) inked an agreement to provide the area with the K200 million Pilikambi hydropower project MOA. Under the agreement, the provincial government has 40 per cent share while China has 60 per cent, the latter to source technical assistance including funding. When completed, the hydro project is expected to generate a total of 19 Megawatts in power which is 17 times the province is getting now at 2.3 megawatts from the Yongki Hydro main grid, and can also supply to neighbouring provinces. “This is how big we are,” Power China executives said. The firm is also building a huge 50 megawatts hydro with the Brown River water system to find solutions for the electricity problem at Port Moresby. Their other projects included West New Britain, Oro and Wau Bulolo in Morobe Province. Chairman of Enga Hydro Ltd Alan Guo said that this project began 7 years ago. “That’s how long it took for us to come this far to sign the agreement to kick start the project. Yes, building a hydro is not an easy task,” he said. “I want to tell the Enga provincial government, its administration, the people of this province and the country that we will deliver the project in two years.” For his part, Managing director of Power China (PNG) Ltd He Tingfu also said his firm will work fast to bring electricity to the people. “As I have said we are a big in the World in producing power energy (electricity). With our building experience and skill capacity, we will deliver the Pilikambi Hydro project on time to the people of Enga,” he said. Enga Governor Sir Peter Ipatas said, “The people of Pilikambi must appreciate that the construction of a big project will take place in their area. Their duty now is to change their attitude from being tribal warriors to being good citizens so you benefit from what the project got to offer.”


PNG Business News - October 09, 2020

The Need for Cheaper Energy

During the handover ceremony of Petroleum Minster Kerenga Kua to Energy Minister William Onglo, the former chided the latter that at this point in time, there should be a department created for the energy sector. “For Papua New Guinea’s quest for development, (we should start) by making energy a standalone department, with its own dedicated minister, with its own dedicated secretary and staff,” Kua said. “We have about 30 to 40 dedicated staff at the energy wing. Presently, under the public service determinations, we are one department.” He added, though that the sooner the Energy Minister advances his department, the better it is for the country. He continued, “Some of your challenges would be sourcing different sources of energy. There are all sorts of energy that you can look at. In PNG’s case, we have so much cheap energy, and cheap labour. But what has been lacking has been cheap energy.. We have not been able to figure out how to provide ourselves, cheap, affordable energy. It’s through the energy that you will encourage industrialisation.” As a response, Onglo agrees that the energy in the country has gained ground and deserves to have a separate minister. “No doubt the energy sector is now gaining momentum as a very important driver to economic growth and deserves a separate minister,” he said. “I will ensure that the Energy Bill is presented to the NEC for endorsement and to the National Parliament for enactment as soon as possible.” There are, of course, major challenges, Onglo said, but he is still hopeful that this department will push through.

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