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Energy

PNG Business News - May 18, 2021

PPL and ABG Sign MoU to Explore Possible Energy Resources

PNG Power Limited (PPL) and the Autonomous Bougainville Government (ABG) recently signed a Memorandum of Understanding (MoU) to explore possible energy resources for power generation in the area. This MoU was signed following a conversation between the ABG and PNG Power last year about working together to grow the energy market in AROB. A follow-up meeting between the two parties was held in Buka in February of this year, confirming the coordination and relationship of the MoU that established the Bougainville Energy Development Steering Committee, which has the authority to carry out the obligations decided upon by the parties in the MoU and Terms of Reference (ToR). According to both PPL and ABG, main responsibilities in the ToR include the completion and expansion of operations at all installed power stations in Bougainville, the operationalisation of proposed rural electrification power distribution networks, the construction of the Ramazon Hydropower project and other schemes, and the formulation of MTDs for energy development from the new ABG-PNG Power Energy development plan 2014-2030. This will include facilitating the creation of an energy or power supply corporation for Bougainville, the transition of power over electricity supplies, the identification of alternative energy sources, and the development of a memorandum of agreement based on the MoU. The signing of this MoU, according to Vice Minister for Bougainville Affairs Peter Tsiamalili Jr, is in accordance with the signing of the SHARP deal. PPL, according to Mr Tsiamalili, is the first state-owned company to take this first step toward realizing the SHARP agreement's goals. “The most fundamental enabler in any country is power. “This step towards having an organisation that in few years time, Bougainville will be able to have its own entity that will regulate and manage its own power, it’s significant,” he said. “This shows the confidence of what this government has over this relationship. “I commend both technical teams in putting together this MoU that can articulate the process by which will enable Bougainville to have its own power.” PNG Power Limited managing director Flagon Bekker congratulated ABG on reaching this landmark and stated that PPL would work with ABG to ensure a smooth transition from PPL to complete ownership of its own electrical power generation. PNG Power, according to Bekker, has always played a key role in the economy and society of Bougainville, as well as the Autonomous Region of Bougainville. He explained that the people of Bougainville voted for ownership and autonomy over their electrical power generation, transmission, and distribution properties when they voted for independence in 2019. Meanwhile, ABG Acting Chief Secretary Shadrach Himata said that this relationship is based on mutual understanding and commitment to ensure that the rural majority has access to both non-renewable and renewable energy-based electricity. Himata also said that the Bougainville government is committed to ensuring that the power and functions of electricity are gradually transferred as expected at the Bougainville Power Company by 2027.

Energy

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.

Energy

PNG Business News - May 04, 2021

Australia Supports Electrification for PNG

The Australian government has decided to contribute $US90 million (K315 million) to the Marape government's top-priority Edevu Transmission and Electrification program. The Edevu hydropower plant, which is based in Sogeri, is part of the Papua New Guinea Electrification Partnership, which seeks to reach 70 per cent electrification across the country by 2030 with the support of Australia, the United States, New Zealand, and Japan. Treasurer Ian Ling-Stuckey praised the announcement, calling it a major step forward for the Marape government's electrification efforts. “With only 13 per cent of the nation connected to power, this is a very important and ambitious project,” he said. “We know that the original announcement was made at the APEC meeting. This was a good announcement. But it is one thing to make big announcements and cut ribbons. “Support from our international friends and allies is critical, and I am grateful that Australia, through the Australian Infrastructure Financing Facility for the Pacific, is coming to the party.” Ling-Stuckey stated that the discovery would be on favourable terms, with a $US18 million grant portion (K65 million). The money will be on-loaned to PNG Power Ltd, pending NEC clearance. The Edevu project would have the required infrastructure to link modern hydropower generation to the Port Moresby Grid, allowing diesel generation to be replaced at a lower cost and with less environmental impact. It will also allow for the upgrade of substations to improve grid stability. PPL will now be able to purchase and mount smart meters in consumer premises as part of the funding. Taxes, duties, levies, and fees on supplies, utilities, and facilities available for the project would be exempted as part of the Marape government's contribution.

Energy

PNG Business News - May 03, 2021

New Zealand Signs Funding Agreement for Electrification Project

Philip Taula, New Zealand's High Commissioner, and Flagon Bekker, Managing Director of PNG Power Limited, have signed a funding agreement for the Enga Electrification Project, paving the way for work on the Ramu grid extension to begin. Under the five-nation PNG electrification Partnership, New Zealand and Australia are co-funding the initiative. It was revealed at the APEC Leaders Meeting in Papua New Guinea in November 2018. Via the P.E.P, the governments of Papua New Guinea, New Zealand, Japan, Australia, and the United States are collaborating to help PNG achieve its electrification goal of 70% by 2030. The Ramu grid is being extended into Tsak Valley in Enga's Wapenamanda District as part of a K50 million initiative. Within 500 meters of the main transmission lines, the project would link up to 5,500 rural homes, schools, health centres, government offices, and enterprises. The PNG Electrification Partnership is working on initiatives that will bring about long-term and transformational progress in PNG. The project aims to extend and improve the power grid, as well as enhance the structural capability, policy and regulatory settings, and provide renewable energy to rural and remote communities.

Energy

PNG Business News - April 29, 2021

Parliament Passes Energy Bill

The National Energy Authority Bill, 2020 was passed by the National Parliament with an overwhelming majority of 73 to 0. The National Energy Authority Bill was created to control renewable and non-renewable energy production, storage, delivery, and retailing. The Act will also cover the following functions: Governing the oil market by overseeing the implementation and implementation of rules, legislation, and policies. Levies, fines, tariffs, and other charges are received and collected. Responsibilities for energy research and development in order to put energy policy and legislation into practice The aim of the Act Administer the National Electrification System is to approve the corporate policies of subsidiary corporations and affiliates Administrate the National Electrification Trust Funds The Bill for an Act to Reform the Electricity Industry Act 2020 was also passed. The National Energy Authority 2020 and the Electricity Industry Act Amendment Bill 2020, according to Minister for Energy and Rural Infrastructure Saki Soloma, are the culmination of the work undertaken so far in restructuring the energy market. He said that the passed Act of Parliament would create energy and electricity industry legislation for the energy sector in general. According to him, the National Energy Authority Bill 2020 establishes a robust and equitable legislative framework, with fines imposed on those that violate the Act and regulations. He went on to say that the Electricity Industry Act (Amendment Bill) contained consequential changes to the Electricity Industry Act, allowing the National Energy Authority Act, which was passed by Parliament, to go into effect right away. The National Energy Authority Bill 2020 is based on the same model used for the establishment of stationary authorities such as the National Fisheries Authority, National Information and Communication Technology Authority, and others, according to the explanatory notice. It specifies that the National Energy Authority is a policy and regulatory agency, not a commercial institution, as stated in the Act. PNG Power Limited will no longer be an economic or technological authority and the NEA will conduct the licensing and technical functions that were formerly handled by PNG Power Limited.

Energy

PNG Business News - April 19, 2021

Bekker Says Contract Reviews Are Important

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.

Energy

PNG Business News - April 12, 2021

Independent Power Producers Concerned Over PNG Power Opening Up Contracts

Independent Power Producers (IPPs) in Papua New Guinea have expressed concern about PNG Power Limited's (PPL) unilateral analysis and renegotiation of existing contracts and contractually agreed rates to supply power to the grid. The task of IPPs, according to David Burbidge, Chair of the IP3 Industry Group for Independent Power Producers, is to collaborate with PNG Power to provide affordable and secure power to the grid and thus to end-users and consumers. “The intention of the Utility to renegotiate the price defined in a contract is problematic for IPPs; it will also have sector-wide ramifications. The price at which IPPs sell their power to PPL is a contractual agreement between the IPP as a power generator and PPL as the Utility, which is captured in PPA – a power purchase agreement. These PPA contracts are generally for a period of 15 to 25 years to ensure both parties know in advance that there is a market for the power generated (for the IPP) and a consistent power supply (for the Utility) at a mutually agreed price level. This gives financiers certainty over the debt repayment and allows the IPPs to recover the cost of capital employed in what has to date been perceived as a high-risk environment,” added Burbidge. The IP3 Industry Group criticized the way PNG Power Managing Director, Mr Flagon Bekker, framed the subject in a recent statement.  “We see it as misleading that Mr Bekker speaks of subsidies to IPPs. IPPs are paid a mutually agreed price for the power they provide, just like any other commercial arrangement,” said Burbidge. “IP3 emphasises that the generation industry is open to working with PPL to implement the lowest cost possible for future generation, which will help reduce the major liquid-fuel bill that currently affects PPL’s net revenue. However, PPL also needs to improve its financial position by reducing the major financial losses due to power theft and billing losses, over 20%. The State and other large non-paying customers also need to consistently pay for power used, as this revenue shortfall is directly responsible for PPL’s losses,” said Burbidge. “Setting the precedent that PPL can reopen PPAs at any time to renegotiate prices will be devastating for the power generation industry in PNG. It will increase the cost of any financing and the future cost of power from IPPs as it creates an environment of major contractual uncertainty and major sovereign risk in terms of all contracts with State-Owned Enterprises in PNG. This will increase the prices offered by IPPs, which is the opposite of what PPL is trying to achieve, and it will not encourage foreign investment in PNG’s energy sector” stresses Burbidge. “We have seen analysis that reveals the fixed generation costs from IPPs represents less than 20% of PPL’s costs, and a focus by PPL on revenue collection and movement away from expensive liquid fuels is fundamental for PPL to improve its operating position for the short, medium and longer-term. “As an Industry Group, we also underline and fully endorse the critical nature of transparent and open tendering for future IPP projects. A number of expensive un-tendered previous PPAs have now expired or will expire relatively soon, they can be replaced by lower-cost IPPs, a number of which have already passed through a transparent tender process. “We support the statement by the PPL Managing Director that we need a ‘win-win situation for the people of PNG and independent power producers while positioning the sector for lower tariffs going in the future. Unfortunately, the approach taken by PPL cannot be characterised as creating a win-win for IPPs, PPL, customers, and the people of PNG, and is more likely to result in power shortages and high power prices, due to increased diesel usage, or the unrequired commitment to large power generation with major capacity charge obligations over 15 years on PPL of over 10 billion Kina,” said Burbidge.

Energy

PNG Business News - April 08, 2021

Lae Chamber Welcomes Green Energy

The Lae Chamber of Commerce and Industry (LCCI) said it welcomes any power plan that is long-term, environmentally friendly and creates jobs in the delivery of efficient, low-cost electricity in Lae and Morobe. President John Byrne referred to concerns regarding the PNG Biomass project in the province's Markham Valley when he said, “PNG Biomass has provided a solution which ticks most of these boxes, whether it fits the plan of PPL (PNG Power Ltd) is a decision beyond our scope. The recent Ramu 2 announcement is another such solution. Our people of Lae, Morobe, and PNG, not only expect but deserve, reliable, constant and cost-effective power solutions.” According to Byrne, the Lae business group praised the Lae PPL team for their commitment, hard work, and communication in maintaining an ageing and insecure grid infrastructure operational. He said many companies that had short or long-term contracts with the government were failing because of the long-standing outstanding Government bills owing to them. “The quantum of debt is not specified but very large and this added to the impact of the Covid-19, resource debates and a lack of forex is taking a toll on the business houses.,” he said.

Energy

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.

Energy

PNG Business News - March 19, 2021

Power Plant Site Cleared in Markham Valley

PNG Biomass is Oil Search’s renewable energy and sustainable tree farming business. The project is still subject to a final investment decision by Oil Search, now planned to take place in the second half of the year. The formal ‘go-ahead' has been postponed several times due to a lengthy process with the PNG government to fulfil their promises to move the project forward. Oil Search will shift the project rapidly into construction once the PNG government addresses the final outstanding issues, adding 30 megawatts of renewable, affordable, and clean energy to the Ramu grid and Lae businesses. Michael Henson, Project Director of PNG Biomass, said, “We designed PNG Biomass with a two-fold purpose; we will power the Ramu Grid with low-emission renewable energy, and to do that we use an inclusive economic growth model to empower communities to maximise benefits for them. The value we create with PNG Biomass is shared between landowners, communities, women, youth, future generations, local and regional businesses, provincial and national government, and Oil Search. This is a  great example of creating shared value. This project is equally a sustainable investment for Oil Search in the  energy transition and investment in the people and prosperity of PNG.”  Henson said that it is now time to realise the benefits of this project. “Over the last year, we have expanded our tree farm to 3,000 hectares. We signed the long-term lease with the landowners of the power plant land and just finished clearing the power plant site, we are ready to commence construction. In the next few months, boreholes will be drilled to supply water to the power plant. We just need the Government to deliver on its commitments to move this project forward,”  stated Henson.   He added, “Landowners of the Ganef community were glad to see us clear the site, but they are getting restless. They have committed their land to build the power plant, but construction has not commenced yet. We reach out to them daily to provide information and explain the delays, but it is difficult to explain the bureaucracy and politics in PNG. Fortunately, we have a great working relationship with our communities. The Ganef landowners are thankful for the borehole we drilled in their community. We also installed a solar pump and water tank so they now have a fresh water supply.” 

Energy

PNG Business News - March 16, 2021

Start Date For K4mil Solar Project Has Been Set

Work on a K4 million solar project to cover all wards in the Duke of York Islands local level government (LLG), Kokopo, East New Britain (ENB), is set to start in June. This was announced by Francis Uratun, director of PNG Power Ltd (PPL), who recently travelled to the Duke of York Islands to finalize project documents for submission to AusAid. AusAid will fund the project. Uratun said, “This will be the first solar power project to be rolled out by PPL under its rural electrification programme. The project is an initiative of Kokopo MP Emil Tammur who has been negotiating with PPL for the past 18 months. The negotiation for the project between Tammur, PPL and AusAid has been a long process and this trip to the islands will complete the final process, including gauging the views of the communities, especially women and youths. The PPL team is expected to submit a detailed and final proposal to AustAid this month before funding can be made available. The project proposal is to set up four solar farms in various locations on the island to supply 50 kilowatts of power.”

Energy

PNG Business News - March 02, 2021

PNG Power Addresses Electric Issues

To address the problems of electric supply in the region, PNG Power Limited has focused its efforts on addressing key issues in the country. According to Managing Director Flaggon Bekker, the organisation was split into two - corporate and execution - to see how to solve these problems. “With the split in the organisation, there are no-cost implications or job loses rather we are having staff working in the right places and addressing a specific problem,” he said, adding that they are looking at other problems aside from ageing equipment that causes power outages. “For land issues, we need local and provincial governments’ involvement, we want to execute the project but we can’t leave the solutions for landowners,” he said. “We need all the governments around the PNG Electrification Partnership (PEP) project to engage with us to address this because the projects are important and are national projects.” To address illegal power connections, PNG Power has introduced smart meters. “This (smart meters) is a project we are working with donor partners as a solution for illegal connection,” he said. “Smart meter is a meter that goes in and comes out and is digitally linked. When that difference changes then there is a leak and there is an illegal connection.” The group is also looking at fixing specific parts of power grinds in the region. “Solutions will be different in different places because the problems might be slightly different and components can be different but the same strategy will be applied in all the power grids,” he said. “We will be looking at the certain parts of the grid and when we strengthen it (or the weakest link) this will help the whole grid.”

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Energy

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.

Energy

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.

Energy

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.”

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