Power project waiting to start
DEVELOPERS of the Ramu 2 hydro-power project are waiting for Kumul Consolidated Holdings (KCH) on when to start construction.
Li Jianjun, an executive of China’s Shenzhen Energy Group, a partner in the project made the comments yesterday.
“We are waiting for KCH to advise us on the time to execute the agreements,” Li said.
KCH managing director Darren Young said this week that the National Executive Council of the previous government approved in January the execution of two key commercial agreements: the power purchase agreement and implementation agreement.
Young said this would effectively commit parties to proceed to the next phase, which included completing project financing negotiations and for the consortium partner to commence early work. Young said it would be prudent for the government to be briefed on the status of the project in light of its scale and policy implications before parties proceeded to execute the project agreements.
He said KCH was anticipating construction to start at the end of the year.
Li said Shenzhen Energy Group had accepted the revised transaction model, which was the Boot (build-own-operate-transfer) model.
Boot means that the project developer and operator, a consortium comprising two Chinese companies Shenzhen Energy Group and Sinohydro Corporation, would own, operate and maintain the asset for a duration of 25 years.
The original model that was put to Cabinet was a built-lease-operate, meaning the operators would not own the land, but it would be leased, which was not good for the investors because if they did not own the land, the cost of finance would be high.
The project would be the first hydro project to be delivered under a public-private partnership model which would see the Eastern Highlands and Morobe governments owning 20 per cent, with the landowner umbrella company owning another 20 per cent shares.