Papua New Guinea boosts power supply

Public and private sector efforts are under way to increase Port Moresby’s electricity supply ahead of the Pacific Games in July, as the Papua New Guinea government tries to allay fears that the major sporting event could be disrupted by blackouts.

Prime Minister Peter O’Neill announced during the last parliament session in mid-February that ExxonMobil had agreed to provide up to 25 MW of electrical power to the capital for near-term use. The news comes as the country prepares to host the Pacific Games, which are expected to attract athletes and dignitaries from 21 neighbouring countries.

“This is a much welcome relief to the residents of Port Moresby,” said O’Neill. “Knowing that PNG Power is running out of capacity to produce a stable and consistent supply of power, we needed to encourage the LNG project to provide the country with access to gas,” he added, referring to the PNG LNG project operated by ExxonMobil.  

The total supply from the Port Moresby electricity system is 130 MW, but demand often reaches 150 MW, according to the prime minister, leading to regular power outages. Requirements could rise to up to 200 MW in the coming years as the city expands.

In a statement, ExxonMobil said it would supply up to 20m cu feet per day of domestic natural gas for 20 years, and provide up to 20% of Port Moresby’s current generation capacity for an interim period while the government addresses long-term power generation options.

The oil and gas major said that the recently signed memorandum of understanding also includes the construction of a new gas-fired power plant, which is set to boost electricity supply to the capital city in the long term.

As part of the same agreement, the government awarded ExxonMobil a petroleum development licence for the P’nyang South gas field, with an eye to both supplying the domestic market and expanding the PNG LNG project. This may result in the construction of a third LNG train down the line.

Meeting domestic demand

The energy-starved industrial sector welcomed the news, given that demand for power is only expected to increase. According to the Government’s Strategic Development Plan 2010-30, peak demand could reach as high as 1970 MW by 2030.

“It is a daunting task to keep up production and stay competitive as an industry when power supply comes and goes like a Christmas tree,” Stan Joice, general manager of SP Brewery – PNG’s first brewing company now part of the Heineken-owned Asia Pacific Breweries (APB) group − told OBG.  “Like everybody else, we have to rely on our own backup generators, but that doesn’t come cheaply either.”

Improving power generation

Inviting independent power companies to participate in the sector is also part of the government’s strategy to improve power generation, leaving PNG Power solely in charge of distribution over time. 

In addition, the government purchased two power generators from Israel Electric and LR Group of Companies at a cost of K94m ($35m) last year. While the first is already in use in Port Moresby, a second, 26-MW gas turbine has been recently commissioned in Lae and is expected to provide immediate relief to consumers and services in the industrial hub.

The authorities must also tackle issues such as unpaid electricity bills due to outdated billing systems, prompting the government to declare a state of emergency to recoup overdue bills in January.

Clement Waine, acting secretary at the Department of Public Enterprises, told OBG that an outdated billing system and endemic theft in certain areas of the country were the reasons behind PNG Power not being able to collect as much as 70% of its outstanding bills. “Although we have rescued the situation for the time being, it is only through the introduction of smart grids and cutting-edge technology that we will be able to properly manage the domestic market over the long run,” said Waine, who was brought in as part of a team to devise private sector solutions for state-owned companies.