PNG expands electricity coverage with new investment

Continued economic growth in recent years is driving demand for electricity across PNG, straining the capability of the country’s primary grid networks. The widely dispersed population and geographic challenges continue to pose formidable barriers to increasing electrification, while the small but growing capacity serving the main urban areas is in need of expansion to meet growing power needs.

Total national power generation capacity currently sits at around 582 MW, according to Asian Development Bank (ADB) figures, less than the output of a single large power plant in many countries. Lacking a coal mining industry that can supply cheap fuel for its power plants like many of its neighbours, PNG has historically relied on renewable sources for power generation supplemented by diesel-fired generators. Hydropower plants form the single largest contributor to the national power grid with 230 MW of installed capacity, or 39.1% of the total. Diesel generators run a close second with 217 MW (37.4%), followed by gas-fired with 82 MW (14.1%) and 53 MW of geothermal power production (9.1%).

Png Power

The largest single operator is state-owned PNG Power Limited (PPL), which operates the three primary grids, along with dozens of smaller localised systems. The Port Moresby system serving the National Capital District is the largest of these and derives most of its electricity from the 76-MW Rouna power station, which runs four primary hydro units on the Laloki River. This is supplemented by another 30-MW thermal power plant at Moitaka, as well as through purchases from private power stations. Operated under an independent power project agreement, the 24-MW, diesel-powered Kanudi thermal power station has fed electricity to the Port Moresby grid since it began operations in 1999.

Serving the Momase region, including the towns of Lae, Madang and Gusap, as well as the Highlands population centres in Wabag, Mendi, Mt Hagen, Kundiawa, Goroka, Kainantu and Yonki, the Ramu grid is the PPL’s second-largest network and is similarly dependent upon hydropower for the majority of its power generation. The largest contributors to the system are the 75-MW Yonki and 12-MW Pauanda hydropower plants. Supplementary power can also be added to the grid as needed from the privately operated 2-MW Baiune hydropower station at Bulolo in Morobe Province, as well as the small-scale PPL diesel standby units located in Madang, Lae, Mendi and Wabag.

The third and smallest of the three major systems is the Gazelle network, which provides power to Rabaul, Kokopo and Keravat. Power for the grid is generated from the 10-MW Warangoi hydropower station, along with the diesel-powered thermal plants of Ulagunan (8.4 MW) and Kerevat (0.5 MW). PPL operates another 19 independent power systems serving dozens of smaller urban centres across the country.

Off the Grid

Altogether only around 10% of PNG’s population has access to electricity, and those who are connected to a grid still remain subject to frequent blackouts and inconsistent supply. In order to counteract this unreliability, urban areas have considerable self-generation and backup generation capacity, which is expensive and inefficient to operate and maintain. One of the larger independent power producers operating in PNG includes Hanjung Power, which runs the Kanudi station supplying the Port Moresby grid.

The other major private player is PNG Sustainable Energy, which operates rural grids in Western Province and is expanding to other parts of the country. In addition to this, provincial governments are responsible for maintaining a number of stand-alone rural generation facilities, some churches provide electricity to villages that are off the grid and the larger mining sites sometimes provide power to adjacent communities.

For its part, the government through PPL has embarked on a number of initiatives intended to extend power access throughout the country, as well as to shore up the existing network to ensure adequate and consistent power supply. These programmes include the ongoing $83m Port Moresby Power Grid Development Project, rolled out with the help of the ADB, and the Ramu Transmission System Reinforcement Project, launched in 2013 in conjunction with the Japan International Cooperation Agency and the Town Electrification Investment Programme.

Road Blocks

Yet in spite of these efforts, numerous challenges in PNG have thwarted a smooth roll-out of new power infrastructure. While the government has received aid from its partners in various projects, PPL often lacks the resources and funding to carry out the growing list of development initiatives it is tasked with, including the rehabilitation of existing infrastructure to improve reliability, the extension of grids to service the growing urban population and the expansion of disaggregated generation to serve the rural population. As of result outdated and poorly maintained transmission lines and substations, power transmission and distribution system losses account for 20% of the energy PPL handles. Other contributing factors include difficult geographical conditions, operational issues linked to technical and management capacity, investment disincentives related to the single national tariff structure and high up-front costs for power generation in rural areas. Compounding these challenges is a long-running problem facing PPL in which the state-owned enterprise has been unable to collect large amounts of past-due bills, many of which are for other public firms or large companies that have racked up millions in unpaid charges.

State of Emergency

The cumulative weight of these burdens came to a head in early 2015, when Ben Micah, minister for public enterprise and state investment, announced a state of emergency in the electricity sector in a bid to fix the revenue problems faced by PPL. According to statements made by Micah to the local press, a 60-day period of extraordinary powers was instituted in order to compel companies and individuals to atone for non-payment of bills and illegal use of electricity, which tallied up to PGK138m ($52.22m) owed to PPL. These powers enabled the government to enforce disconnections, levy fines of up to PGK100,000 ($37,840) for individuals and PGK500,000 ($189,200) for businesses, or up to six months in prison, as well as to call up army and police forces for protection and enforcement of policies.

This action was followed later in April 2015 with a shake-up of PPL’s top management, naming former Digicel CEO John Mangos the power firm’s new executive director in what Micah described as an effort to provide reliable, 24-hour power to the majority of the population within a decade, according to an official media release. At the same time, the government also announced a 10-year electricity infrastructure development plan and reshuffled PPL’s umbrella body, the Independent Public Business Corporation, by sacking incumbent Wasantha Kumarasiri for not conforming to Cabinet directives. “The ultimate goal for the reforms in the electricity sector and the restructure of PPL is to introduce reliable and affordable power supply to at least 90% of the population consistent with the goals of Vision 2050,” said Micah.

He went on to indicate that the proposed restructure recognised the need to open up space for private sector participation in the generation of electricity, distribution and retail businesses and that approval had been given for new hydropower stations to be built at Edevua (Brown River), Gembogl, Kiburu, Tua River, Wara Simbu, Daewoo Lae, Hela and Puanda.

Lighting the Way

While the results of the recent shake-up at PPL are as yet unclear, a number of new power generation projects are in various stages of development, which, if carried out to fruition, would increase current capacity many times over. Numerous hydroelectric power projects are already under way to take advantage of PNG’s underutilised hydro resources, estimated by the International Energy Agency at 4200 MW for technical and economically viable resources. Tapping into this latent potential is a cornerstone of the government’s Strategic Development Plan 2010-30, which targets a national electrification goal of 70% by the end of the period. This would require a near quadrupling in total capacity from roughly 500 MW in 2010 to 1970 MW by 2030, of which hydropower would account for more than half at 1140 MW.

In the near term the state is set to begin benefitting from the recent gas developments, with plans finalised in 2015 to build PNG’s first gas-fired thermal power plant. ExxonMobil, operator of the PNG liquefied natural gas (LNG) project, and the government signed a memorandum of understanding in January 2015 for the former to supply up to 20m standard cu feet per day of domestic natural gas for 20 years to power a 25-MW thermal plant feeding into the Port Moresby grid. As part of the same agreement, the government awarded ExxonMobil a petroleum development licence for the P’nyang South gas field, which will be developed to supply gas as part of a possible third train for the PNG LNG project, as well as to fuel a new gas-fired power plant to be built by the government near the LNG plant outside of Port Moresby.