A rapidly expanding population and the corresponding strong economic growth are putting increasing pressure on Papua New Guinea’s overstretched power sector. Already registering annual growth in power consumption of around 5%, according to Chris Bai, executive advisor at PNG Power (PPL), demand is only expected to rise in the coming years. “The population has increased substantially, and rapid urbanisation means use of energy is rising,” John Cholai, the general manager of Origin Energy, told OBG. Maintaining a reliable power supply could prove challenging. Years of neglect and chronic underfunding have resulted in regular outages, even among the established power grids serving urban centres. Only 20% of the country’s total population has access to electricity. However, some relief for the sector is on the way in the form of a number of new power generation projects, as well as expansion plans to extend electricity services to the rural population.

GENERATION: As of early 2012, the total electricity generation capacity for PNG was around 500 MW, the majority of which is generated by PPL. Of the 330 MW coming from PPL, around two-thirds is generated by hydropower stations, with the remainder coming from thermal power stations. One of the largest plants currently in operation is the Rouna hydropower complex, which consists of four units located on the Laloki River and fed by the Sirinumu reservoir. The complex has a total installed capacity of 62.2 MW. Other plants in the area, which serve the Port Moresby grid, include the 30-MW Moitaka thermal power station, as well as the privately owned 24-MW Kanudi power plant. The primary base-load generator for the Ramu grid system is the Ramu hydropower plant, which has installed capacity of 75.5 MW and is fed by the Yonki Dam reservoir. The 12-MW Pauanda hydro plant also supplies power to the Ramu network. The 10-MW Warangoi hydro plant, meanwhile, supplies the Gazelle grid. Apart from these primary plants, there are also dozens of micro- and small-scale hydro and thermal plants, producing around 4 MW, which serve villages and commercial operations. Hybrid solutions are becoming more prevalent in isolated areas, such as a 3.8-MW system in West New Britain driven by an 800-KW run-of-the-river hydro station.

In addition to the plants operated by the state power company, several independent power producers (IPPs) are active. One of the largest is the 24-MW, oil-fired thermal plant operated by South Korea’s Hanjung Power. PNG Forestry runs a 6.5-MW biowaste power plant, sells 3 MW to PPL and is expecting to generate a further 9 MW in September 2012, which will go to the national grid to supply the Hidden Valley mining operations. A 2-MW biofuels-powered IPP unit is opening in West New Britain under the ownership of New Britain Palm Oil, and several other private hydro plants, such as the 1800-MW Purari Hydro, Sohun and East-West Sepik projects, are also being considered, according to PPL.

CAPACITY BUILDING: To prepare for the expected increase in demand, PPL is continuing with a programme of rehabilitation and refurbishment of its ageing plants, and developing the next generation of power facilities. Due to the higher costs associated with importing fuel for cheaper thermal power plants, as well as the fact that virtually all of the country’s natural gas stocks are earmarked for lucrative liquefied natural gas export contracts, renewable energy is seen as the most viable option. “Shell and BP have left the fuel distribution business and I believe Mobil will soon leave too,” Tappie Uruaka, the general manager at Niugini Oil Company, told OBG. According to Bai, “The potential for hydro in PNG is virtually unlimited. The only issue is financing, as these projects are very capital-intensive.”

There are several new hydropower projects at various stages of development. Some have completed feasibility studies and are only waiting for financing to be arranged. The most advanced of these is the 80-MW hydro station on the Noro Brown River, which is expected to begin operations by 2016. Other potential projects include the 90-MW Mongil Bulum plant in the Northern Province and the 80-MW Laluai plant. A feasibility study has been completed for the construction of the 240-MW Ramu hydropower project, downstream from Ramu 1, which could utilise the same controlled flow from the Yonki Dam.

TRANSMISSION & DISTRIBUTION: PNG’s rugged terrain may offer spectacular beauty and breathtaking views, but these features also create logistical challenges for the development of large-scale electricity transmission systems. Due to this and other factors, there are three primary independent distribution grids operating in PNG. However, there is currently no national transmission system in place to connect these separate operations.

The first and largest grid is the Port Moresby system, which serves the capital and its surrounding districts. The Ramu system, the second-largest grid in the country, provides power from the Yonki Dam complex to the industrial cities of Lae, Madang and the Highlands region. Finally, the Gazelle power grid serves the area around Rabaul in East New Britain.

In a bid to fulfil the Medium-term Development Strategic Plan’s goal of providing access to reliable and affordable electricity to 70% of the population by 2030, the government has launched a number of initiatives to extend the reach of the current grid. The most expansive is PPL’s Rural Electrification Programme (REP). Launched in 2006, the REP plans to provide electricity to each of the country’s 89 districts, many of which are extremely isolated.

The electrification process was developed using a two-pronged approach. Where it is technically feasible, existing grid infrastructure is extended to include new settlement areas, while in the more remote regions of the country, the focus remains on bolstering isolated generation systems and associated small, independent distribution networks.

Three primary areas centred on existing distribution areas were targeted for initial work: Sirinumu Dam, in the Port Moresby system; the Yonki Dam area of the Ramu system; and the Gazelle system. Parts of the Southern Highlands and Enga provinces were later added to the mandate. Funding of PGK65m ($31m) was obtained in 2007, but spending outpaced works, leaving many of the targets unfinished.

CHALLENGES: According to Bai, “The project is very difficult for a variety of reasons: the first being terrain; the second, politics; and the third, capacity. This was a government initiative tasked to PPL, which was not geared to do these corporate social responsibility-type projects, in addition to running a power company.” Bai told OBG that other difficulties the REP has encountered include financial constraints and the relatively high investment cost per household connection, due to PNG’s low population density. Running power lines across large segments of territory also entails customary land rights issues, with landowners in some regions asking to be compensated for use of their land. Collecting payment in more remote villages can also prove difficult.

PPL estimates that an additional 10% of the population now has regular access to electricity, compared to when the REP was introduced in 2006. The programme was reinvigorated in the summer of 2011 when it received an added PGK30m ($14m) from government coffers as part of budgetary concessions for the extension of the power grid.

In addition to the REP, the Town Electrification Investment Programme was initiated in February 2011, with assistance coming in the form of a PGK150m ($71m) loan agreement from the Asian Development Bank (ADB). The government has pledged to contribute a further PGK40m ($19m) in counterpart funding. The ADB has divided these funds into two tranches, the first of which has already been paid out and is being used to build three projects: two small hydropower plants and a transmission line. The second tranche has been earmarked to construct three more hydropower stations.

UNDER STUDY: Pre-feasibility studies started in early 2011, with the studies for three projects completed by June of that year. These included two 3-MW run-of-river hydropower plants in Ramazon and Divune. The third is a 90-km, 66-KV transmission line in West New Britain, which will connect the towns of Kimbe and Bialla. These projects, which are expected to be complete by the end of 2013, will provide power to at least half of the 3273 unconnected households in the town of Popondetta, the 1187 unconnected households in Kimbe, and an additional 922 homes in Arawa and Buka. New power and water hook-ups will also be provided by PPL for around 30 households located near the Divune and Ramazon project sites. Another three hydro projects due to be evaluated consist of two more 3-MW run-of-river hydropower plants – the Gumani plant at Milne Bay and the Salwan plant near Wiwak – and the 1-MW Kimidan hydro plant on New Ireland island.