PNG Power’s Pathway to Recovery
PNG POWER'S PATHWAY TO RECOVERY
PNG Power acknowledges the recent media release from the Independent Power Producers (IPP) group regarding the state of power supply infrastructure and reliability in the country and payments owed to the IPPs.
However, PNG Power wants to ensure that the efforts put into its recovery from its Government shareholder, Kumul Consolidated Holdings, are also clearly understood. Although perhaps not immediately obvious, PPL is taking serious steps to address the issues it is currently experiencing.
The reliability of the power supply in PNG is a challenge for PPL. As the number of business, industrial and domestic consumers increase, the demand for power also expands, PPL has been increasing electricity availability on its grids in Port Moresby, Ramu and Lae. Projects being undertaken in Port Moresby and around the country are targeted at increasing generation, capacity and improving reliability through better transmission and distribution. These changes will start to be seen from the end of 2023.
In line with its commitment to increasing generation, PNG Power recently witnessed the Edevu hydropower plant dam filling with water – from a new entrant into the market, PNG Hydro Development. Edevu will generate 54 MW for Port Moresby, meeting 40% of demand in the nation’s capital, and stabilising the grid. PNG Power is constructing the Edevu to Moitaka transmission line, the link to the Port Moresby grid. This will allow PPL to have surplus power generation and use this opportunity to rehabilitate its own hydro facilities at Rouna.
Edevu will generate clean, environmentally friendly energy, assisting PNG’s commitment to transitioning to 100% renewable energy by 2030. To relieve loading on the Boroko and Konedobu substations, PNG Power has commissioned two feeders at the new Kila Kila sub-station. Improvements are also underway at the Rouna 1 and 3 hydropower stations, to ensure PPL’s generation units there are providing their rated power.
Work on the Ramu grid transmission reinforcement system is improving power supply into Lae city - the energising of the new Singsing substation and improvement of the Erap sub-station. Ramu 1 generation units are also being improved.
PPL’s improvements have been supported by electrification partners and donor agencies along with the National Government. PPL will continue to work with IPPs to ensure that we cooperatively achieve the goal of delivering improved, safe and reliable electricity to the people of PNG.
I would like to restate that PPL’s reliability issues are due primarily to ageing infrastructure, power theft, the inability to pass on costs of power purchased to end users and delays in payments from private and Government sector power consumers. PPL’s objective is to have a steady cash flow from the provision of reliable power whilst at the same time servicing its debts and liabilities. Reliability comes at a cost.
PNG Power has undertaken certain critical initiatives to curb the problems it is experiencing. To protect its cash flow going forward, PPL is in the process of implementing three-phase pre-paid meters so customers pay for their power in advance of usage. To tackle power theft, PPL is rolling out the AMI Smart Metering Project which aims at improving non-technical losses.
NEC recently allocated K211 million to KCH to fund PPL projects that address power reliability and enable the company to repay its debts through improved revenue collection as a result of improved power reliability.
To address matters alluded to by the IPPs in their media statement and give confidence to business investors and domestic consumers, PPL would like to clarify the following:
- PPL is not Insolvent. Certain IPPs are disputing their invoices which have led to court action to address these.
- There are no court proceedings against PNG Power or any of the IPPs. The matter between PNG Power and NiuPower Limited was recently settled by consent - PPL discontinued its proceedings and NiuPower withdrew its creditor’s statutory demand.
- PPL’s main recovery tool, its tariff, has not been increased since 2013. Like any business, PNG Power has to be able to pass on production costs from its sale of electricity. To date, this has not been possible. The Government will implement this tool when reliability has improved but as stated earlier - reliability comes at a price.
PPL acknowledges the concerns raised by the IPPs and assures the general public that it is working tirelessly with the Government and its shareholder, KCH, to resolve these issues.
Approved for Release
McRonald Nale, Chairman
PNG Power Board