New gas-fired plant to increase installed capacity by 10%
Last November William Duma, minister for public enterprises and state investment, officially launched work on a $120m, gas-fired power station in Port Moresby, which is expected to significantly boost supply to the capital and add almost 10% to the country’s installed capacity, according to data from the Department of National Enterprises.
The 58-MW facility will use gas from the nearby PNG LNG project to supply the Port Moresby grid through a new 66-KV power line. The plant is being developed under a power purchasing agreement between PNG Power and NiuPower, a joint-venture company formed by state-owned Kumul Petroleum and local energy firm Oil Search.
Under the agreement, NiuPower will sell electricity to PNG Power at a much cheaper tariff than that offered by existing diesel plants. Officials expect commercial operations to begin in the first quarter of 2019.
The new project comes as gas looks set to play a larger role in the energy mix, in line with the government’s stated aim of supplying 70% of the population with electricity by 2030.
New ministerial portfolio to strengthen sector
With the current electrification rate at 13% and energy consumption set to rise significantly on the back of economic development and population growth, improving the nation’s energy supply is a key priority for government.
In a sign that the administration is sharpening its focus on the sector, in October last year it reshuffled its ministerial portfolio, appointing Sam Basil as minister of communications, IT and energy. Prime Minister Peter O’Neill said the decision to create the new portfolio reflected PNG’s commitment to finding a balance between boosting the role played by renewables and making use of existing infrastructure to meet rising demand.
“Strengthening our energy security and ensuring access to power for our people enables business to expand and helps our communities develop,” he said. “Modern sources of energy production are more efficient and environmentally friendly. Through embracing renewable technologies, more energy can be harvested locally and does not require the same infrastructure that was needed with traditional energy delivery.”
Wapu Sonk, managing director of Kumul Petroleum, told OBG the move was an encouraging sign for the future of the energy sector.
Highlighting the need for a coordinated plan to take advantage of PNG’s diverse energy resources, he said, “PNG is blessed in many ways. We have plenty of gas fields, sunlight, geothermal, wind and hydro potential; in fact, an entire spectrum of energy sources.”
A successful strategy, he said, would require closer cooperation between the public and private sectors, and should also take account of the fact that given PNG’s regional diversity in many aspects, a one-size-fits-all approach to connecting the country may not necessarily be the best way forward.
Phased renewable targets set for next three decades
While meeting the energy shortfall will involve a mix of gas and renewables in the short term, the drive to develop alternative sources of power is gaining pace in line with the longer-term goal of a 32% share for renewables in the energy mix by 2030 and 100% by 2050.
Hydropower has been earmarked to play a major role, with work already under way on several projects. These include the large-scale, $2bn Karimui dam in Chimbu Province, which is being developed by Italian firm Salini Impregilo. The project is expected to be completed by 2023 and will have a capacity of 1800 MW once operational. Two other hydro developments in the pipeline – Ramu 2 and Edevu – will provide an additional 180 MW and 50 MW of capacity, respectively.
Investing in existing infrastructure
Along with expanding generation capacity, there have been calls for further investment to maintain and upgrade existing infrastructure.
While some tenders have been issued for projects to reinforce the grid, industry players have told OBG that more is needed to ensure expansion plans are effective, with upgrades to the distribution network also necessary to ensure it is capable of carrying the additional load created by new power stations.