Papua New Guinea Additional Power and Electricity Information

Source: Compiled by VisionRI from information in the National & Provincial Ten Year Power Development Plan (2007-16), PNG
Power Limited, 2006, and revised based on ongoing discussions with ED-DPE, 2007-08.
Distribution
PPL supplies power to Port Moresby and 26 other urban centers through 19 independent power
systems. Its present generating capacity is 153 MW (80 MW in Port Moresby) for total energy
sales of 742 GWh (316 GWh in Port Moresby). PPL, formerly the Electricity Commission, used to
be the sole generator, transmitter and distributor of electricity in the country. In 1999, an
independent power producer, Hanjung Power Ltd, negotiated the production and sale of power
to the grid within a 15-year build-operate-transfer (BOT) arrangement. However, the present
electricity tariff of about $0.15 per kilowatt hour (kWh) is hardly sufficient to cover the cost of
the diesel oil needed to produce power in Port Moresby. In rural areas the cost of diesel alone can
be three times the tariff, or more. Since 2003, PPL has been earmarked for privatization and a
new private commercial operator, PNG Sustainable Energy Ltd (SEL), is beginning to enter the
sector.

Sector Issues

Lack of reliable quality power supply to the main urban areas may limit economic growth.
Investments are required in power generation and the transmission and distribution grids for the
Port Moresby and Ramu grids.

Town electrification - Poor-quality power supply in provincial centers and lack of generation to
meet growing demand is limiting economic growth in provincial urban centers not connected to
the main grids.
The poor development of the provincial power systems is due to:
- difficult geographic conditions, resulting in isolated load centers with relatively low
demand;
- high initial investment costs for hydropower, resulting in reliance on diesel generation,
which has low upfront investment costs but substantially higher life cycle costs;
- the single national tariff structure, which serves as a disincentive for the corporatized PPL
to invest in high-cost provincial centers (each additional customer on these systems
results in increased financial loss).

Rural electrification - The difficult geographic conditions mean that it is not technically or
financially feasible to extend the existing power grids to more than a relatively small percentage
of the rural population.
Where grid extensions are not feasible, rural electrification will consist of village-level and
household-based generation systems, such as small diesel generators and household solar
systems. Currently, the provincial governments are responsible for the management of the
village-level power systems; however, due to the lack of an operating budget and maintenance
capacity constraints, the majority of the village power systems have ceased to operate.

The Energy Division of the Department of Petroleum and Energy (ED-DPE) is responsible for the
rural electrification program. The provincial governments have responsibility for maintaining the
Government’s stand-alone rural generation facilities (C-Centers). There are several other power
suppliers. Churches and missions provide electricity to nearby areas while some mine, industrial
and agricultural enclaves supply free electricity to nearby villages. PPL has an ongoing program
of extending the urban grids to sell electricity to rural communities close to the grid. SEL is also
actively entering the sector. The World Bank is assisting SEL with a Solar Lantern Project for
teachers, and it is discussing possible assistance to finance mini-hydro schemes in rural areas.

Tariffs - Power tariffs are independently regulated by the Consumer and Competition
Commission and allow full cost-recovery for PPL. Power tariffs are set on a national basis,
resulting in uniform tariffs irrespective of local generation costs. The uniform tariff structure
cross-subsidizes tariffs for consumers in high-cost centers (provincial centers) through the lower
generation costs from the main grids (the Port Moresby and Ramu grids, which are
predominantly hydropower-based, and therefore relatively low cost). However, the uniform tariff
provides a disincentive for PPL to invest in high cost-generating areas, including provincial
centers where high reliance on diesel generation and high diesel transport costs have resulted in
high generation costs.

Supply

National Grid

There is at present no national grid system due mainly to challenges posed by PNG's difficult
topography as well as vast distances between various towns or load centres. PPL nonetheless has
plans to interconnect the Ramu and the Port Moresby systems. The project however depends
entirely on the planned construction of a trans-island road to link the New Guinea Highlands to
Papua, which itself has not eventuated.

PNG Power electricity generation uses both hydro electric generation and thermal generation
(generally diesel powered) plant to supply power to its customers. The grid systems of Port
Moresby, Ramu (Lae, Madang and the Highlands) and Gazelle in East New Britain have hydro
generation that supplies the bulk of the power. Overall, hydro supplies about 65% of the PNG
Power power requirements. The regional centres that are not connected to these power grids rely
on diesel powered thermal generating plant.

PNG Power continues its extensive refurbishment and upgrade program of the generation
facilities to improve the reliability and quality of supply at all its centres throughout PNG. In Port
Moresby, PNG Power signed a major contract to refurbish the Rouna 2 hydro power station. In
the regional centres, PNG Power continues to upgrade the diesel powered thermal generation
where plant had not been replaced or refurbished previously because of the poor financial state
of the business.

Port Moresby System

The Port Moresby system serves the National Capital District, the commercial, industrial and
administrative centre of Papua New Guinea. The Port Moresby system also serves surrounding
areas in the Central Province.

The main source of generation is the Rouna system consisting of four hydro stations on the Laloki
River, controlled water storage in Sirinumu Reservoir and a small generating set at the toe of
Sirinumu dam. The total generation capacity from the Rouna Power Stations is 62.2MW.

PNG Power also operates a thermal power station at Moitaka, outside Port Moresby which is also
used to supplement the supply from the Rouna Power Station with a generation capacity of
30MW.

PNG Power also purchases electricity from a privately owned power station at Kanudi. The
Kanudi Power Station completed in January, 1999 is owned and operated by an IPP, selling power
exclusively to PNG Power. Kanudi adds another 24 MW to the Port Moresby system generation
capacity and is being utilised as base load.

The load demand for the National Capital District is 73.5MW.

The Port Moresby hydro generation is transported by three 66kV lines and a 33kV feeder and the
Moitaka thermal generation output is delivered to the system at Boroko via a single and a double
circuit 66kV lines which also supply Waigani Substation. There is also a 66kV circuit line from
Moitaka to Kanudi to improve the security of power supply.

Ramu System

The Ramu system serves the load centres of Lae, Madang and Gusap in the Momase Region and
the Highlands centres of Wabag, Mendi, Mt Hagen, Kundiawa, Goroka, Kainantu and Yonki. The
economy of the regions supplied by the Ramu system is based on mining, oil, gas, coffee, tea,
timber and industrial productions.

The main source of generation is the Ramu Hydro Power Station with an installed capacity of
75MW, comprising of five units of 15MW each. This station which was previously a run-of-river
scheme became a storage scheme when the Yonki dam was commissioned in February, 1991.

Additional hydro energy is supplied by Pauanda, a run-of-river station in the Western Highlands
Province with 12MW.

Power is also purchased when required from the privately owned Baiune Hydro Power Station at
Bulolo in Morobe Province, and varies between 1 to 2 MW depending on availability.

Transmission line outages, energy and peak demands are met by diesel plants at Madang, Lae,
Mendi and Wabag. These plants serve as stand-by units.

Three radial lines originating from Ramu Hydro Power Station switch yard serve Lae, Madang
and the Highlands centres. Currently Madang and the Highlands Region are supplied at 66kV and
Lae at 132kV. The Highlands line interconnects with Pauanda hydro station and supplies the
townships of Kainantu, Goroka, Kundiawa, Mt Hagen, Wabag and Mendi.

Gazelle Peninsula System

The Gazelle Peninsula system serves the townships of Rabaul, Kokopo and Keravat to service
Gazelle's economy based on copra, coconut oil, cocoa, timber and fishing.

The Gazelle Peninsula system is powered by a 10MW hydro power system at Warangoi, Ulagunan
Diesel Power Station with 8.4MW, and 0.5MW from Kerevat Diesel Power Station.

A 66kV line linking Warangoi to the Rabaul, Kokopo and Kerevat zone substations delivers hydro
power from Warangoi Power Station to these load centres.

Other Centres

The remainder of the centres is served by diesel generating stations except for the Kimbe system
which is supplied by the Ru Creek Mini hydro system and the Bialla system is supplied by Lake
Hargy mini hydro scheme.

PNG Power took over the supply of electricity to several or District centres in recent years as part
of its rural electrification program.