An analysis of Papua New Guinea’s three main power grids has revealed that inadequate maintenance of plants and the transmission lines is the primary cause of frequent power outages, according to a review conducting by London-based consultants, Economic Consulting Associates. The review also comes with some recommendations.

The Yonki hydropower facility in Morobe Province, which is about to be expanded to boost generation capacity by 194%.

In a report prepared for state utility PNG Power Ltd, Kumul Consolidated Holdings Ltd, and the International Finance Corporation (IFC), the consultants analysed capacity, demand, and constraints facing the Port Moresby, Ramu and Gazelle Peninsula grids.

They also developed an action plan, outlining the priorities, sequencing and investment needs for the three grids over the next 15 years, with an emphasis on the short term (the first five-to-ten years).

‘The key issue is that the power cannot be delivered to the consumer in a reliable way, due to poor availability of generating assets and deficiencies in the maintenance and operation of the transmission grids’

The report, presented to a workshop of industry executives and government representatives in December in Port Moresby, calls for ‘a strenuous effort’ over the next two years to ensure the grids meet internationally accepted sector benchmarks.

The IFC’s Gavin Murray

‘Basically, the review concluded that there is sufficient existing generating capacity within each of the grids to meet current demand,’ the IFC’s Country Manager, Gavin Murray, tells Business Advantage PNG.

‘The key issue is that the power cannot be delivered to the consumer in a reliable way, due to poor availability of generating assets and deficiencies in the maintenance and operation of the transmission grids.’

Pipes

The report notes there is a high proportion of ageing infrastructure within the grids but that reliability of even the newer investments within the grid is considered poor against international benchmarks, because the system is not being maintained to ensure reliability of supply.

‘In plumbing terms, as the pipes get older, you have more leakage, you have more breakages, which reduces efficiency of supply, even if you have sufficient water, and that’s effectively what’s happening within the three grids to various degrees.’

While it was difficult to put a price on fixing the transmission and network issues, Murray says, it is estimated to run into the ‘hundreds of millions of Kina’.

Focus

Murray points out while there are ‘good competent people in PNG Power who understand what needs to be done’, they are distracted ‘by competing priorities or other imperatives’.

‘In plumbing terms, as the pipes get older, you have more leakage, you have more breakages which reduces efficiency of supply, even if you have sufficient water, and that’s effectively what’s happening within the three grids to various degrees.’

‘They clearly understand the need to focus on the network, to focus on upgrading their operating systems, and maintaining their assets and capital investments to deliver on what are reasonable expectations of both their customers and owners.

‘But clearly that’s not well understood or accepted by some of their key stakeholders who want available resources focused on expanding generating capacity and the grid network—often considered the “sexy stuff” that interests politicians and government.

‘And that’s the challenge really: to facilitate PNG Power to be able to get on and do what they need to do.

‘Hence the development of the Action Plan, while holding them to account against a set of transparent management and operating performance criteria.’

Forecast demand

The consultants say it is difficult to forecast demand, which is linked to economic growth, future grid extensions, and proposed new projects, noting ‘a single mine connecting to PPL’s grid could potentially double or even triple load on the system overnight’.

… while there are ‘good competent people in PNG Power who understand what needs to be done’, they are distracted ‘by competing priorities or other imperatives … And that’s the challenge really-to facilitate PNG Power to be able to get on and do what they need to do.’

They conclude, however, that demand for the Port Moresby grid could increase by between 3% and 6%; the Ramu grid by between 2.5% and 5% and the Gazelle grid by between 1% and 3.5% over the next 10 years.

Private sector involvement

‘We need to accept that any future power generation should be developed by the private sector, rather than by PNG Power, as independent power producers.

‘That requires the government to think about how it attracts the best partners with the necessary track record and financial backing to be able to put these projects into play quickly, on the right contractual terms.’

‘It’s probably time, under the new Kumul structure, for PNG Power to move towards a corporatised, commercially-governed operating model and to restructure themselves into those three stand-alone business divisions.’

‘It’s something that’s now well accepted throughout the rest of the developed world and there are organisations out there who do this for a living. So, let’s use that infrastructure development model but through open and competitive processes to get the best deal for PNG,’ says Murray.

PNG Power restructure?

‘Further down the track, you can then look at how to get private sector involvement in transmission investments but that will require further liberalisation of the energy sector in PNG.’

PNG Power has been contemplating whether it should restructure along the lines of the three different businesses that it operates: generation, transmission and retail.

‘It’s probably time, under the new Kumul structure, for PNG Power to move towards a corporatised, commercially-governed operating model and to restructure themselves into those three stand-alone business divisions,’ Murray concludes.