PNG Power Acting CEO Douglas Mageo talks to Business Advantage PNG about the prospects for greater accessibility, reliability and affordability in electricity.

PNG power lines. Credit: PNG Power

PNG Power has a big task ahead of it as the government-owned power provider has been handed a plan to electrify 70 per cent of the country by 2030.

A large part of this will be via the Papua New Guinea Electrification Partnership, a joint initiative between Australia, New Zealand, Japan, the United States and PNG – and all this complicated by the global economic stress created around the COVID-19 pandemic.

The man in charge of the operation, PNG Power Acting CEO Douglas Mageo, says there are a lot of basics to get right before tackling the huge expansion plans.

‘Our key issues are accessibility, reliability and affordability but you have to break those down into components,’ Mageo tells Business Advantage PNG. ‘That includes the grid, off-grid and what we call “off-off grid,” which is the far-flung islands where the definition of electricity is basically a light.’

Keeping the lights on

Mageo sees his biggest challenge as reliability; he believes it is possible to have reliable base load electricity in Port Moresby this year, although he notes that COVID-19 is a big unknown.

Mageo wants PNG Power to become more proactive when it comes to reliability.

‘We are making a loss and when you are making a loss you cannot take the price down.’

‘The key to reliability for us is maintenance – to get away from reactive to planned maintenance so we can improve reliability.

‘But there is a second part to it. When it comes to maintenance, if you have only one line, and you take that line out, then the customer suffers; so the next component of reliability is redundancy, like when you have a spare tyre.’

To this end, PNG Power is building a second line into the Ramu Grid from Lae to Ramu. ‘That will give us reliability; if a line goes down, we have another line there.’

Making power more affordable

Douglas Mageo. Credit: PNG Power

Businesses are keen to know when they can expect a drop in power prices sufficient to make an impact on the cost of doing business. While Mageo does not rule out any rate rises, he does say that PNG Power’s aim is to drop prices as soon as it is practicable.

‘We are making a loss and when you are making a loss you cannot take the price down. Hopefully, by the end of the year we are looking at making a profit and then we can look at reducing the cost,’ he explains. ‘But also we owe a lot of creditors, so we need to make sure we pay them off and then, after that, we are in a position to start reducing our tariffs.’

A key part of the price reduction process is using the private sector – independent power producers – to generate electricity but that has had its own issues. Mageo admits that the connection of the NiuPower plant – the Oil Search–Kumul Petroleum joint venture – had a few teething problems. But overall he is positive about the fact that power generation has been outsourced.

‘They are working with us on smart meters that can talk to us and tell you at any given time if the usage is changing.’

Another factor in the high prices is that up to 17 per cent of generated power is being stolen. With the help of the World Bank and Asian Development Bank, PNG Power has a plan for smart meters to combat electricity theft.

‘They are working with us on smart meters that can talk to us and tell you at any given time if the usage is changing – but this is subject to funding approval,’ he adds. ‘It will solve a lot of these problems because 17 per cent is a lot of money.’

New hydro

Mageo was proud of the fact that the switch from diesel to gas was gradually driving down prices but also emphasises the importance of renewables to help power supply and the future.

Much of PNG Power’s work is revolving around transmission – or poles and wires – to link both private-sector generators and hydro to its grids.

‘Our partners in DFAT (Department of Foreign Affairs and Trade) have agreed to fund the new line from Edevu, a new hydro that will be online in one-and-a-half years’ time,’ he says.

The 50 megawatt Edevu hydro plant is a K500 million Chinese-backed project located in Kairuku Hiri District in Central Province and a key example of how the vision for 2030 might be realised – with private sector generation, Australian-government backed poles and wires, and a renewable energy source contributing to the much-needed stability, access and affordability of power that is so essential PNG’s needs.