Papua New Guinea: Improved Energy Access for Rural Communities

Sovereign Project | 41504-024

Summary

The impact of the Improved Energy Access for Rural Communities Project (Project) will be improved livelihoods for rural communities in PNG provinces. The outcome will be that PPL has increased access to power for rural communities. The outputs will be (i) PPL extends power distribution grid to rural communities, (ii) PPL trials community based civil works contracts for powerline construction, and (iii) community capacity building undertaken to improve productive utilization of electricity.

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Project Name Improved Energy Access for Rural Communities
Project Number 41504-024
Country Papua New Guinea
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 9163-PNG: Improved Energy Access for Rural Communities
Japan Fund for Poverty Reduction US$ 2.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Partnerships
Sector / Subsector

Energy - Conventional energy generation

Gender Equity and Mainstreaming
Description The impact of the Improved Energy Access for Rural Communities Project (Project) will be improved livelihoods for rural communities in PNG provinces. The outcome will be that PPL has increased access to power for rural communities. The outputs will be (i) PPL extends power distribution grid to rural communities, (ii) PPL trials community based civil works contracts for powerline construction, and (iii) community capacity building undertaken to improve productive utilization of electricity.
Project Rationale and Linkage to Country/Regional Strategy

In Papua New Guinea (PNG), approximately 10% of the population has access to electricity. Lack of access to affordable, reliable power is limiting economic growth in provincial centers, and contributing to poverty in rural areas. Access to electricity is even lower in the provincial urban centers and virtually non-existent in rural areas. Low access rates in rural areas is primarily due to (i) difficult geographical access conditions, (ii) lack of generation capacity in the Provincial centers to allow grid extension, (iii) high cost of diesel power generation in the isolated Provincial urban centers providing a disincentive to PNG Power to connect additional customers due to the uniform national tariff, (iv) high cost of extending distribution systems due to lack of suitable contractors in the provinces, and (iv) low level of Government grant funding of distribution connections .

PPL is currently implementing Tranche 1 of the Town Electrification Investment Program, which is increasing the supply of clean energy (predominantly hydropower) to three provincial centers (Popondetta in Northern Province, Kimbe in West New Britain and Buka in the Autonomous Region of Bougainville). This will (i) provide additional generation capacity to allow extension of supply to unserviced rural customers, and (ii) reduce the cost of power generation by replacing high cost diesel generation with low cost hydropower. The Town Electrification Investment Program will also construct transmission lines along main population corridors to connect the hydropower sites and the main urban areas, thereby substantially reducing costs required to connect rural communities along the alignment. Therefore, the Town Electrification Investment Program is supporting core power sector infrastructure in a number of provinces which provides the basis for increasing access to power for rural communities located along the main transmission corridors.

However, although the Town Electrification Investment Program is constructing the core transmission network, power distribution construction (low voltage connections to villages) in the Provinces is still prohibitively expensive due to isolation of the power grids and lack of qualified local contractors. Additionally, sustainability of infrastructure development in rural PNG faces ongoing issues related to lack of community ownership from local landowners. Government budget allocation for grid extension has been inadequate to significantly impact the low rural access rate. During the initial design phase of Town Electrification Investment Program, the Government recognized the opportunity to expand access to energy among rural communities along the proposed transmission lines, and therefore requested ADB to support trialing of implementation models such as community based civil works contracts to lower the cost of implementation and improve community ownership. The Government requested the trialing in 3 Provinces to demonstrate the impact in a range of different geographical and cultural settings . If successful, PPL and the Government have proposed to replicate the model in other PNG Provinces through upscaled grant financing. Project cost estimates have been based on preliminary community surveys. Detailed design will be conducted prior to project implementation. Preliminary estimates have indicated that rural communities will benefit financially from replacing expensive kerosene lighting and self generation (small diesel generators) with higher quality distributed electricity . Initial surveys have indicated a high capacity and willingness to pay for power services; however site surveys prior to community selection will confirm willingness to pay.

Impact Livelihoods for rural communities in PNG provinces has improved
Project Outcome
Description of Outcome PPL has increased access to power for rural communities
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. PPL extends power distribution grid to rural communities

2. PPL trials community based civil works contracts for powerline construction

3. Community capacity building undertaken to improve productive utilization of electricity

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Project design has included extensive consultation with stakeholders, including government officials, power utility representatives, NGOs and power customers. All components have been proposed by national counterparts.
During Project Implementation The Project will be implemented in consultation with, and the participation of, consumers, communities, government officials, NGOs, and international development partners. Component A will include extensive community consultation regarding selection of communities to receive power distribution and development of community civil works contracts. The Project Management Unit will be located within PPL to ensure Project ownership extends to system operation and maintenance. Component B will include considerable stakeholder consultation and awareness raising with the communities. Local entrepreneurs and microfinance bodies will participate in the community awareness raising workshops.
Business Opportunities
Consulting Services The total input from international and national consultants will be 10 months and 12 months, respectively. The individual consultants (including national and international consultants) will be recruited by ADB in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time) using the individual consultant selection (ICS). Consulting services will be engaged to provide implementation, management and monitoring services for the Project. ICS is considered a suitable procurement method as there are a limited number of consultants required (2 international, 2 national), with discrete activities which do not require significant coordination.
Procurement All procurement under the Project will be conducted in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). The procurement method for equipment will be international competitive bidding (ICB) and shopping procedures. The procurement method for community based civil works contracts will be direct selection.
Responsible ADB Officer Muhammad Amir Ingratubun
Responsible ADB Department Pacific Department
Responsible ADB Division Papua New Guinea Resident Mission
Executing Agencies
PNG Power LimitedP.O. Box 1105, Boroko,NCD
Papua New Guinea
Timetable
Concept Clearance 26 Apr 2010
Fact Finding 02 May 2011 to 06 May 2011
MRM -
Approval 19 Apr 2012
Last Review Mission -
Last PDS Update 17 Aug 2011

Grant 0288-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Apr 2012 24 Jun 2013 04 Oct 2013 30 Jun 2015 20 Jul 2016 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1.00 Cumulative Contract Awards
ADB 0.00 19 Apr 2012 0.00 1.87 75%
Counterpart 1.00 Cumulative Disbursements
Cofinancing 0.00 19 Apr 2012 0.00 0.27 11%

Grant 9163-PNG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Apr 2012 31 Oct 2012 31 Oct 2012 30 Jun 2015 20 Jul 2016 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.50 Cumulative Contract Awards
ADB 0.00 19 Apr 2012 0.00 1.37 55%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.50 19 Apr 2012 0.00 0.26 10%

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Improved Energy Access to Rural Communities Environmental Assessment and Measures May 2011

Evaluation Documents

See also: Independent Evaluation

No documents found.


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