Papua New Guinea: Town Electrification Investment Program - Tranche 2

Energy / Electricity transmission and distribution

The components proposed for financing under the requested PFR are:

Component 1: Rehabilitation of two hydropower plants: (i) Yonki Toe of Dam (YTOD) hydropower plant, and (ii) Warangoi hydropower plant, which are currently operating below their full capacities. After rehabilitation, these plants will be capable of operating at their rated capacity of 28.0 MW-18 MW YTOD, and the 10 MW Warangoi plant. Moreover, the proposed rehabilitation will extend the economic life of these plants by another 20 to 25 years and ensure that they are brought to current standards.

Component 2: Construction of Ramazon run-of-river small hydropower plant with a preliminary capacity of 3 MW. The project will include construction of a (i) concrete weir, (ii) 5 km pipeline, (iii) penstock, (iv) powerhouse, and (v) new access road from the existing road to the powerhouse and internal roads within the project area.

On 25 November 2010, ADB approved a multitranche financing facility (MFF) of $120.0 million comprised of Asian Development Fund (ADF) and ADB ordinary capital resources (OCR) for the Town Electrification Investment Program (TEIP). The government contributed $30.0 million to help finance the total program cost of $150 million. Afterwards, on 6 December 2010, ADB approved the tranche 1 of the facility, consisting of (i) $16.4 million in ADF financing, (ii) $40.9 million in OCR financing, and (iii) $14.3 million of government counterpart contribution, for a total tranche 1 cost of $71.6 million. Lastly, on 9 December 2015, ADB approved the administration of a grant not exceeding NZ$7.0 million (equivalent to $4.8 million) from the Government of New Zealand as additional financing for tranche 1. The MFF availability period has been extended up to 30 June 2020.

PNG has significant underutilized indigenous renewable energy sources, particularly hydropower and solar, for which the generation costs of energy are considerably lower than that of diesel. The TEIP is assisting PNG to meet the MFF outcome of improved utilization of reliable and clean power in provincial urban centers by supporting the development of least-cost renewable energy sources to (i) improve the reliability and quality of power supply in order to stimulate economic growth; and (ii) replace diesel generation, thereby reducing power generation costs and creating incentives to improve access rates. The TEIP also supports the extension of the distribution grid to increase access to electricity in the provinces.

In addition to tranche 1 and its additional financing, the government seeks ADB financing for (i) refurbishment of two existing hydropower plants; and (ii) construction of the Ramazon hydropower plant, consisting of a 3 megawatt (MW) run-of-river hydropower plant.

The government is expected to submit the periodic financing request (PFR) for tranche 2 the final tranche under the MFF by the end of August 2016 which summarizes the analysis and due diligence completed. The proposed tranche 2 will support the objectives of the MFF by improving the use of reliable, clean power in the provincial urban and peri-urban centers. The existing project management unit (PMU) under tranche 1 will be responsible for the implementation of tranche 2. The proposed tranche 2 is included as a firm 2016 project in the ADB country operations business plan, 2016-2018.

2018 July: YTOD and Waronggoi contracts concluded and ready for signing.

2018 September: The implementation progress of the Project is slow. Since effectiveness of the Project, a construction supervision consultant contract, with a value of about $1.89 million has been signed. Moreover, two out of three small hydro power turnkey contracts under the Project, with a total value of $32.95 million are ready for signing. However, no disbursement has been made and the two award-ready contracts have not been able to be signed, because the SLA has not been signed, which is the condition for disbursement of loan proceeds.

PNG Power Ltd (PPL) rehabilitates three aging hydropower plants to bring them back to their rated capacity of 28.0 MW

PPL constructs and connects to the grid 3.0 MW of hydropower capacity

Capacity building is undertaken for implementing agency and project beneficiaries

The Project Management Unit renders efficient project management services.

YTOD and Waronggoi contracts concluded and ready for signing.

To be assessed later.

To be assessed later.

For the Romazaon contract, the JV issue has been resolved, but has delayed the signing.

Too early to determine.

Too early to determine.

Too early to determine.

Too early to determine.