“The recent announcement of another step being taken to tap PNG’s vast natural hydropower sources to increase power supply by over 30% is great news. We must get more power to our rural areas, and ensure cheap and reliable power to our people and businesses. However, with the announcement, I must ask “How much will the people of PNG be paying for this power?” said Ian Ling-Stuckey, PNG’s Shadow Minister for Treasury and Finance.
”There is little real information available on the latest proposal. The last update on the Kumul Consolidated Holdings website was done back in May 2016. For a K3 billion proposal, involving such a historic increase in our power supply, this is not good enough. For example, it is not clear how much of the additional electricity will go to our people rather than two major mines-not that we are against both projects to benefit.Earlier ADB reports indicated that up to 90% of the power could go to Ramu Nickel and Wafi Golpu. But that was back in 2008. So how much of the extra electricity will be available to improve electricity access to our people? How much will they have to pay? Will they pay the same as the big mines, or will they pay more or less?” asked Mr Ling-Stuckey.
“How is this project to be financed. We know that the government and landowners intend to have a 30% equity component for the first 25 years. So 30% of a K3 billion project is K900 million. Where will this money come from? Is it a free equity cover provided by the project developer? Or will we need to add even more to our public debt? My worry is that the earlier PNG LNG project did not provide the best terms for our people. How do we know that the best terms have been secured? I note that the proposed developer was ranked third in the initial shortlisting. What did they offer in their financing proposal to jump the other two shortlisted companies?
“I am also concerned that the aim is to make a formal announcement at APEC. Once again, possibly things are being rushed just for big announcements at APEC. My curiosity is also raised that this major announcement of the previously third ranked bidder comes so soon after the apparent termination of the Chair of Kumul Consolidated Holdings. Overall, it will be great to get Ramu 2 up and running . But this must be done in the best possible way, taking fully into account environmental and social impacts. It must also be the best financial deal possible for the people of PNG. Simply saying that PNG will own all of the asset in 25 years time sounds good, but how much will the people of PNG have to pay over the next 25 years” asked Mr Ling-Stuckey.
Shadow Minister for Treasury & Finance
27 September 2018
Last official update from Kumul on Ramu 2 – not good enough for such a major project – May 5 2016
This update set out the next steps for the project, including the three top submissions ranked in order. Shenzhen Energy Group was initially ranked third. They have now been selected. This is not unusual for rankings to change during negotiations on financial terms, but more information is required.
The above update expected that financial arrangements would be closed by March 2017. So timing is already running 18 months late. Why rush now prior to APEC. This project has been slow to develop – the article below indicates construction was expected by 2016.