New special-purpose company created for Yonki expansion

National Executive Council has authorised the creation of a special-purpose company within PNG Power, Yonki Hydro Ltd, to rehabilitate the Yonki power assets and expand the scheme.

“This brings the full development of Yonki, in three stages, a step closer to fruition,” State Enterprises Minister Sir Mekere Morauta said.

“The O’Neill-Namah government’s aim is to stabilise generation as soon as possible to prevent the current widespread power cuts affecting the Momase-Highlands region, especially in Lae and Madang.

“Our long-term aim is to greatly increase power supply to the region to allow the development of new resource projects, promote economic development and increase the standard of living of the people in the area.

“We now have a coordinated strategy for repairing and expanding Yonki and ending the power cuts that have crippled the business sector over the past 10 years of the Somare government and caused such problems in the daily lives of ordinary Papua New Guineans.”

An important element of the plan is to make provision for landowner equity in the Yonki scheme.

The Somare government failed to deal with this very important issue, Sir Mekere said.

The O’Neill-Namah Government will tackle it in two ways.

 “The first is to develop a framework for landowner participation as private equity partners,” he said.

“The second is to encourage the employment of landowner companies in the development and construction phase by acting as preferred providers of services.

“Other private sector participation in the project is to be encouraged through existing PPP (private public partnership) arrangements.

“PNG Energy Development Ltd, a 50-50 joint venture between PNG Sustainable Development Ltd and Origin Energy of Australia, has joined the project steering committee recently set up by IPBC (Independent Public Business Corporation).

“This committee will continue with its technical, social, environmental and social investigations.”

The Yonki project has three phases. They are:

• The refurbishment and upgrade of Ramu 1 power station, at a cost of K58 million. Further work will be needed to return the station to full operational capacity, which is expected late this year;

• The completion and commissioning of the Toe of Dam generation system. The Toe of Dam project is designed to generate 18 megawatts of power from water flowing down the dam spillway that would otherwise be wasted. Construction began in 2009 but was suspended owing to problems with the contractors. PNG Power has now resumed construction work with support from two Japanese companies - Nippon Koei and Daiho  – and expects the plant to be commissioned by the middle of next year; and

• The construction of a new powerhouse, Ramu 2, which would generate an additional 120 - 180 megawatts bringing the total power generated at Yonki to  from 45 megawatts to 180-240 MW.

Sir Mekere said the transfer of assets into Yonki Hydro would be subject to due diligence, and a final feasibility study would be needed for Ramu 2.